Does anyone know if its better to max out HSA first or 401k? I have both W2 and 1099 income too and trying to figure out the optimal order.

Great question! I'm in a similar boat with mixed income sources. One thing I learned the hard way - make sure you calculate your net self-employment income correctly for that 20% employer contribution. Don't forget to subtract: 1. Half of your self-employment tax (roughly 7.65% of your net SE income) 2. The employer contribution itself (it's a circular calculation) So if you have $130k in 1099 income, after business deductions and the SE tax adjustment, your actual contribution base will be lower. The effective rate usually works out to about 18.6% rather than the full 20%. Also, since you mentioned backdoor Roth - consider whether a solo 401k with Roth options might be better than trying to do backdoor Roth IRA conversions, especially if your income puts you over the IRA contribution phase-out limits. The solo 401k gives you more flexibility and higher contribution limits.

Just to add another perspective - I'm an expat who's lived abroad for years, and the foreign earned income exclusion (Form 2555) is different from your situation. That's for people who are genuine residents of foreign countries. Since your situation is a temporary absence and you intend to return to the US, you're still considered a US resident for tax purposes, which actually helps with your EIC eligibility. Make sure you don't accidentally file as a foreign resident which would definitely disqualify you from EIC.

Based on what you've described, you should still be eligible for the Earned Income Credit. The IRS recognizes that temporary absences due to circumstances beyond your control (like travel restrictions during emergencies) don't automatically disqualify you from EIC if you maintain your US residence and intend to return. The key factors working in your favor are: 1) Your absence was unplanned and involuntary, 2) You maintained your US ties and residence, and 3) You have clear intention to return. With only $3,800 in earned income, you're well within the income limits for EIC. Make sure to keep documentation of your situation - any records showing why you couldn't return (travel restrictions, family emergency details, etc.) and evidence that you maintained your US residence (lease payments, bank accounts, etc.). File your return as a US resident - don't use any foreign residency forms since your situation is temporary. You should be able to claim the EIC without issues, but having that documentation ready will help if the IRS ever has questions about your residency status during 2023.

Has anyone used the IRS sales tax deduction calculator? It lets you add major purchases like cars separately rather than keeping all those receipts for the year.

Great question! I was in a similar boat last year. The key thing to remember is that you can only deduct the sales tax you paid on the car, not the $13,500 purchase price itself. Here's what I learned: vehicle sales tax gets lumped in with your other state and local taxes (SALT), which are capped at $10,000 total when itemizing. So even if your car sales tax was $1,000, you'd need your total itemized deductions (including that sales tax, property taxes, mortgage interest, charitable donations, etc.) to exceed the standard deduction to make it worthwhile. For most people buying one car, the standard deduction ends up being the better choice. But definitely run the numbers - if you have significant mortgage interest, property taxes, or made large charitable contributions this year, itemizing might work out better for you. The IRS website has a good worksheet to help you compare, or you could use tax software that will automatically calculate both scenarios and pick the better one for you.

Great question! I went through this exact same situation with my LLC last year. The key thing to understand is that guaranteed payments are treated as self-employment income for tax purposes, but the mechanics of how the money flows can be flexible. Your LLC can absolutely withhold the $1,000 for your 401(k) contribution directly from the $12,500 guaranteed payment and remit it to the plan, then pay you the remaining $11,500. This is actually preferable from a cash flow perspective and keeps everything clean administratively. The 401(k) plan administrator generally doesn't care about the source - they just need to receive the contribution and proper documentation. What matters for tax purposes is that the full $12,500 still gets reported as guaranteed payments on your K-1, regardless of whether $1,000 went directly to your 401(k) or through your personal account first. Just make sure your operating agreement is clear about this arrangement, and that your bookkeeper properly tracks the full guaranteed payment amount for tax reporting. The IRS views the entire $12,500 as taxable guaranteed payment income to you, even though part of it went directly to retirement savings.

One thing I'd add to this discussion is the importance of getting your payroll provider on board early if you use one. We ran into issues initially because our payroll company wasn't familiar with processing 401(k) contributions from guaranteed payments. They kept trying to treat it like regular employee payroll with tax withholdings, which created a mess. We had to educate them that guaranteed payments are already subject to self-employment tax, so there's no additional payroll tax withholding needed - just the straightforward transfer to the 401(k) plan. Also, make sure you coordinate the timing with your plan's contribution deadlines. Most plans require contributions to be made within a reasonable time after the guaranteed payment date. We typically process ours within 5 business days of issuing the guaranteed payment to avoid any potential issues with the Department of Labor's timing requirements. The bookkeeping approach Carmen mentioned is spot-on - that's exactly how we handle it and it keeps everything clean for tax reporting.

I'm going through a similar situation right now and this thread has been incredibly helpful! My divorce won't be final until May, but I've been separated since September and have my two kids living with me full-time. I was planning to file Married Filing Separately, but after reading about the Head of Household option, I'm wondering if I qualify too. One question I haven't seen addressed - if I do qualify for Head of Household, do I need any special documentation to prove the separation timeline or that I paid more than half the household expenses? I want to make sure I have everything properly documented in case the IRS has questions later. The last thing I need during this stressful time is an audit because I didn't have the right paperwork to back up my filing status. Also, for those who mentioned the tax calculation tools - do they factor in state taxes too? I'm in California and wondering if the filing status choice affects state taxes differently than federal.

As someone who works in tax preparation, I want to emphasize something that hasn't been fully addressed - the timing of when you actually separated matters a lot for Head of Household eligibility. The IRS requires that you lived apart from your spouse for the LAST SIX MONTHS of the tax year, not just any six months during the year. So if you separated in August like one commenter mentioned, you'd meet this requirement since August through December is more than six months. But if someone separated in July, they'd need to count July through December to make sure it's at least six months. Also, regarding documentation - the IRS doesn't require you to file proof with your return, but you should definitely keep records. I recommend creating a simple timeline document showing: separation date, when kids started living with you primarily, major household expenses you paid each month, and any relevant court documents or separation agreements. One more tip: if you're unsure about your filing status, you can always file an amended return if you discover you qualified for a more beneficial status after filing. It's better to be conservative and potentially amend later than to file incorrectly and face penalties. The Head of Household status can save significant money compared to Married Filing Separately, so it's definitely worth exploring if you think you might qualify!