Just wondering - should you also attach an explanation or statement to your tax return when you have this situation? I have both 1042-S and 1099-DIV forms and am worried the IRS might think I'm not reporting all my income if they see the 1042-S but don't immediately connect it to the dividend income I'm reporting.

I went through this exact same situation last year and want to share what I learned after consulting with a tax professional. The key issue is that Morgan Stanley likely had you classified as a non-resident alien at some point during the year, which triggered the 1042-S filing even though you were actually a full-year resident. Here's the step-by-step approach that worked for me: 1. **Compare the forms carefully** - Look at the dates and amounts on both the 1042-S and 1099-DIV. Often they're reporting different dividend payments or different portions of the same payments. 2. **Report dividend income once** - Add up all your dividend income from both forms (avoiding double-counting) and report the total on Schedule B as regular dividend income. 3. **Claim all withholding** - The $315 federal tax withheld on your 1042-S should be claimed as additional federal tax payments, separate from any withholding shown on your 1099-DIV. 4. **Contact Morgan Stanley** - Call them to update your residency status in their system so you don't keep getting 1042-S forms unnecessarily in future years. The IRS matching system will see both forms were issued to you, but as long as you report all income and claim all withholding correctly, there shouldn't be any issues. I had no problems with my return being processed, and no follow-up questions from the IRS. Good luck with your filing!

Does the person receiving the house have to worry about property tax reassessment? I know when houses change hands the county often reassesses and raises the property taxes. Would they base it on the $100 sale price or the actual value?

Just wanted to add another important consideration that hasn't been mentioned yet - the impact on your friend's mortgage eligibility if they ever want to refinance or take out a home equity loan later. When lenders do their due diligence, they'll see that your friend "purchased" a $500k house for $100, which creates a massive red flag in their underwriting process. Even if you both properly documented this as a gift transaction with the IRS, mortgage lenders will be extremely suspicious of this transaction history. Your friend might have trouble getting competitive rates or could be denied altogether because lenders will assume there are undisclosed liens, side agreements, or other complications. They may require extensive additional documentation to prove the transaction was legitimate, which could be costly and time-consuming. If you're serious about helping friends buy houses, you might want to consider alternative approaches like providing them with a large gift for the down payment (properly documented) so they can purchase at fair market value, or exploring legitimate seller financing arrangements that don't raise as many red flags with both the IRS and future lenders.

Don't overlook the potential of utilizing a Backdoor Roth if increasing your W2 wages pushes you beyond the Roth IRA income limits. Anyone can contribute to a Traditional IRA regardless of income, and then convert it to a Roth IRA.

As a fellow S-corp owner who went through this exact optimization process, I'd strongly recommend exploring the defined benefit/cash balance plan route that others have mentioned. You're already doing great with the core strategies, but those additional plans can really move the needle. One thing I learned the hard way: don't just focus on maximizing contributions without considering your long-term cash flow needs. When I first set up my defined benefit plan, I got excited about the huge tax deferrals but didn't fully account for the commitment aspect. These plans require consistent funding for several years, and the IRS gets unhappy if you try to terminate early without good reason. Also, since you mentioned FIRE goals, consider the timing of when you'll need access to these funds. The defined benefit money is generally locked up until 59.5 (with some exceptions), so make sure you have enough in taxable accounts to bridge any early retirement gap. Have you run projections on what your tax situation will look like in retirement? Sometimes it makes sense to balance pre-tax deferrals with some Roth strategies, especially if you expect to be in a similar or higher tax bracket later.

As someone who's dealt with this exact scenario multiple times, I can confirm that the wash sale situation with RSUs is incredibly frustrating. Here's what I've learned from experience: The key insight is that the sell-to-cover transaction happens automatically and you typically can't control which specific shares are used. Most brokers use FIFO, so if you have shares with adjusted cost basis, there's a good chance some of them were used in the sell-to-cover. What I do now is contact my broker immediately after each vesting event to get a detailed breakdown of: 1. Which shares were actually sold for tax withholding 2. The specific cost basis of those shares 3. Which of my remaining shares have wash sale adjustments This information isn't always obvious in the standard account statements, but most brokers can provide it if you ask specifically. One thing that really helped was setting up automatic alerts 35 days before each vesting date to remind myself not to sell any company stock at a loss. It's not perfect given trading window restrictions, but it's prevented most of the wash sale headaches. Also worth noting - if you're in a high tax bracket, sometimes it's actually better to just hold the RSUs long-term rather than trying to optimize around these wash sale rules. The long-term capital gains treatment can be more valuable than the short-term tax loss harvesting, especially when you factor in the time and complexity involved.

I've been through this exact situation and found that the most practical approach is to work backwards from your Form 1099-B to understand what actually happened. Your broker is required to report the wash sale adjustments, and this will show you exactly which shares had adjusted basis and whether any of those were used in the sell-to-cover transaction. In my experience with similar RSU programs, the 240 shares sold for taxes are typically processed as a separate transaction from your 360 remaining shares, but the wash sale adjustment applies to specific tax lots based on FIFO ordering (unless you've changed your default method). Here's what I'd recommend: Contact your broker's tax department and ask for a "wash sale detail report" for the transactions around your Sep 28 vesting. This will show you exactly which of your remaining shares carry the $8/share cost basis adjustment. One key thing I learned - you don't necessarily need to sell all 360 shares to claim the loss. You only need to sell the specific 250 shares (or whatever subset) that have the adjusted basis. But identifying which ones those are requires getting the detailed lot-level information from your broker. Given the complexity and your trading window restrictions, you might also want to consider whether the tax benefit is worth the administrative headache. Sometimes simplifying your approach (like holding RSUs long-term or avoiding loss harvesting near vesting dates) provides better peace of mind even if it's not perfectly tax-optimized.

6 What about payment processing? I'm starting a similar business and trying to decide between Square, PayPal, and traditional merchant services through my bank. Any recommendations for handling client payments for tax prep services?

As a new tax preparer myself, I've found that Wells Banco Business Choice Checking has worked well for my startup. No monthly fee if you maintain a $500 minimum balance, and they offer 100 free transactions per month which should cover your expected volume easily. One thing I'd add to the great advice already given - consider setting up automatic transfers to move a percentage of each payment into that separate tax savings account. I set mine to transfer 30% of every deposit, and it's been a lifesaver for quarterly payments. Also, don't overlook the importance of having a good relationship with your banker. When tax season gets busy and you need quick answers about deposits or account issues, having someone you can call directly makes a huge difference. Good luck with your new business!