Has anyone actually calculated whether it's better to just sell RSUs immediately upon vesting rather than hold them? My financial advisor keeps telling me to diversify away from my company stock because it creates risk concentration.

I actually just went through this exact scenario a few months ago! One thing that wasn't mentioned yet is the timing consideration for year-end tax planning. If you're already facing a big tax bill this year like you mentioned, donating the RSUs before December 31st could help offset some of that income with the charitable deduction. But here's what caught me off guard - make sure your brokerage can actually transfer the shares to your chosen charity efficiently. Some brokerages make it really cumbersome and it can take weeks to process. I almost missed my year-end deadline because of transfer delays. Also, if you're planning to donate regularly, consider opening a donor-advised fund account. You can dump all your RSUs there at once, get the immediate tax deduction, then distribute to charities over time. This gives you more flexibility than direct donations to individual charities.

Has anyone mentioned the "ownership test" exception? I think there's something where if one spouse meets requirements and the other doesn't, you might still qualify. I know OP isn't talking about spouses, but there might be a similar provision for family members? Not sure tho.

One thing that might help your situation is the "step-up in basis" rule if your mom passes away while you still own the property together. I know that's not something anyone wants to think about, but it's important to understand all your options given your difficult financial situation. Also, have you considered doing a 1031 exchange? If you're buying another property immediately, you might be able to defer the capital gains entirely. The new property would need to be of equal or greater value and you'd have strict timing requirements (45 days to identify replacement property, 180 days to close), but it could completely eliminate your current tax burden. Given that you mentioned you're planning to buy a smaller place outright, this might not work since you'd need to reinvest all the proceeds, but it's worth exploring with a tax professional. Sometimes restructuring the timing of purchases can save significant tax dollars. The unemployment and health issues you mentioned should definitely qualify for the unforeseen circumstances exception. Make sure you document everything - medical records, unemployment benefits, job loss documentation, etc. The IRS is generally sympathetic to these situations when properly documented.

Has anyone used the "Schedule SE" worksheet in the tax software? I found it super helpful because it automatically calculates how much self-employment tax you owe taking into account your W-2 income. Saved me a ton of math!

This is exactly the kind of situation I went through last year! The key thing to remember is that self-employment tax is calculated on your net earnings from self-employment (after business expenses), and the Social Security portion does have that annual wage cap. For 2025, the Social Security wage base is $168,600. Since you're making $127,000 from your W-2 job, you have about $41,600 of "room" left before hitting the cap. This means only the first $41,600 of your self-employment earnings would be subject to the 12.4% Social Security portion of SE tax. However, ALL of your self-employment income will be subject to the 2.9% Medicare portion since there's no cap on Medicare taxes. Don't forget that you can deduct legitimate business expenses (computer equipment, software subscriptions, portion of home office, etc.) before calculating your SE tax. Also, you'll be able to deduct half of your self-employment tax as an adjustment to income, which helps reduce your overall tax burden. I'd definitely recommend making quarterly estimated payments if you haven't already - the underpayment penalties can be painful!

This whole situation is exactly why the tax code needs to be simplified. It's ridiculous that getting married can actually increase your tax burden. I've been using a really thorough spreadsheet to project my taxes each year since getting married in 2021. I can share it if anyone wants it - it lets you compare Single vs MFJ vs MFS side by side so you can see the differences. The most important thing I learned is that withholding and filing status are completely separate things. You can have your employer withhold at the higher single rate even when you're married by completing your W4 correctly. This has saved me from owing at tax time.

I completely understand your frustration - this is such a common shock for newlyweds! The marriage penalty is real and hits hardest when both spouses earn similar incomes in certain brackets. Here's what's happening: When you were single, your income got its own trip through the tax brackets. Now married, even filing separately, the tax brackets for MFS are exactly half of the MFJ brackets - which often works out worse than the single brackets you used to enjoy. It's like the tax code is designed assuming married couples will always file jointly. A few practical things that might help: - Since you keep finances completely separate anyway, definitely run the numbers for both MFJ and MFS. Sometimes MFJ comes out better overall even if it feels wrong given your separate financial lives - The Child Tax Credit phases out at different income levels for MFS vs MFJ, which could be affecting your calculations - Consider having additional tax withheld from both your paychecks going forward (line 4c on the W4) to avoid this surprise next year The tax software is correct that you can't file as Single - your marital status on Dec 31st determines your filing options. But don't give up! Sometimes there are deductions or credits available to married filers that can help offset the penalty. Have you tried itemizing vs taking the standard deduction?

Quick clarification question - I'm a US citizen working in Japan and visit home for about 3 weeks every Christmas. For Form 2555, do I need to prorate my foreign housing exclusion for those days I'm in the US, or can I claim the full amount?

Great question! As someone who's been helping expats with Form 2555 for years, I can confirm that you should use 365 days as your qualifying period. Since you've been a bona fide resident of Spain since 2012, your 22-day visit to the US for your mom's surgery doesn't disrupt that status. The key factors the IRS looks at for bona fide residence are: 1) Your permanent home is in Spain, 2) You have no definite plans to return permanently to the US, and 3) Your temporary visit had a clear purpose (family emergency) with intent to return to Spain. You're correctly reporting those US days in Part II Question 14 - that's just for documentation. But for your qualifying period calculation, you remain a bona fide resident for all 365 days of 2024. This means you can exclude the full amount of your foreign earned income (up to the annual limit), regardless of those 22 days spent in the US. The IRS Publication 54 specifically addresses this scenario. After 12+ years of residence in Spain, brief visits for family emergencies absolutely don't change your bona fide residence status. You're good to go with 365 days!