This is such a common confusion with tax software! I went through something similar when I was 24 and had some dividend income from stocks my grandfather left me. The software kept trying to apply kiddie tax even though I was clearly independent. What really helped me was understanding that the kiddie tax has very specific requirements - it's not just about age or having investment income. You have to meet ALL the criteria, and since you're supporting yourself and not claimed as a dependent, you definitely don't qualify. One thing I learned is that sometimes the order you answer questions in tax software matters. If you mention investment income early in the process, it might flag you for kiddie tax before it gets all your personal details. Try starting a fresh return if the dependency corrections don't work - sometimes that clears out any logic errors the software made early on. Your $3,400 in investment income will just be taxed at your regular marginal tax rate along with your salary income. Much better than the kiddie tax rates which can be quite high!

I had this exact same issue when I was 22! Tax software can be really buggy with these edge cases. What worked for me was going into the "Federal Taxes" section, then "Wages & Income," and looking specifically for an "Investment Income" or "Other Income" subsection. There's usually a question buried in there that asks something like "Are you subject to kiddie tax?" or "Should this investment income be subject to special rules?" Make sure that's answered correctly based on your actual situation (which is NO for both questions in your case). Also double-check that when you entered your W-2 information, you didn't accidentally mark yourself as a dependent or student somewhere. Sometimes those checkboxes get selected by mistake and the software carries that assumption through the entire return. The good news is your $3,400 inheritance income really should just be added to your regular income and taxed at your normal bracket. At $58k salary, you're probably in the 22% bracket, so that investment income would be taxed at 22% too - way better than kiddie tax rates which can go up to 37%!

Has anyone considered the security and privacy implications of sending tax docs overseas? I'm concerned about data protection laws being different in other countries. How do you ensure client data is secure?

As a veteran-owned firm myself, I completely understand your dilemma. I faced the same decision two years ago and ended up going with a modified approach that's worked well for our business. I kept about 70% of my work with US-based preparers but started outsourcing the most straightforward returns overseas - think single W-2 filers with standard deductions only. This allowed me to stay competitive on pricing for simple returns while maintaining my "veteran-owned, American-staffed" branding for complex work where clients really value that expertise. The key was being transparent with clients about our approach. I tell them upfront that simple returns may be prepared by our international team but reviewed by our US staff, while complex returns, business filings, and tax resolution work stays entirely in-house. Most clients actually appreciate the honesty, and it hasn't hurt our retention. From a financial standpoint, this hybrid model reduced our preparation costs by about 25% overall while allowing us to maintain premium pricing for our specialized services. The Marine background still resonates strongly with clients - they're paying for your expertise and leadership, not just the location of data entry. My advice: start small with maybe 10% of your simplest returns, invest heavily in quality control processes, and use it as a stepping stone rather than an all-or-nothing decision. Your commitment to American workers can still be your differentiator while adapting to market realities.

Depends on if you got any credits or deductions tbh. Clean returns go faster

California is definitely running behind this year - I'm seeing a lot of people waiting 4-6 weeks even after processing. The good news is once it shows "processed" you're basically in the queue and it will come. I'd expect it within the next 2-3 weeks if you did direct deposit. Paper checks take longer obviously. Just keep an eye on your bank account!

Don't forget that when closing your business, you also need to handle any state-level requirements. If you collected sales tax for your Facebook lives or flea market sales, you'll need to file final sales tax returns. Some states also require you to formally dissolve even small businesses. Since you only had an EIN, it's probably minimal, but worth checking your state's requirements to fully close everything out.

One thing that hasn't been mentioned yet - if you're planning to donate any of the unsold crystals to charity instead of selling them, you can potentially deduct the fair market value as a charitable contribution on your personal return (Schedule A). However, you'd still need to remove the inventory from your business books at cost, so you can't double-dip on deductions. Also, make sure to keep detailed records of everything you do with the remaining inventory - whether you sell it, donate it, or convert it to personal use. The IRS may ask for documentation during an audit, and having a clear paper trail of how you disposed of each item will save you headaches later. Take photos of the inventory and keep receipts for any bulk sales or donation acknowledgments from charities. The key is being consistent in your reporting and having documentation to back up whatever method you choose for handling the unsold merchandise.

I'm dealing with almost the exact same situation! Foreign-owned Wyoming LLC, missed the 2022 Form 5472 filing because I had no idea about the registered agent fee being reportable. After reading through all these responses, I'm definitely going with Option 2 - filing both years. The consensus seems pretty clear that ignoring 2022 is way too risky given the $25,000 penalty. What's really helpful from this thread is understanding that I need to document WHEN I discovered the requirement and show I acted quickly once I learned about it. I'm going to start gathering all my emails and research from when I first found out about Form 5472 to include with my reasonable cause statement. Quick question for those who've been through this - how detailed should the reasonable cause letter be? Should I include the specific date I learned about the requirement, or just a general timeline? And do I need to attach any supporting documentation beyond the letter itself? Thanks everyone for sharing your experiences. This thread has been way more helpful than the generic advice I was getting from other sources!

I've been through this exact scenario with my foreign-owned LLC and can confirm that filing both years is absolutely the right call. The $25,000 penalty per missed form is not something the IRS takes lightly, and enforcement has definitely ramped up in recent years. A few practical tips from my experience: 1. When preparing your reasonable cause statement, focus on the fact that you weren't aware of the requirement rather than trying to argue the registered agent fee shouldn't be reportable (it definitely is). 2. Include specific dates - when you formed the LLC, when you first learned about Form 5472, when you started taking corrective action. Documentation is key. 3. Consider having a tax professional review your forms before filing, especially for the 2022 late filing. The penalty is steep enough that it's worth the extra cost to get it right. 4. File the 2022 form as soon as possible. The longer you wait, the harder it becomes to argue reasonable cause. The good news is that many people have successfully avoided penalties with proper documentation and a well-crafted reasonable cause statement. Don't let anyone convince you to just ignore the missed year - that's playing with fire given the penalty amount.