That's a really good point. I started contracting around April 2021 and didn't form the S Corp until September. So I definitely had some income before the corporation existed. And yes, I'm pretty sure I filed the 2553 - the bookkeeper handled that paperwork and I signed it. I got something back from the IRS confirming the S election but I'd have to dig through my files to find it.

That's good you filed Form 2553 and have confirmation. Your approach should be to file two different types of returns for 2021 then: For January-August 2021, report your contracting income on Schedule C as a sole proprietor. This will be part of your personal 1040. For September-December 2021, file an 1120-S for your S Corporation. You'll need to report any reasonable salary you should have taken (even if you didn't actually run payroll) and any distributions you took from the business.

I use TurboTax Business for my S Corp. Would that work for someone in OP's situation or is this too complex for DIY software?

Thanks for mentioning this! My ex and I are actually on decent terms. Would we both have to file jointly together or could I still do head of household? I've already submitted my return as head of household based on the advice here...would I need to do an amendment if joint was better?

If you file jointly, both of you have to file together on one return. You can't have one person filing jointly and the other filing head of household - it's an all or nothing choice. Since you've already filed as head of household, you could amend if filing jointly would benefit both of you. However, you'd need to run the numbers both ways to see which is better, and your ex would need to agree. Remember that filing jointly also means you're both responsible for the entire tax liability, so there's some risk involved if you don't completely trust each other.

FreeTaxUSA actually handles this pretty well! I used it last year after my divorce. They ask straightforward questions about your marital status as of Dec 31, whether you have dependents, etc. and guide you to the right filing status. Their help sections explain the requirements clearly too.

I would recommend you double check with a professional if your situation is complicated. My sister used FreeTaxUSA after her divorce and it seemed fine but she missed some deductions related to the kids that her accountant caught the following year.

Thanks for this perspective! I definitely won't go back to H&R Block after that experience. Do you have any tips on finding a good CPA who knows how to handle these interstate moves and stock issues? Is there anything specific I should look for or ask when I'm interviewing them?

Look for a CPA who specializes in individual taxes rather than business taxes. Ask specifically about their experience with interstate moves and stock compensation (RSUs, options, etc). A good question is "how would you handle allocation of income between California and Oregon for a mid-year move?" Also ask about their approach to organizing those old 401ks - a good tax professional thinks beyond just this year's return. Check Google reviews, but also ask for referrals from colleagues in similar situations. Since you work for a large company, there might be others who've dealt with the same stock and relocation issues who can recommend someone.

I'll second FreeTaxUSA. It handled my interstate move and stock sales for $15 (for the state return). Federal filing is completely free regardless of complexity. TurboTax would have charged me $120+ for the same forms.

Thanks for confirming! I felt like I was taking a risk trying a less-known software but it worked perfectly. The interface isn't as pretty as TurboTax but it asks all the right questions and handles the complex scenarios at a fraction of the cost.

Thank you for mentioning this! I had no idea there were income thresholds where filing wasn't required. That makes me feel a bit better about the situation. Their mobile home was probably worth about $25,000 and they had no other major assets. Do you know if the IRS can tell us whether they were required to file for those years?

Yes, the IRS can absolutely help determine if they were required to file. When you contact them (either directly or through a service like others mentioned), ask specifically for "wage and income transcripts" for the years in question. These will show all income reported to the IRS under their Social Security numbers. The value of their mobile home actually doesn't factor into the filing requirement - it's based on income, not assets. Given what you've described, it sounds very possible they weren't required to file. The 1041-ES forms you received are likely related to the estate itself, not their personal unfiled returns, which is a separate matter that the IRS can clarify when you speak with them.

This is important! My mom's estate had a CD that generated $700 in interest during probate, and we had to file a 1041 for the estate even though she wasn't required to file personal returns for years before her death.

Thank you for bringing this up! There was a small checking account with maybe $3,000 that earned some interest, and a life insurance policy that paid out about $15,000. Would the life insurance payout count as estate income? We distributed everything pretty quickly after getting the insurance money, probably within 2-3 months.

Do you have any tips for tracking DeFi staking rewards if you were, hypothetically, completely disorganized and didn't track anything all year? Asking for a friend... 😬

If your "friend" hasn't been tracking anything, there are a few options! First, check if the DeFi protocols you're using have any dashboard that shows historical rewards - some newer ones do offer this. For most cases though, you'll need to use a blockchain explorer like Etherscan, Solscan, etc. Look up your wallet address and filter for the contract addresses of the staking protocols you used. You'll need to go through the transactions and identify the rewards. It's tedious but possible. Some tax tools can also retroactively analyze your on-chain activity and categorize staking rewards automatically. Worth the investment if you have significant DeFi activity, especially across multiple chains or protocols.

How much staking would trigger that self-employment consideration? I'm running 3 Ethereum validators and about 10k in Polkadot. Is that enough to be considered a "business"?