That's a really good point I hadn't considered. My first LLC does own the building where we operate. Would the self-rental rules apply even after the restructuring since I'd still be the ultimate owner through the second LLC?

Yes, the self-rental rules would still apply even after restructuring. The IRS looks at the ultimate ownership when determining whether these rules kick in. Since you'd still be the ultimate owner of both entities (you own the second LLC which owns the first LLC), any rental payments between them would be subject to scrutiny. The main thing to be aware of is that rental income in this situation is typically treated as non-passive, regardless of your level of participation. This means you can't use these rental losses to offset other passive income. It can significantly impact your tax planning if you were counting on those losses.

What ratio did you end up using between salary and distributions that the IRS was ok with? I've heard everything from 50/50 to 70/30 but never from someone who actually went through an IRS review.

How difficult was it to set up the TOD? Does it offer any advantages over just naming them as regular beneficiaries? I'm trying to keep things as simple as possible while still maximizing the tax benefits.

Setting up the TOD was extremely simple - just a form from my brokerage firm that took maybe 10 minutes to complete. The main advantage is that it's specifically designed for investment accounts and creates a cleaner transfer process. The TOD designation accomplishes essentially the same thing as a regular beneficiary designation, but it can sometimes process more quickly after death and avoids probate. Both methods will give your grandkids the full step up basis benefit. One thing to note - if you have multiple grandchildren and want to specify different percentages or specific assets going to specific grandchildren, the TOD forms typically allow for that level of detail.

Yeah, the UTMA/UGMA accounts are terrible for tax efficiency compared to getting the step up basis. My brother went that route and regretted it. Did you consider a trust at all? I've heard revocable living trusts can provide the step up basis while also giving you more control over when/how the kids get the money.

3 Did you have to fill out any special forms to document the support calculation? I've been trying to figure out if there's an official worksheet or something for this. My son made about $32k from gaming tournaments this year.

18 There's no specific IRS form for the support calculation, but I created a simple spreadsheet showing the total cost of my daughter's support (housing, food, education, medical, clothing, etc.) and what portion I paid versus what was paid from her earnings. I kept receipts for major expenses just in case. For your son's gaming tournaments, make sure you understand if they're considered prizes/awards (reported on Line 8 of Schedule 1) or self-employment income (Schedule C) - they're treated differently for tax purposes. In my daughter's case, her online business income required Schedule C and self-employment tax, which was a big surprise our first year dealing with it.

7 Good question! The kiddie tax only applies to unearned income (investment income, interest, dividends, capital gains) - not to earned income like modeling or acting wages. If your child performer is just earning wages, the kiddie tax doesn't apply at all. However, if they're earning enough that you're investing some of that money and generating significant investment income, then the kiddie tax could come into play. For 2024, the first $1,250 of unearned income is tax-free, the next $1,250 is taxed at the child's rate, and anything above $2,500 in unearned income would be taxed at the parent's rate.

Thanks for the suggestion! I actually tried Free File Fillable Forms but got confused on some of the calculations. Do you think FreeTaxUSA or Cash App Taxes would be more user-friendly for a first-time filer? I'd rather just e-file at this point and be done with it.

FreeTaxUSA is definitely more user-friendly for first-time filers. It walks you through everything step by step with explanations, and the free version covers most basic tax situations including W-2 income and HSA distributions. It also lets you see a preview of all forms being filled out as you go, so you can understand what's happening on your 1040. Cash App Taxes is also good and completely free for federal and state, but some users find the interface less intuitive. Either one would save you a lot of headache compared to filling out forms manually, especially for a first-timer.

Yes! This is super important. The IRS adjusts the tax brackets, standard deduction, and many other figures each year for inflation. For 2024 taxes (filed in 2025), the standard deduction increased to $13,850 for single filers, up from $13,200 in 2023. The tax bracket thresholds increased too.

Did you have to do anything special with your bank to make the Direct Pay work? My US credit card always gets flagged for fraud when I try to use it from overseas for anything government-related.

I did have to call my bank first to put a travel notice on my card and specifically mention I would be making a payment to the IRS. Even with that, my first attempt was declined and I had to verify it wasn't fraud via text message. I recommend trying the payment a few days before you need to submit it, just in case you run into issues. My backup plan was to have my parents make the payment from their account in the US if my card kept getting declined. The IRS doesn't actually require the payment to come from your personal account - it just needs to be properly attributed to your tax ID/SSN.

You're not alone in the confusion! Form 2350 is specifically for US citizens or residents who are abroad and need more time to meet either the bona fide residence test or the physical presence test to qualify for special tax treatments like the Foreign Earned Income Exclusion. Form 4868 only gives you until October 15, while Form 2350 can potentially give you more time (up to a 6-month extension, and sometimes more if needed specifically to meet those residency/presence tests). If you're trying to qualify for those expat benefits, 2350 is usually better.