AZDT Help & FAQs
FAQs, but make them actually helpful.
Clear answers to your real-life questions, written like a person (not a policy manual) for when you're stuck or just unsure.
Filing Basics & Deadlines
The essentials you actually need to know to file right: when, how, and what to include so you don’t miss a beat (or a deadline).
For most individuals the deadline is April 15. You need to either e-file or have your return postmarked by that date to avoid late-filing penalties. If the 15th lands on a weekend or holiday, it bumps to the next business day.
Need more time? We can file an extension (Form 4868) that pushes your filing deadline to October 15. One thing people miss: an extension gives you more time to file, not more time to pay. If you owe, you still need to pay at least 90% of the balance by April 15 to avoid late-payment penalties and interest, so we'll estimate what you owe and get a payment in.
State deadlines mostly follow the federal date but not always, so we'll confirm yours. And if you're serving in a combat zone or live in a federally declared disaster area, special extended deadlines may apply.
You take whichever one is bigger, and we run it both ways for you. You itemize only when your deductible expenses (mortgage interest, state and local taxes, charitable gifts, big medical bills) add up to more than the standard deduction.
For 2025 the standard deduction is $15,750 for single filers, $23,625 for head of household, and $31,500 for married filing jointly. Folks 65 or older get an extra amount on top, and for 2025 through 2028 there's also a new $6,000 senior deduction (per qualifying spouse 65+) that phases out at higher incomes.
Because those standard amounts are fairly high, most clients come out ahead taking the standard deduction. The usual exceptions are homeowners with a sizable mortgage and people in high-tax states, especially now that the state and local tax (SALT) cap is up to $40,000 for 2025. Send us your numbers and we'll tell you which way wins.
Once we e-file, the IRS sends back an electronic acknowledgment, either “accepted” or “rejected,” usually within a day or two. We'll let you know as soon as we see “accepted,” which is your confirmation it's in.
You can also verify it yourself anytime. Set up an IRS Online Account at irs.gov to see your filing status and transcripts, and use the “Where's My Refund?” tool at irs.gov/refunds (or the IRS2Go app) to track a refund. For states, check your state tax agency's site.
Yes, here's the short version. Gather what applies to you:
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Personal: SSNs or ITINs for you and your dependents, and last year's return for reference.
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Income: W-2s, 1099s (NEC, INT, DIV, etc.), investment and rental income, and any other income statements (unemployment, Social Security).
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Deductions & credits: mortgage interest (1098), property tax statements, charitable and medical receipts, education expenses (1098-T), and childcare provider info.
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Health insurance: Form 1095-A (Marketplace) or 1095-B/C.
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Banking: account and routing numbers for direct deposit or payment.
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Other: retirement contributions (IRA, 401(k)), records of any investments you sold, and documentation for credits you plan to claim.
Complex situation or a big life change this year? Loop us in early, that's usually where the missed items hide.
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Easiest path: compare this year to last year. If you had a W-2, a 1099, a mortgage 1098, or a brokerage statement last year, you almost certainly have the same forms this year, send them all. Then add anything new from a life change (new job, new baby, bought or sold a home, started a side business).
When in doubt, upload it. It's far easier for us to set aside a document we don't need than to chase one that's missing.
Services, Process & Portal
Everything you need to know about working With AZDT.
Great question, and the honest answer is that it depends on the complexity of your return(s). We'll give you a clear quote up front so there are no surprises.
We can absolutely handle bookkeeping, payroll, and taxes under one roof, that's a lot of what we do, and keeping it together usually makes your tax filing cleaner and faster.
Grab a slot on our Calendly, that's the fastest way to get on the calendar.
Sorry for the hassle, that usually points to an expired or already-used invite link, or a browser hiccup. First try opening the link in a different browser or an incognito/private window, and clear your cache. If it still won't load, the link may have expired and we'll send you a fresh one.
Yes. Clicking “finished” just signals to us that you think you're done, it doesn't lock you out. If you find another document, you can still upload it. Just send us a quick note so we know to grab the new file before we file your return.
Totally fair to ask, especially when you're planning around a refund. We work returns in the order documents are completed, and we'll give you our best estimate of timing.
Please don't share your login, for security and so we can tell who uploaded what. The better move is a separate login for your spouse so you each have your own secure access.
Same starting point, the portal handles both. Upload your business documents there as well. If you want a clean handoff, put together a simple financial statement (a cover sheet summarizing revenue, expenses, and net income) for the business, save it as a PDF, and upload it alongside your other files.
We can help dig into this. QBO errors when adding line items to a draft invoice are usually one of a few things: a product/service item that's inactive or missing required fields, a price/quantity field that's blank, or a temporary sync glitch. Try saving the invoice as a draft and reopening it, and confirm the product you're adding is active under Sales > Products and Services.
Business Entities (LLC & S-Corp)
Are you a business entity or looking to become one? Start here.
An LLC (Limited Liability Company) is a legal business structure that combines the liability protection of a corporation with the flexibility and pass-through taxation of a partnership or sole proprietorship.
The big difference is liability. With a sole proprietorship or partnership, there's no legal line between you and the business, your personal assets are exposed. As an LLC member, you generally have limited personal liability for the business's debts and lawsuits.
Limited liability protection, flexible management, pass-through taxation (profits and losses flow to your personal return), and relatively easy formation compared to a corporation.
Generally: choose a business name, file articles of organization with the state, and put together an operating agreement. Depending on your state and industry you may also need licenses or permits.
It's the document that spells out how the LLC is run, member roles, ownership percentages, how profits are split, and what happens if a member leaves. It's not legally required in every state, but it's highly recommended, especially with more than one member.
Yes. A single-member LLC gives a sole proprietor liability protection and flexibility. By default the IRS treats it as a “disregarded entity,” so its income flows onto your personal return.
By default, LLCs are pass-through entities, profits and losses are reported on the members' personal returns, and there's no separate entity-level federal income tax. If it's advantageous, an LLC can elect to be taxed as an S-corp or C-corp instead.
Your personal assets (home, personal bank accounts) are generally shielded from business debts and lawsuits, your exposure is limited to what you've invested in the business. That protection can be lost if you mix personal and business finances, so keep a separate business bank account and clean books.
Yes, an LLC can have non-U.S. members and foreign ownership, but it can trigger extra tax and reporting requirements, so let us know if that's your situation.
Possibly, depending on your industry and location. Forming the LLC at the state level is separate from any local, state, or federal licenses your specific business may need. Check with your city/county and any regulatory agency for your field.
Yes. An LLC can convert to a corporation or another structure down the road, it just involves a formal filing process.
In many states, yes, LLCs file an annual (or biennial) report and pay a fee to stay in good standing. Miss it and the state can administratively dissolve the LLC.
Usually according to each member's ownership percentage, as laid out in the operating agreement. Members can agree to a different split, but it needs to be documented and respect the tax rules.
Yes, by amending the operating agreement and, if your state requires it, notifying the state.
Keep clean financial records, keep business and personal money separate, file your annual report, and stay current on federal and state taxes. If you have meetings or major decisions, document them.
Yes, either voluntarily by the members or involuntarily by the state for non-compliance (like skipping annual reports or fees).
Yes. An LLC can hire employees and is then responsible for payroll taxes and complying with employment laws.
Generally yes, but it often requires the other members' approval and an update to the operating agreement. Check what your agreement says.
It depends on your goals, size, and risk. For most small business owners who want liability protection without heavy formality, it's a strong fit, but let's talk through your specifics before you file.
It varies by state, expect a formation filing fee, annual report fees, and possibly professional fees for setup and ongoing compliance.
Maybe, it comes down to profit. An S-corp election can save self-employment tax, but only once your business nets enough to make it worth the added cost and rules.
Here's how it works: as an S-corp, you pay yourself a reasonable salary (which is subject to payroll/employment taxes), and any remaining profit can come out as distributions that are not hit with the 15.3% self-employment tax. That spread is the savings.
The catches: the IRS requires that salary to be genuinely reasonable for the work you do, paying yourself $0 or a token amount to dodge payroll tax is a classic audit trigger. You'll also have payroll to run, a separate business return (1120-S) to file, and added admin cost.
The two biggest levers for most small business owners are entity choice and clean bookkeeping:
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Entity structure: once you're profitable enough, an LLC with an S-corp election can cut self-employment tax (see the S-corp answer above).
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A real accounting system: a proper bookkeeping system (we love QuickBooks Online) makes sure you actually capture every legitimate deduction, mileage, home office, equipment, software, subcontractors, the works. Missed expenses are missed tax savings.
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Retirement contributions: a SEP-IRA, SIMPLE IRA, or Solo 401(k) can shelter a meaningful chunk of profit (see the Retirement section).
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Timing and estimates: paying quarterly estimates on time avoids penalties, and timing big purchases can shift deductions into the year you need them.
The legal, sustainable savings come from structure and good records, not gimmicks. Let's build a plan around your actual numbers.
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That's your state's annual report (or similar compliance filing) to keep the LLC in good standing, separate from your tax return. Don't ignore it; missing it can lead to penalties or the state dissolving your LLC.
Yes, please do. Seeing the partner/operating agreement and formation documents helps us set up the books and the tax return correctly (especially how profits, losses, and distributions are split). Also send any EIN confirmation, S-corp election (if filed), and prior returns.
We need a little more context on where this question is coming up (a bank form, a state registration, the tax software?), but the general principle is this: your business is taxed where it operates and where you generate income, not simply where the bank account is. If you've actually moved the business to Colorado, you likely need to register/operate it in Colorado and may have filing obligations there.
Life Events
Marriage, new baby or status change? We're sure you've got questions.
Your withholding is controlled by the Form W-4 you give your employer, so getting it right is about filling out the W-4 to match your real situation. The easiest, most accurate way is the IRS Tax Withholding Estimator at irs.gov, plug in your pay, your spouse's pay, and any other income, and it tells you exactly what to put on your W-4.
When to revisit it: after marriage or divorce, a new baby, a second job, a big raise, or if you got a surprise bill or a giant refund last year (a huge refund just means you over-withheld and gave the IRS an interest-free loan). Send us last year's return and we'll help you dial it in so you're not over- or under-paying.
Since you've already told the Social Security Administration about your name change, the key is that the name on your tax return must match the name now on file with the SSA, otherwise the IRS can reject or delay your return. So we'll file under your updated name. Just make sure the SSA change is fully processed before we file, and let us know your new mailing address so everything's current.
No, unfortunately. Your filing status is determined by your marital status on the last day of the year (December 31). If you're not legally married by then, you can't file jointly for that year, you'd each file as single (or head of household if one of you qualifies). Once you're married as of December 31, you can file jointly for that year and going forward.
For the large majority of married couples, filing jointly (MFJ) comes out better, it generally means lower rates, a higher standard deduction, and access to credits that are reduced or off-limits when filing separately (like several education and childcare credits).
Filing separately (MFS) only tends to win in specific situations, for example, when one spouse has very high medical expenses (the deduction floor is based on that spouse's lower income), when you want to keep finances/liability separate, or when separate filing helps with things like income-driven student loan payments. We'll run it both ways and file whichever produces the lower combined tax.
We don't necessarily need a formal year-end statement, but to claim the Child and Dependent Care Credit we do need the provider's information: their name, address, and tax ID (EIN or SSN), plus the total amount you paid for care during the year. A statement from the daycare is the easy way to get all that, but if they didn't issue one, you can simply report the details and the amount to us (just keep your payment records in case the IRS asks). We'll request a W-10 from the provider if we need their tax ID confirmed.
Retirement & Savings
Everything you need to know about retirement & savings for tax time.
Absolutely, this is one of the best tax levers you have, because the right account both builds your nest egg and lowers your current tax bill. The main options:
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Traditional IRA / 401(k): contributions may be deductible (or pre-tax), lowering taxable income now; you pay tax on withdrawals in retirement.
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Roth IRA / Roth 401(k): no deduction now, but qualified withdrawals are tax-free later, great if you expect higher rates down the road.
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Self-employed plans: a SEP-IRA, SIMPLE IRA, or Solo 401(k) lets business owners shelter much more than a regular IRA.
The right mix depends on your income, whether you're a business owner, and your expectations about future tax rates. Let's look at your picture and pick the most tax-efficient combination.
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A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a retirement plan built for small businesses, self-employed individuals, owners, and any business with 100 or fewer employees that doesn't already have another plan. Contributions are tax-deferred (they lower taxable income now; you pay tax on withdrawals later).
Employee contribution limits (2025): you can defer up to $16,500, plus a $3,500 catch-up if you're 50 or older. (Small employers with 25 or fewer employees, and those age 60-63, may have somewhat higher limits.)
Employer contributions, the employer must either:
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Match employee contributions dollar-for-dollar up to 3% of compensation (can be reduced to as low as 1% in 2 of any 5 years), or
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Contribute a flat 2% of each eligible employee's compensation, whether or not they contribute.
Eligibility: generally employees who earned at least $5,000 from you in any 2 prior years and are expected to earn $5,000 this year (you can loosen these rules). Withdrawals before age 59½ face a 10% penalty, or 25% if taken within the first 2 years of participating, and you can't take a loan from a SIMPLE IRA.
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Payments, IRS Notices & Audits
No need to panic, we've got all your answers right here.
Don't panic, and don't ignore it. First, send it to us so we can review it, IRS notices are sometimes wrong or based on incomplete info, and we may be able to dispute it or reduce what's owed. Open everything: note the tax year, the amount, and any response deadline.
If the balance is legitimate, the cleanest move is to pay it (or set up a payment plan, see below) before penalties and interest grow. If a penalty is involved, we can often request abatement (more on that next).
Best course of action: pay the outstanding balance as soon as you can (and add it to your spreadsheet so we track it). Then we send the IRS a letter requesting abatement of the penalty, on the grounds that you've now retained a CPA who has your back going forward. We've gotten penalty abatements for a lot of clients using this process, so don't assume the penalty is set in stone.
You can, but you usually don't even need to call, you can set up a payment plan online at irs.gov/OPA, and it takes just a few minutes with instant approval in most cases. The options:
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Short-term plan: up to 180 extra days to pay in full (for balances under $100K).
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Long-term installment agreement: monthly payments, available if you owe $50,000 or less in combined tax, penalties, and interest and you've filed all required returns.
There's a setup fee ($31 for autopay/direct debit, more for non-automated), and interest keeps accruing until it's paid off, so pay it down as fast as you reasonably can. Want us to handle the setup or look at whether you qualify for penalty relief too? Just say the word.
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The fastest way to confirm is your IRS Online Account at irs.gov, it shows payments posted and any balance due. We can also check based on how the payment was scheduled. If it was set up as a direct debit with your return, look for the withdrawal on your bank statement around the scheduled date.
If it turns out the payment never went through, no problem, you can pay directly via IRS Direct Pay (bank account) or by debit/credit card at irs.gov/payments, or mail a check (see below). Send us the details and we'll confirm status and the cleanest way to get it paid.
Mail your check with a Form 1040-V payment voucher, and the correct address depends on your state (the IRS uses regional lockbox addresses). Make the check payable to “United States Treasury,” and write your SSN, the tax year, and the form number (e.g., “2025 Form 1040”) in the memo line.
We'll give you the exact mailing address for your state, or honestly, paying online at irs.gov/payments via Direct Pay is faster, free from a bank account, and gives you instant confirmation, so we usually steer clients there instead of mailing a check.
Yep, that works, mail a check with a Form 1040-V voucher (see the address guidance above), or even easier, pay online at irs.gov/payments using IRS Direct Pay straight from your bank account. Online is faster and you get instant confirmation. Either way, make sure it's in by the deadline to avoid penalties.
If you scheduled a direct debit (electronic funds withdrawal) with your e-filed return, the IRS withdraws the funds on the payment date you specified, as long as the return has been accepted. If that date falls on a weekend or holiday, it usually comes out the next business day.
Don't see it come out? Give it at least a couple of business days past the scheduled date, then check your IRS Online Account. If it still hasn't posted, contact us and we'll help track it down so you don't end up with a missed-payment notice.
First, breathe, most “audits” are not someone showing up at your door. The large majority are correspondence audits: the IRS mails you a letter asking for documentation on a specific item (say, a deduction or some income). You respond by mail with the records that back it up.
If you're a client and you get audited, send us the notice right away. We'll help you understand exactly what's being questioned, pull together the documentation, and respond on your behalf. Good records (the receipts and logs we're always nudging you to keep) are what make an audit a non-event.
This is the heart of what we do, and the right strategy depends on your situation. The legitimate levers usually include:
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Choosing the right business entity (e.g., an S-corp election once you're profitable enough).
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Maxing out tax-advantaged accounts, retirement plans (IRA, SEP, SIMPLE, Solo 401(k)), HSAs, and 529s.
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Capturing every legitimate business deduction with clean books.
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Timing income and deductions, and harvesting investment losses, around your tax brackets.
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Claiming the credits you qualify for (child, dependent care, education, energy where still available).
Let's build a proactive plan tailored to your numbers, the real savings come from planning ahead, not scrambling at filing time.
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Homeownership & Real Estate
Everything you need to know about homeownership & real estate investments.
First, the two 1098s are normal, your loan was transferred mid-year, so each servicer reports the interest it collected. We just combine them; you don't lose anything.
On the deductions, here's what a home purchase typically gives you (all on Schedule A, only if you itemize):
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Mortgage interest, the big one, reported on your 1098(s).
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Mortgage points: points you paid to get the loan on your main home are generally deductible in the year of purchase (if they meet the IRS conditions and show as “points” on your settlement statement).
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Property taxes: deductible as part of the state and local tax (SALT) deduction. Good news for 2025, the SALT cap jumped from $10,000 to $40,000 (phasing down above $500K income), so far more of your property and state taxes may now be deductible.
Most other closing costs (appraisal, title fees, recording, etc.) are NOT deductible, but keep your closing statement, those costs add to your home's cost basis and reduce your taxable gain when you eventually sell.
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Most home improvements aren't deductible in the year you make them, but they're not useless, they add to your home's cost basis, which lowers your taxable gain when you sell. So keep every receipt; we'll log them.
Two exceptions worth checking: (1) energy-efficient improvements may qualify for residential energy credits, though note some of these were curtailed under recent law, so we'll confirm what's still available for your year, and (2) improvements for a home office or rental portion can be depreciated. Send the details and we'll sort which bucket each one falls in.
The homestead exemption is a property tax break handled at the county/state level, not on your federal return, so the deadline and process depend on where you live (many places have an annual application deadline early in the year). If you've missed this year's window, you generally apply for the next tax year, and it's absolutely worth doing, it can lower your property tax bill going forward.
Quite possibly, yes. Many cities and counties impose a lodging or occupancy tax (“hotel tax”) on short-term rentals to fund local tourism and services, and hosts are often required to collect it from guests and remit it. Here's how to nail it down:
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Research your local rules: check your city and county tax authority's website (or call them) to see if short-term rentals owe occupancy tax.
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Understand the requirements: you may need to register or get a permit, know the rate, and know how often to file and remit.
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Check what Airbnb collects for you: in many jurisdictions Airbnb automatically collects and remits occupancy tax on your behalf, so confirm what's already handled before you double-collect.
Getting this wrong can mean penalties, so it's worth confirming. We can help you figure out your obligations and keep the recordkeeping clean.
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Yes, costs to set up and furnish a property for short-term rental are generally legitimate rental business expenses, and your instinct to keep a clean, dedicated log tied to the Airbnb setup and hosting is exactly right. A few pointers:
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Track everything tied to the rental: furniture, linens, supplies, setup costs, and ongoing hosting expenses.
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Bigger-ticket furnishings may need to be depreciated (or expensed under current rules) rather than written off all at once, we'll determine the right treatment.
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If you also use the place personally, we have to allocate expenses between personal and rental use, so the log matters even more.
Keep the receipts and the log organized by property, and we'll make sure each item is deducted correctly.
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Investments & Capital Gains
Everything you need to know about your investments & capital gains.
It comes down to how long you held the investment before selling:
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Short-term (held one year or less): taxed as ordinary income, at your regular tax bracket.
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Long-term (held more than one year): taxed at the preferential capital gains rates of 0%, 15%, or 20%, depending on your taxable income. Many clients fall in the 15% band; the 0% rate applies at lower incomes (roughly under ~$48K taxable single / ~$97K joint for 2025), and 20% only at high incomes.
Qualified dividends get the same favorable long-term rates; ordinary dividends and interest are taxed as ordinary income. High earners may also owe an extra 3.8% Net Investment Income Tax. The simple planning takeaway: holding more than a year before selling usually means a lower tax rate.
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Often you owe nothing, thanks to the Section 121 exclusion. If the home was your primary residence and you owned and lived in it at least 2 of the last 5 years, you can exclude up to $250,000 of gain ($500,000 if married filing jointly).
When do we actually report it on Form 8949 and Schedule D? In any of these cases:
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Your gain is larger than the exclusion (the excess is taxable).
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You received a Form 1099-S from the closing/title company (then we report it even if it's fully excluded, to show the IRS why nothing is owed).
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You don't qualify for the full exclusion, or you choose to report it.
Save your closing statements from both the purchase and the sale, plus receipts for major improvements, those improvements raise your cost basis and shrink the taxable gain. Send them over and we'll handle the reporting.
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It depends on the type, and the reporting can get nuanced, so send us your statements (and any Form 3921/3922) and we'll handle it. The basics:
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Non-qualified stock options (NSOs): when you exercise, the difference between the market price and your strike price is taxed as ordinary income (usually shows up on your W-2). When you later sell the shares, any further gain/loss is capital.
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Incentive stock options (ISOs): no regular tax at exercise, but the bargain element can trigger Alternative Minimum Tax (AMT). If you hold the shares long enough (1 year from exercise and 2 years from grant), the eventual sale gets long-term capital gains treatment.
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RSUs (technically grants, not options): see the next question.
The key is tracking your cost basis correctly, brokers often report it incorrectly for equity comp, which leads to double taxation if we don't catch it.
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Great question, and the trap with RSUs is under-withholding. Here's what's going on:
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When RSUs vest, that value is taxed as ordinary income, and your employer typically withholds federal tax at the flat supplemental rate of 22% (37% on amounts over $1M).
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If your actual tax bracket is higher than 22% (say 32% or 35%), that 22% wasn't enough, so you're already short on the vesting itself, before we even get to the sale.
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Then you sold short-term (held one year or less), so any gain between vesting and sale is taxed at your ordinary rate too, with no withholding taken out on that piece.
So whether you need to make a payment now comes down to whether your total withholding for the year will cover your total tax. If the RSU income pushed you into under-withholding, making an estimated payment now avoids an underpayment penalty rather than waiting for the April calculation. Send us the vesting and sale details and your YTD withholding and we'll tell you whether to send a payment and how much.
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If the stock became truly worthless (the company is fully wound down and the shares have no value), you can claim a capital loss as if you sold it for $0 on the last day of the year it became worthless. Practically, if your broker still shows the position or you can sell it for pennies, selling to close the position creates a clean, documented loss.
That capital loss first offsets your capital gains. If losses exceed gains, you can deduct up to $3,000 of net capital loss against ordinary income per year, and carry the rest forward to future years. Keep documentation showing the security became worthless. Send us the details and we'll make sure the loss is captured.
Deductions & Credits
Everything you need to know about deductions and credits.
On the federal level, no, 529 contributions are never federally deductible. Some states, however, give a state income tax deduction or credit for contributions to their plan, so check with your 529 plan or your state.
The real tax benefit of a 529 is on the back end: the earnings grow tax-free and come out tax-free when used for qualified education expenses (tuition, fees, books, and room and board). It's the growth that's tax-advantaged, not the contribution.
Not quite yet, with one path that changes the answer. If you've formed an LLC for the activity, those costs can be treated as “startup expenses” and recovered once the business is up and running. If you haven't, I'd wait until you have some income. A Schedule C that shows only expenses and zero income year after year is a red flag to the IRS (it looks like a hobby, not a business). Get some revenue on the board first, then we deduct the related costs.
It depends on whether it's care or enrichment:
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Day camps (including sport-specific camps like a soccer or swim camp) CAN count toward the Child and Dependent Care Credit, but only if you used them to provide care while you (and your spouse) were working. The activity focus doesn't disqualify a day camp.
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Regular extracurriculars, weekly swim lessons, a soccer league, music or dance classes, generally do NOT count. They're treated as enrichment, not care. Overnight camp never counts.
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Tuition for K-12 isn't a childcare expense either (though before-/after-school care can qualify).
For 2025 the credit covers up to $3,000 of qualifying care expenses for one child, or $6,000 for two or more, at a rate of 20-35% depending on income. Keep the provider's name and tax ID, you'll need it to claim the credit.
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Almost certainly, yes. If your child lived with you, is under 17 at the end of the year, has a valid Social Security number, and you're under the income limits, you qualify. For 2025 the Child Tax Credit is $2,200 per qualifying child (up from $2,000, thanks to the One Big Beautiful Bill Act), with up to $1,700 of it refundable.
The credit starts to phase out above $200,000 of income for single filers and $400,000 for married filing jointly. Make sure we have the baby's SSN and birth date and we'll claim it. Even a child born late in the year counts for the full credit for that year.
Important update first: the federal Clean Vehicle Credit ended for vehicles acquired after September 30, 2025 (the One Big Beautiful Bill Act repealed it early). So whether this applies to you depends entirely on when you acquired the vehicle.
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If you acquired the vehicle on or before 9/30/2025 (binding purchase agreement + payment by that date): you may still claim it, up to $7,500 for a qualifying new EV. We file Form 8936 with your return, and yes, we'll need details from you: the VIN, purchase/placed-in-service date, and the seller's report or time-of-sale report.
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If you're buying after 9/30/2025: unfortunately the federal credit is no longer available.
Send us the VIN and purchase paperwork and we'll confirm eligibility and the exact credit amount. (Some states still have their own EV incentives, separate from the federal credit.)
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Generally no. The IRS does not treat payments to a medical cost-sharing ministry or healthshare program as health insurance premiums, so they don't qualify for the self-employed health insurance deduction, and they're not deductible as a medical expense on Schedule A either. They aren't HSA-eligible coverage on their own, either.
Actual out-of-pocket medical bills you pay can still count toward itemized medical deductions (above the 7.5%-of-AGI floor), but the monthly cost-sharing contribution itself isn't deductible. If lowering taxes via a health plan is a goal, let's talk about HSA-eligible high-deductible coverage instead.
For cash contributions, federal law generally lets you deduct up to 60% of your adjusted gross income (AGI) in a year (California limits it to 50% of federal AGI). Donations of goods (like to Goodwill) are valued at fair market value and have their own AGI limits (typically 30% or 50% depending on the property and organization). Amounts over the limit can carry forward up to five years.
Two practical notes: you only benefit if you itemize, and for any non-cash donation you need a receipt, plus a written appraisal if an item is worth more than $5,000.
You can, and it's one of the few moves still available after year-end. A few things to keep in mind:
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Limits (2025): up to $7,000, or $8,000 if you're 50 or older.
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Deadline: you can make a prior-year contribution right up to the April filing deadline.
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Deductibility: a traditional IRA contribution may be deductible (which is what lowers your taxable income and can bump your refund), but the deduction phases out at higher incomes if you or your spouse are covered by a workplace retirement plan. A Roth contribution isn't deductible, so it won't change this year's refund.
Tell us your numbers and we'll calculate exactly how much a deductible contribution would save you before you fund it.
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You can get a tax benefit, but not by deducting her salary directly. A nanny is a household employee, and her wages aren't a deductible business expense. What you can do:
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Claim the Child and Dependent Care Credit on the qualifying portion of what you pay for care (subject to the $3,000/$6,000 limits).
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If your employer offers a Dependent Care FSA, you can run care costs through it pre-tax (coordinated with, not stacked on, the credit).
Heads up: with a household employee you're responsible for the “nanny taxes”, Social Security, Medicare, and federal unemployment, and likely need to issue a W-2. Let us set that up correctly so you stay compliant and capture the credit.
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Not the rent itself, no, you can't expense an apartment you're also living in. But we don't lose the benefit entirely: we keep taking the home office deduction, which captures the business-use portion of the home. So track everything, rent, utilities, etc., and we'll apply your business-use percentage to the total.
(If the space were 100% dedicated to the business with no personal use, it would be a straight rent expense. A place you live in doesn't qualify for that.)
Self-Employment, Payroll & Contractors
All the most common questions we get from the self-employed, about payroll & from contractors.
Since no one's withholding taxes for you, you generally pay the IRS yourself in quarterly estimates. Here's the framework:
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Start with your net profit (income minus business expenses).
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Self-employment tax: about 15.3% on roughly 92.35% of that net profit (12.4% Social Security up to the annual wage cap + 2.9% Medicare).
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Income tax: your net profit also gets taxed at your regular income tax rate, on top of the SE tax.
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Divide your total estimated annual tax by four and pay each quarter.
Due dates are roughly April 15, June 15, September 15, and January 15. You generally must pay estimates if you'll owe $1,000 or more at filing. The “safe harbor” to avoid underpayment penalties: pay at least 90% of this year's tax, or 100% of last year's (110% if your prior-year AGI was over $150,000). Pay via IRS Direct Pay or EFTPS.
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For an owner paying yourself (especially an S-corp owner taking a reasonable salary), salary is usually the cleaner choice, a consistent amount each pay period that's easy to document and matches your reasonable-comp figure. Hourly makes more sense for staff whose hours actually vary.
No. Independent contractors are responsible for their own taxes. Your job is to report what you paid them: if you paid a U.S. contractor $600 or more during the year, you issue them a Form 1099-NEC, and they report and pay tax on it themselves. To do that, collect a W-9 from every contractor before you pay them.
A missing W-9 is a real headache. Without it you don't have the contractor's correct legal name and tax ID, which you need to file an accurate 1099-NEC. Two consequences:
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Backup withholding: if you can't get a valid TIN, the IRS can require you to withhold 24% of the payments and remit it.
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Penalties: filing 1099s late or with wrong/missing info carries per-form penalties.
Best practice is to get the W-9 before you ever cut the first check, it's much harder to chase down after the work is done (as you're finding out). For the contractors who've gone quiet, send a written request and keep a record that you asked.
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Good news on the tax side first: if your contractor is a foreign person performing all of their work outside the U.S., you generally do NOT issue a 1099-NEC. Instead, have them complete a Form W-8BEN (individual) or W-8BEN-E (entity) and keep it on file, that documents their foreign status. Without a valid W-8BEN, you could be on the hook for 30% withholding, so collect it before the first payment.
On the how-to-pay side, you've got solid low-fee options. Services like Wise (formerly TransferWise) or PayPal are popular for international contractor payments. You can set up a PayPal business account, and you're right that keeping everything in QuickBooks is ideal for clean books, you can record the payment in QBO regardless of which rail you use to actually send the money.
Here's the key distinction: he's an employee, not a contractor, so that payment doesn't belong on a 1099 at all. Wages paid to an employee go on his W-2, even the off-cycle check. The fix is to run that payment through payroll (or correct the W-2) so it's reported as wages with the right payroll taxes, rather than trying to 1099 it or leave it off.
If he's already filed, an amended/corrected W-2 may be needed. Let's reconcile the payroll for the year so everything ties out, this is exactly the kind of thing the IRS matches.
Three separate things, let's take them in order:
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Distributions: distributions of profit to yourself as the owner generally do NOT show up as an expense or a line on the business tax return, they reduce your equity/basis, not the company's taxable income. So it's normal that you don't see them on the return. We do track them for your basis, though, so keep that record.
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The $42 Form 940 (federal unemployment) payment you made from your personal account: that's a legitimate business expense (payroll taxes). Since you paid it personally, we'll record it as an owner contribution / reimbursable so the business gets the deduction.
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The $1,204.27 computer inside “Software”: it's cleaner to break that out. A computer is equipment (often “Office Expense” or a fixed asset we can expense under the de minimis/Section 179 rules), not software. Reclassifying it keeps the books accurate and the deduction defensible.
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Yes, if you're self-employed and the course maintains or improves skills for your current business, it's a deductible business expense. You cannot deduct it against W-2 wages (unreimbursed employee education isn't deductible on the federal return for most employees right now).
Two different issues:
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Nothing withheld: withholding is driven by the Form W-4 she gave her employer. If it was filled out in a way that claims very low or no withholding (or wasn't updated after a change), the employer withholds little or nothing. That's fixable, she submits a new W-4. The employer follows the form; it's not the employer deciding on their own.
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Paid via 1099: that means the employer is treating her as an independent contractor, not an employee. That can be legitimate, but if she works like an employee (set hours, employer controls how the work is done), she may actually be misclassified. A 1099 worker gets no withholding and owes self-employment tax, so she should be setting money aside for quarterly estimates.
Worth a closer look, send us how she's actually working and we'll tell you whether the 1099 treatment holds up and what she should withhold or set aside.
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Yes, even a one-person business has options (general liability, professional liability, and health coverage). One option clients have mentioned is Sedera (sedera.com), a medical cost-sharing community, almost like a co-op, that covers larger/extreme medical situations at a reduced cost. Note that cost-sharing is not the same as traditional health insurance (see the next question on deductibility).
Help Yourself: Tools, Tips, and Templates for the Financially Curious (or Cautious)
Quick guides, smart reads, and useful tools - pick what you need, skip what you don’t.
Playbook:
Should I be an S-Corp?
Calculator:
Tax Saving Potential?
Tracker:
Business Expense Tracker
Blog:
"I'll just use Turbo Tax"
What to Expect
You don’t need to have it all together, we’ll help with that.
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A no-pressure kickoff call.
We’ll talk about what’s going on in your business, where you’re stuck (or overwhelmed), and what kind of support you’re looking for.
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Gather your docs.
Don’t worry, we’ll give you a clear checklist. Most people upload things like prior-year returns and income statements.We’ll walk you through exactly what we need and why.
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We dig into the numbers.
This is where we roll up our sleeves and start spotting opportunities: missed deductions, S-Corp salary tweaks, better ways to pay yourself, and other tax-saving moves.
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You get a plan.
Whether it’s filing your return or setting up smarter systems, we’ll talk next steps, timelines, and what support looks like from here.
