I'm dealing with a very similar situation right now! Just discovered my bookkeeper has been carrying forward some old business credit card accounts that should have been closed years ago. They're showing small balances but I haven't used those cards in forever. Reading through everyone's responses here has been incredibly helpful. It sounds like the consensus is that as long as these balance sheet issues didn't affect my actual Schedule C income and expenses, I don't need to panic about amended returns. That's a huge relief! I'm planning to follow the advice about having my bookkeeper create adjusting entries to zero out the phantom accounts against owner's equity, and properly account for any real money that's sitting in those old accounts. One thing I'm still wondering about - should I wait until after I file this year's taxes to clean this up, or is it better to get it sorted beforehand? My tax deadline is coming up fast and I don't want to delay filing, but I also want to make sure I'm handling this correctly.

I've been through this exact scenario with my freelance consulting business. Had old PayPal and bank accounts from a previous venture showing up in my QBO that were making my balance sheet a mess. The relief I felt when my CPA confirmed that Schedule C filers don't submit balance sheets to the IRS was huge! Since you're only providing consulting services, the IRS is really just looking at your income and expenses on the Schedule C itself. Here's what worked for me: I had my bookkeeper create a detailed spreadsheet showing exactly what each old account contained - which ones had real money vs. just old entries. For the accounts with actual funds, we transferred them to my current business account and recorded as owner contributions (since the money was from a previously taxed business). For the phantom entries, we zeroed them out with journal entries against owner's equity. The key is documentation. I kept detailed notes about each adjustment so if questions ever come up, I can explain exactly what happened and why. My CPA said this kind of cleanup is actually pretty common when people switch from one business to another using the same QBO file. You're being appropriately careful about compliance, but it sounds like you can breathe easy about amended returns as long as these old accounts didn't affect your actual business income or deductible expenses this year.

Just wanted to add another perspective on tracking FUTA payments in QuickBooks - make sure you're categorizing these correctly in your chart of accounts. I made the mistake of lumping all my payroll taxes together under one generic "Payroll Tax Expense" account, which made it nearly impossible to track FUTA separately for reporting purposes. I'd recommend creating separate expense accounts for each type of payroll tax (FUTA, SUTA, Social Security, Medicare, etc.) right from the start. This will make your quarterly and annual reporting much easier, and you'll always know exactly how much you've paid in each category without having to dig through transaction details. Also, if you're using QuickBooks Payroll, it should automatically calculate and track FUTA for you based on your employee wages, but always double-check the calculations against your actual payments to make sure everything aligns properly.

As someone who's been through this exact same confusion with QuickBooks setup, I wanted to share a few additional tips that might help others avoid the pitfalls I encountered: First, if you're importing historical payroll data like the original poster, make sure you have your state unemployment tax records handy too. FUTA and SUTA calculations are interconnected - you get that 5.4% credit against FUTA when you pay your state unemployment taxes timely, which affects your actual FUTA liability. Second, double-check that your QuickBooks payroll items are set up correctly for FUTA. The system should automatically apply the 0.6% rate (assuming you get the full state credit), but I've seen cases where people accidentally had it calculating at the full 6.0% rate because their state setup wasn't configured properly. Finally, keep good records of when each employee reaches that $7,000 threshold during the year. Even though QB tracks this automatically if you're using their payroll service, having your own backup records helps catch any discrepancies and makes year-end reconciliation much smoother. I learned this the hard way when I had to reconstruct everything for an audit! The folks above gave excellent advice about separate GL accounts for each tax type - that organizational structure will save you countless hours down the road.

This is such helpful information! I'm going through the adoption process right now and had no idea about some of these qualifying expenses. Quick question - do adoption-related medical expenses count? Our birth mother had some prenatal appointments and delivery costs that weren't covered by insurance, and our agency said we could help with those. Also, what about expenses for getting certified copies of documents? We've had to get multiple certified birth certificates and other official documents throughout this process. Thanks for sharing all your experiences - it's really reassuring to hear from people who've been through this!

One thing I haven't seen mentioned yet is that you need to be careful about timing with the adoption tax credit. For domestic adoptions, you can claim expenses in the year after they were paid OR in the year the adoption becomes final, whichever is later. For international adoptions, you can only claim the credit in the year the adoption is finalized. This timing rule caught us off guard during our first adoption - we paid most of our expenses in 2023 but couldn't claim the credit until we filed our 2024 taxes because that's when the adoption was finalized. Make sure you're planning for this delay, especially if you're counting on the credit to help with cash flow. Also, remember the adoption tax credit is currently $15,950 per child for 2024 (likely to be adjusted for inflation in 2025). If your qualified expenses exceed this amount, you can carry forward the unused credit for up to five years, which can be really helpful for expensive adoptions.

Remember that even if you use the de minimis safe harbor for items on your Schedule C, you still need to keep records of these purchases! The IRS can still ask for documentation to prove these were legitimate business expenses. I keep a simple spreadsheet with: - Date of purchase - Item description - Cost - Business purpose - Receipt location (digital folder or physical file) This has saved me multiple times during IRS questions about my Schedule C deductions.

For your specific situation, here's what I'd recommend: **$780 in general supplies** - These definitely go on Schedule C line 22 as office expenses. No questions there. **$350 desk chair and $220 bookshelves** - Both qualify for the de minimis safe harbor since they're under $2,500 each. You can put these on line 22 IF you make the de minimis election by attaching a statement to your return. **The election statement** should say something like: "I elect to apply the de minimis safe harbor under Treas. Reg. 1.263(a)-1(f) for the tax year 2025. All property purchases of $2,500 or less per item will be expensed in the year of purchase." **Alternative approach**: You could also use Section 179 on Form 4562 for the furniture, which gives the same immediate deduction result but requires different paperwork. Most people find the de minimis route simpler for smaller purchases like yours. The key is picking one method and being consistent. Don't mix and match - either elect de minimis for qualifying items or use Section 179, but document your choice properly. Your tax software should handle the forms once you tell it which route you want to take.

I went through this exact same situation two years ago and can confirm what others have said - you absolutely need to report the full $77k from your SSA-1099 on your tax return, even though you only kept $12k of it. One thing I'd add that hasn't been mentioned much is to make sure you keep copies of ALL the paperwork related to this transaction. I mean everything - the original SSDI award letter, the LTD insurance agreement that required repayment, bank records showing the transfer to the insurance company, and any correspondence with the insurance company about the repayment. The IRS may send you an automated notice a few months after you file because their computers will see the discrepancy between what Social Security reported and what you claimed as income. Having all this documentation ready made it super easy to respond to their inquiry and clear everything up quickly. Also, don't stress too much about getting "flagged for an audit." This type of situation is actually pretty routine for the IRS - they see disability repayments regularly. As long as you report everything correctly and have good documentation, you'll be fine. The key is being transparent about what happened rather than trying to hide the discrepancy.

I'm a CPA who's handled several of these SSDI repayment situations, and I want to emphasize something that's been touched on but deserves more attention - the timing of when you calculate your tax liability can make a significant difference in which method (itemized deduction vs. claim of right) benefits you most. With your $65k repayment, you'll definitely want to run both calculations. The claim of right provision essentially lets you calculate your tax as if you never received that $65k in the first place, then gives you a credit for the difference. This is often more beneficial than an itemized deduction, especially if you're in a higher tax bracket or if the repayment pushes you into a different bracket. One practical tip: when you're gathering documentation from your LTD insurance company, also request a letter on their letterhead stating the specific date they received your repayment and confirming that this was pursuant to your policy's SSDI offset provision. This type of detailed documentation can prevent delays if the IRS requests additional information. Also, don't forget that if you do itemize to claim the repayment, you'll need to consider the impact on other tax benefits that phase out based on your adjusted gross income. The claim of right method might preserve some of those benefits that would otherwise be reduced.