Just a heads up - make sure you're using the correct worksheet version for your tax year. The Qualified Dividends and Capital Gain Tax Worksheet gets updated, and using last year's version could lead to errors. I learned this the hard way when I was using old instructions I printed out last year. Also double-check that you correctly calculated lines 15 and 16 on Schedule D in the first place. Line 15 should be your net long-term capital gain or loss, and line 16 is typically your net short-term and long-term combined. If those aren't calculated right, it cascades through the rest of your forms.

I had this exact same confusion last year! You're absolutely right to enter -1,912 with the negative sign on line 3. The key thing to remember is that when the instructions say "smaller," they mean mathematically smaller - and negative numbers are always smaller than positive numbers. One thing that helped me understand this better was thinking about it on a number line: -1,912 is further to the left (smaller) than 2,191. The worksheet is designed to handle negative values properly, so don't second-guess yourself. Just make sure as you continue through the rest of the worksheet that you follow the specific instructions for each line. Some later lines will tell you to enter zero if your calculation results in a negative number, but line 3 should definitely show your -1,912. This will ensure your capital loss is properly accounted for in your tax calculation.

Does anyone know if my state taxes US obligation income differently than others? I'm in California if that matters. My tax software is asking about this but doesn't explain if California has special rules.

Just wanted to add something that might help clarify the confusion about finding this on your 1099 forms. When you're looking at your 1099-B, the "US obligations" won't necessarily be labeled that way explicitly. Look for securities with these types of identifiers or descriptions: - Anything starting with "912" (CUSIP numbers for Treasury securities) - Securities described as "T-BILL", "T-NOTE", "T-BOND" - "TREASURY" in the description - "UNITED STATES OF AMERICA" as the issuer Also, if you have a 1099-INT form, Box 3 will show "Interest on U.S. Savings Bonds and Treasury obligations" - this is separate from capital gains but shows if you held these types of securities during the year. Don't forget that if you sold Treasury securities at a loss, you still need to report them in this section (you'd enter a negative number for the loss). The state exemption applies to both gains and losses on these securities.

Just to add another perspective - I've been a server for 15 years and ALWAYS keep a small tip journal with me. I write down my cash tips daily. I've had allocated tips show up on my W-2 before, but because I had good records showing my actual tip income, I didn't have to pay taxes on the allocated amount. The key is documentation.

If this is your first year filing with allocated tips, don't stress too much about not having perfect records for this year. Just be aware of what they are, report them correctly, and then start keeping better records going forward. I got allocated tips for years before I figured out how to handle them properly!

I work for the IRS and want to clarify a few things that might help everyone here. First, the IRS Free File program is completely separate from commercial tax software companies - when you access it through IRS.gov, you're using software provided by our vetted partners but with guaranteed free filing for eligible taxpayers. The bait-and-switch tactics you're describing with E-File and other commercial services are unfortunately common. These companies aren't part of the official IRS Free File program. They use confusing marketing to make people think they're using an IRS service when they're not. For 2024 tax year, IRS Free File is available for taxpayers with adjusted gross income of $79,000 or less. You can access it directly at irs.gov/freefile - don't go through the commercial company websites. We also have Free File Fillable Forms for higher income taxpayers who are comfortable doing their own calculations. The IRS Direct File pilot program that was mentioned is indeed available in Minnesota and several other states. It's completely free with no upsells and handles common tax situations. You can find it at directfile.irs.gov. If you're dealing with misleading practices from tax prep companies, you can report them to us through the IRS website. We take these complaints seriously as part of our oversight responsibilities.

I'm dealing with this exact same issue right now with E-File! After reading through all these comments, I tried several of the suggested workarounds. The incognito browser window didn't work for me, but the "abandon your cart" trick that @Avery Saint mentioned actually did the trick! I got all the way to checkout, closed my browser in frustration, and when I came back an hour later there was suddenly a "Continue with Free Filing" option that wasn't there before. It's absolutely ridiculous that we have to use these workarounds just to access what they advertise as a "free" service. @Liam Sullivan - thank you for the official clarification about the IRS Free File program vs these commercial services. I had no idea there was a difference and definitely got misled by E-File's marketing. I'll be using the legitimate IRS free file options next year and will also be reporting E-File's deceptive practices. This kind of bait-and-switch should not be legal when it comes to something as essential as filing taxes.

Has anyone used CorpNet for handling their S Corp filings? My accountant just retired and I'm trying to figure out the cheapest way to manage all this paperwork and tax stuff for next year.

One thing I'd add to all the great advice here - make sure you're tracking your "basis" in the S Corp properly. When you leave profits in the business like that $135k, it increases your basis in the company. This becomes important later if you ever take out more than the accumulated earnings or if you sell the business. Your basis starts with what you initially invested in the company, then increases with your share of profits (even if left in the business) and decreases with distributions you actually take. Keeping good records of this will save you headaches down the road, especially if you ever need to take large distributions or loans from the company. Most people don't think about basis tracking until they need it, but it's much easier to maintain these records as you go rather than trying to reconstruct them years later.