is it weird that my accountant just puts a plug number on line 5 to make line 8 match schedule k line 18? he says "everyone does it that way" but it seems kinda sketchy to me...

I've been doing S-corp returns for small businesses for over 15 years, and Schedule M-1 reconciliation is definitely one of the most confusing areas for new filers. Here's my step-by-step approach that might help: 1. Start with your book income (line 1) 2. Add back any federal income tax expense you recorded on books (line 2) - S-corps don't pay entity-level tax 3. Add excess capital losses and charitable contributions that exceeded limits (line 3) 4. This gives you line 4 - your adjusted book income Then for deductions not on books: 5. Add non-deductible expenses like 50% of meals, penalties, etc. (line 5) 6. Add income that's on your tax return but not your books (line 6) 7. Add other deductions on return not on books (line 7) Finally: Line 4 minus line 7 should exactly equal Schedule K line 18. If they don't match, work backwards - there's always a specific reason. Don't ever use "plug" numbers to force a balance. Each adjustment should be traceable to actual transactions or differences in how items are treated for book vs. tax purposes. The key is being methodical and documenting every adjustment you make.

As a financial advisor who specializes in education funding, I want to add some perspective on the long-term retirement impact that several people have touched on. The rule of thumb I use with clients is that every dollar withdrawn from retirement accounts in your 40s costs roughly 3-4 dollars in retirement purchasing power (assuming 7% average returns over 20+ years). So Chad's potential $30K withdrawal could indeed cost him $90K-$120K in today's purchasing power at retirement. **However**, there's also value in considering the "return on investment" of private education. While we can't put a precise dollar figure on it, quality education often leads to better college prospects, scholarships, and career outcomes for kids. Sometimes the long-term benefit to the family's overall financial picture justifies short-term retirement account sacrifices. **My recommendation for Chad's situation:** 1. First, exhaust all other options - scholarships, 529s if available, education loans at current low rates 2. If you must use Roth funds, limit it to contributions only and spread across multiple years 3. Consider a "hybrid" approach: maybe one child in private school initially while you build other funding sources 4. Set a firm limit on retirement withdrawals - perhaps no more than 10-15% of your current Roth balance The key is making this decision intentionally rather than reactively. Get the analysis done, understand all your options, and make sure both parents are aligned on the trade-offs involved. Anyone else have experience with setting these kinds of family financial boundaries around education expenses?

I've been following this discussion and wanted to share my experience as someone who went through this exact decision three years ago. We had twin boys starting private high school with similar costs, and I was 41 at the time with about $52K in my Roth IRA. After much deliberation (and consulting with a fee-only financial planner), we decided on a mixed approach that worked really well for us: **Year 1:** Used about $12K from Roth contributions plus took a small education loan for the remainder **Years 2-4:** Shifted to primarily education loans at low interest rates while preserving the rest of our retirement savings What made this work was getting very granular about our family's priorities and limits upfront. We set a hard cap of $15K total from retirement accounts over all four years, which forced us to get creative with other funding sources. The boys ended up getting partial merit scholarships in their sophomore year (something we hadn't anticipated), which dramatically changed our financial picture. One unexpected benefit was that having some education debt actually helped with FAFSA calculations for college - it showed financial need without the income bump that Roth withdrawals would have created. Looking back, I'm glad we were conservative with the retirement withdrawals. The education loans will be paid off in two more years, but that money we left in the Roth has continued growing tax-free. Sometimes the "pain" of monthly loan payments actually helps families stay more disciplined about education spending. For Chad: definitely get that detailed analysis done before deciding. Having the actual numbers in front of you makes it much easier to have honest conversations with your spouse and kids about what's sustainable for your family's long-term financial health.

Has anyone used TurboTax for filing S-Corp returns? I've used it for my personal taxes but not sure if it can handle the 1120-S and all the other forms for a single-member LLC with S-Corp election.

I went through this exact same situation last year as a Canadian who moved to the US and set up a single-member LLC with S-Corp election! The learning curve is definitely steep, but you're asking the right questions. One thing I wish someone had told me earlier: make sure you're keeping detailed records of ALL business expenses from day one. With an S-Corp election, the IRS scrutinizes the separation between business and personal expenses much more carefully than with a regular LLC. This includes things like your home office, business meals, equipment, software subscriptions, etc. Also, since you mentioned you have a client in California, be aware that California has some unique rules for LLCs doing business in the state. You might need to register as a foreign LLC in California and pay their annual $800 LLC fee, depending on how much business activity you're conducting there. It's worth checking with the California Secretary of State or a tax professional about this. The good news is that with only $13,500 in revenue, your situation is relatively straightforward compared to higher-earning S-Corps. Just make sure you get everything filed correctly this first year to establish good habits going forward!

I'm currently dealing with a 570 code that appeared on March 8th, so I'm right in the thick of the waiting period with many of you! Filed on February 12th and was accepted the same day. What's been really helpful reading through this thread is seeing the actual timelines people are experiencing - it seems like most are resolving in that 3-6 week range even though it feels like forever when you're in it. I've been trying to resist the daily transcript checking but it's tough! One thing I noticed is that several people mentioned the combination of codes matters more than just the 570 alone. I have a 570 with a 971 dated the same day, which from what I'm reading here sounds like it's probably just a routine review rather than something more serious. Planning to wait until I hit the 21-day mark before calling, but it's reassuring to see so many success stories in this thread. The randomness of it all is definitely frustrating though - seems like there's no rhyme or reason to who gets flagged and who doesn't!

I'm currently on day 12 with my 570 code that appeared on March 25th. Filed on February 28th and was accepted the same day. Reading through everyone's experiences here has been incredibly reassuring - it's clear that most of these resolve within that 3-6 week timeframe, even though it feels like an eternity when you're waiting! What I find most helpful is seeing the specific code combinations people are describing. I have a 570 with a 971 dated March 25th, and from what I'm gathering here, that seems to indicate a routine review rather than a serious issue. The randomness of who gets flagged is definitely frustrating - my sister filed a week after me with similar circumstances and already got her refund. But seeing all these success stories gives me hope that patience will pay off. Thanks to everyone for sharing their timelines and outcomes - it really helps knowing I'm not alone in this waiting game!

Sorry to jump in with a slightly different perspective, but isn't renting a different car each week extremely inefficient tax-wise? The standard mileage rate for 2024 is around 67 cents per mile, which accounts for ALL vehicle costs including depreciation. If you're paying $15,600 annually for rentals, you'd need to be driving nearly 23,300 business miles annually to make that worthwhile compared to just using your own vehicle and taking the standard deduction. Have you calculated if this approach actually makes financial sense?

You might also want to consider whether your photography business would benefit from a dedicated business vehicle instead of weekly rentals. As a fellow creative professional, I understand wanting to protect your personal car from wear and tear, but there could be more tax-efficient approaches. For example, you could lease a vehicle exclusively for business use and deduct 100% of the lease payments, or purchase a used vehicle and depreciate it over time. This would eliminate the need to track personal vs. business use percentages entirely. That said, if the rental approach works best for your workflow (maybe you need different vehicle sizes for different shoots?), just make sure you're documenting everything meticulously. The IRS can be particularly scrutinous of Schedule C vehicle deductions, so having ironclad records is crucial. Consider setting up a simple system where you log business purpose, mileage, and take photos of receipts immediately after each rental period. Also, don't forget about other deductible expenses related to your vehicle use - things like GPS apps, car phone mounts, or other equipment you need for business travel can also be deducted as business expenses.