Does anyone know if theres special requirements for filing 1120S if you started the scorp mid year? My accountant wants to charge me extra for a "short year return" but im wondering if the software can handle this?

Just wanted to chime in as someone who's been through this exact situation. I started with an S-corp last year and initially tried to find free options but quickly learned that business returns are a whole different beast from personal taxes. After reading through these comments, I think the key takeaway is that while free options don't exist for 1120S filings, there are definitely cost-effective alternatives to paying $800+ to an accountant. The mid-tier software options mentioned here (TaxAct, TaxSlayer) or newer AI-powered solutions seem like reasonable compromises between cost and complexity. One thing I'd add is to make sure whatever software you choose can handle things like shareholder basis calculations and K-1 preparation - these are crucial for S-corps and where a lot of DIY filers mess up. If your business is really simple with just you as the sole shareholder, the learning curve isn't too bad. But if you have multiple shareholders or complex transactions, might be worth biting the bullet on professional help at least for the first year.

Don't forget to consider state taxes too! I learned the hard way that some states (looking at you, New Jersey) have different rules for capital gains offsets than the federal government. I had stock losses I used to offset real estate gains, but NJ limited how much I could offset.

Great discussion here! Just wanted to add a practical tip from my own experience - make sure you have good documentation for all your losses, especially if you're dealing with multiple asset types like stocks and real estate. I had a similar situation last year where I used stock losses to offset real estate gains, but during my tax prep I realized I was missing some key documents like the adjusted basis calculations for my rental property and detailed records of some stock transactions. The IRS can be pretty strict about substantiating your losses, so having everything organized upfront saves a lot of headaches. Also worth noting that if you're using a tax professional, bring all this documentation to them early in the tax season. The interaction between different types of capital gains and losses can get complex, especially when depreciation recapture is involved, and they'll need time to work through the calculations properly.

My biggest schedule C tip: track EVERYTHING throughout the year! I use a simple spreadsheet with categories that match Schedule C exactly. So much easier than trying to remember everything at tax time. Also make sure to save for quarterly estimated payments - I got hit with penalties my first year because I didn't realize I needed to make those.

I'm in a similar situation with my first year of self-employment! One thing that helped me was breaking down Schedule C into smaller chunks instead of trying to tackle it all at once. For equipment expenses, you can either deduct the full cost in the year you bought it (if under $2,500 per item) or depreciate it over several years. Most small photography businesses just deduct it all upfront since the amounts are usually manageable. Don't forget about some of the less obvious deductions like: - Professional development (photography courses, workshops) - Software subscriptions (Lightroom, Photoshop, etc.) - Insurance for your equipment - Business bank account fees - Professional memberships Also, keep receipts for everything! Even small purchases add up. I use a simple phone app to photograph receipts right when I make purchases so I don't lose them. One last tip - if FreeTaxUSA is overwhelming, their customer support is actually pretty helpful for walking through the Schedule C sections step by step. Much easier than trying to decode IRS publications on your own!

I'm actually a landlord with multiple properties and just want to add one more thing that hasn't been mentioned yet: depreciation recapture! Even after you figure out your correct adjusted basis, when you sell a rental property, you'll have to "recapture" the depreciation you claimed over the years at a 25% tax rate (which is often higher than the long-term capital gains rate). So make sure you're planning for that tax hit too. It catches a lot of first-time rental property sellers by surprise.

Your accountant is being overly cautious here. The key distinction is between capital improvements (which get depreciated and added to basis) versus regular repairs/maintenance (which are fully deducted and don't affect basis). For your $23,000 in improvements - items like a new roof, water heater, and flooring are typically capital improvements that should have been depreciated over time, not fully deducted in one year. These DO increase your cost basis, but you need to reduce your basis by any depreciation you've already claimed. The confusion often comes from incorrect tax treatment in prior years. Many taxpayers (and some preparers) mistakenly deduct capital improvements as current expenses instead of depreciating them. If this happened, you might need to determine what should have been depreciated versus what was correctly expensed. I'd recommend getting a second opinion or asking your accountant to specifically explain which of your $23,000 in improvements they believe were correctly treated as immediate deductions versus which should have been capitalized. The IRS Publication 527 has detailed guidance on this distinction for rental properties. Don't let them dismiss legitimate basis increases - this could cost you thousands in unnecessary capital gains tax.

Great advice from everyone here! Just wanted to add that if you're feeling overwhelmed by all the different requirements (federal, state, dissolution procedures), don't forget that the IRS also has some helpful resources on their website. Publication 3402 specifically covers tax issues for LLCs, including inactive ones. Also, make sure to keep good records of everything you do to close the LLC - the dissolution paperwork, any final tax filings, correspondence with state agencies, etc. This documentation will be valuable if any questions come up later. I learned this the hard way when I had to reconstruct paperwork for an old business years later. One last tip: if you formed the LLC late in the year and it truly had zero activity, some tax preparers recommend including a statement with your return explaining the situation (like "LLC formed in December 2023, no business activity conducted"). It's not required but can help prevent any confusion if the IRS has questions.

This is such a common situation - I went through the exact same thing two years ago! I formed an LLC for what I thought would be a great online business, but it never got off the ground. Here's what I learned from my experience: First, yes you absolutely need to address it on your taxes even though it did nothing. Since it's a single-member LLC, you'll file Schedule C with all zeros. The key thing is to show the IRS you're being transparent about the entity's existence. For dissolution, I found the process varies a lot by state, but most require filing dissolution paperwork with the Secretary of State and paying a small fee. Some states also want you to publish a notice in a local newspaper, but many have exceptions for LLCs that never operated. One thing that really helped me was keeping a simple log of everything I did to close it down - the dates I filed paperwork, confirmation numbers, etc. It gave me peace of mind knowing I had documentation if any questions came up later. Don't stress too much about this - it's more common than you think, and the process is usually pretty straightforward once you know the steps. The important thing is addressing it properly rather than just ignoring it.