I went through this exact situation when my mom's trust became irrevocable. The key thing to understand is that the trust's tax obligation exists regardless of whether you actually distribute the money or reinvest it. What helped me was getting a clear picture of the trust's "accounting income" versus "taxable income" - they're not always the same thing. The IRS looks at what the trust earned, not what you did with those earnings afterward. One strategy that worked for my situation was making small distributions to the beneficiaries (my siblings' kids) and having those funds go directly into 529 education savings accounts in their names. This way the income got taxed at their lower rates instead of the trust's compressed brackets, but the money was still being saved for their future benefit. You'd need to check if your trust document allows this kind of arrangement and whether it makes sense for your family's situation. Also, don't forget that the trust can deduct certain administrative expenses like trustee fees, accounting costs, and investment management fees. These deductions can help offset some of the tax burden.

This is a common confusion that many new trustees face! The key insight here is that irrevocable trusts are separate tax entities, so they owe taxes on income they retain regardless of whether that income is reinvested or sits in cash. The $2600 "distributed" amount you're seeing in TaxAct might be a software quirk or it could be related to how the program is calculating potential distributions under the trust's terms. I'd double-check your entries to make sure you haven't accidentally indicated any actual distributions. A few practical suggestions: 1. Consider consulting with a tax professional who specializes in trusts - the compressed tax brackets make this worth the investment 2. Review your trust document carefully to see if you have authority to make distributions now, as this could shift tax burden to your children at lower rates 3. Keep detailed records of all trust income and expenses, as the trust can deduct legitimate administrative costs Remember, as trustee you're responsible for ensuring the trust pays its taxes, but those taxes come from trust assets, not your personal funds. The trust should have its own bank account and tax ID number for this purpose.

Has anyone successfully deducted home office and tech equipment for their S-Corp trading business? My accountant says since trading isn't technically a "service" I provide to others, I might not qualify for these deductions even though I have a dedicated home office where I exclusively do my trading work.

One thing that might help clarify your situation is understanding the difference between "investment activity" and "trading business activity" within your S-Corp. The IRS looks at factors like frequency of trades, time spent, and intent to profit from short-term price movements versus long-term appreciation. If your S-Corp is engaged in trading as a business (not just investment), you can legitimately pay yourself a reasonable salary for managing those trading activities. The salary reduces the S-Corp's net income, and the remaining profits (still characterized as capital gains) flow through to your personal return. Regarding your question about reinvesting profits - this doesn't change your tax liability. You're taxed on realized gains whether you distribute the cash or reinvest it. However, if you're consistently profitable and reinvesting, you'll want to make sure you have enough cash flow to cover the taxes on the pass-through income. One important consideration: if you're making "multiple short-term trades" as you mentioned, you might want to explore whether your S-Corp qualifies for trader tax status and consider a Section 475 mark-to-market election. This could potentially be more advantageous than traditional capital gains treatment, especially if you experience volatile trading results.

I completely understand your confusion - this exact situation trips up a lot of first-time independent filers! The key thing to remember is that the 1095-A form follows the policyholder (the person who purchased the insurance), not necessarily who was covered by it. Since your parents are listed as recipients on the 1095-A, they should include this form on their tax return, even though they're no longer claiming you as a dependent. This is because they were the ones who enrolled in the marketplace plan and potentially received advance premium tax credits. For your return, you'll simply need to indicate that you had qualifying health insurance coverage for the year (to satisfy any coverage requirements), but you won't attach or reference the 1095-A form itself. TurboTax should walk you through this pretty clearly in the health insurance section - just make sure to select that you had coverage but weren't the policyholder. Don't worry, this is actually a pretty common scenario and you're handling it exactly right by asking questions first!

Great question! I went through this exact same situation a couple years ago when I first filed independently. The confusion is totally understandable - it seems weird that your parents keep the 1095-A when you're the one covered, but that's exactly how it works. Since your parents were the policyholders (their names on the form), they need to keep the 1095-A for their tax return to reconcile any advance premium tax credits they may have received throughout the year. This is true even though they're no longer claiming you as a dependent. For your return, you just need to check the box indicating you had health insurance coverage for the year (which you did!), but you won't include any 1095-A information since you weren't the policyholder. One thing to double-check - make sure your parents know they still need to include this 1095-A on their return even though their tax situation has changed with you no longer being their dependent. Sometimes parents assume they don't need to deal with it anymore, but they absolutely do since they were the ones who received any tax credits.

This is exactly why it's so important to review everything before your accountant files your return. I learned this lesson the hard way a few years ago when my CPA made similar decisions without consulting me first. For future reference, always ask to see a copy of your return before it's submitted and specifically look at the refund section to see how they're handling any overpayment. Most tax software will show this clearly - whether it's going to direct deposit, check, or applied to next year's estimated taxes. Also, consider having a conversation with your accountant about their standard practices. Some CPAs automatically apply large refunds to estimated taxes because they assume clients who owe that much in taxes would want to prepay to avoid underpayment penalties. But $40k is a substantial amount that most people would want immediate access to. You might want to evaluate whether this accounting firm is the right fit for you going forward, especially given their unhelpful response when you raised concerns about a decision they made without your consent.

I went through this exact situation two years ago with a $25k refund that my former accountant applied to estimated taxes without asking. Here's what worked for me: First, don't panic - this is definitely fixable! I called the IRS directly (took several attempts to get through) and explained that the election to apply my refund to next year's taxes was made without my consent. The agent told me I could submit a simple written request to revoke this election. I sent a letter with my SSN, tax year, and a clear statement: "I request to revoke my election to apply my 2023 tax overpayment to 2024 estimated taxes. Please issue this refund via direct deposit per my original return." I faxed it to my IRS processing center and got my refund in about 6 weeks - much faster than the amendment route. The key is acting quickly. Also, I'd strongly recommend finding a new accountant. Any tax professional who makes a $40k financial decision without explicit client approval isn't someone I'd trust with my taxes again. Make sure to ask your next CPA about their standard practices upfront so there are no surprises.

I went through something very similar with my 3-member LLC. We also filed on Schedule C for the first two years before realizing our mistake. Here's what I learned from working with both a CPA and getting direct guidance from the IRS: The key factor is whether the "check the box" election was made. By default, multi-member LLCs are treated as partnerships, but if no one filed Form 8832, the IRS sometimes takes a more lenient approach, especially for smaller operations. Given that one LLC only had $15K in income in 2020 and the other had zero income in 2021, you're probably looking at minimal penalties even if you do need to file partnership returns. The penalty for late partnership filing is $210 per partner per month, but it's often reduced or waived for reasonable cause - and "relied on tax software guidance" is actually considered reasonable cause in many cases. My recommendation would be to file the partnership return for 2020 (the year with actual income) and include a reasonable cause statement explaining the confusion. For the zero-income year, you might be able to skip it entirely since there's no actual tax impact. Just make sure to file correctly going forward with Form 1065 for any active years. The statute of limitations issue is real though - until you file the required partnership returns, the IRS can technically go back indefinitely. Better to clean it up now while the amounts are small.

I'm dealing with a very similar situation right now! My business partner and I have been filing our 2-member LLC income on Schedule C for the past three years, and I just found out we should have been doing partnership returns. One thing I learned from my research is that the IRS has a "de minimis" approach for small partnerships - they're less likely to pursue penalties aggressively when the income is low and all taxes were actually paid (just reported on the wrong forms). Since your first LLC only had $15K total income and the other had zero, you're probably in a lower risk category. I'm also curious about the dissolution aspect you mentioned. If you're shutting down one of the LLCs in 2022, you might want to file a final partnership return for that entity showing the dissolution. That could actually help close the books cleanly rather than leaving things hanging. Have you considered reaching out to the IRS directly through their business line? I know it's hard to get through, but they sometimes give more practical guidance than accountants who tend to be overly cautious about every technical requirement.