I went through this exact situation two years ago and can share what I learned. Your accountant is incorrect - you cannot file as "Single" for 2024 taxes if you're still married on December 31, 2024, even if the divorce is finalized in early 2025. Here's what I'd strongly recommend: File "Married Filing Separately" and don't let your ex pressure you into joint filing. Yes, you'll both be required to use MFS if you choose it, and yes, you might pay slightly more in taxes. But the peace of mind and financial protection is absolutely worth it. I made the mistake of filing jointly during my divorce to "save money" and it created so many additional complications - we had to coordinate on every single deduction, share sensitive financial information, and I remained liable for any issues with his portion of the return. The $800 we "saved" wasn't worth the stress and ongoing financial entanglement. Also, make sure you understand the timing - whatever status you choose for 2024 taxes only affects that tax year. Once your divorce is final, you'll be able to file as Single for 2025 taxes (filed in 2026). Trust your instincts about keeping things clean during this transition. Your financial independence starts with your tax filing decisions.

Another important consideration during divorce - make sure you update your withholdings and estimated tax payments if you decide to file separately! When I switched from joint to separate filing mid-divorce, I didn't realize my withholdings were still calculated based on the married filing jointly tax brackets. I ended up owing an additional $2,100 at tax time because my employer was withholding too little for my new filing status. The IRS has a withholding calculator that can help you adjust your W-4 once you decide on your filing status. Also, if you have any estimated tax payments due for the current year, you'll need to make sure those are calculated correctly for separate filing too. Just another reason to get your filing status decision locked in sooner rather than later so you can adjust everything accordingly.

Great question about the S Corp home office setup! I went through something similar last year. One thing I haven't seen mentioned yet is the importance of establishing exclusive business use of the space. The IRS requires that the area be used "regularly and exclusively" for business purposes - so if your partner uses that same space for personal activities, it could complicate the deduction. Also, since you're the sole employee getting a W-2, make sure you're taking a reasonable salary before considering any distributions. The IRS looks closely at S Corp owner-employees who try to minimize payroll taxes by taking low salaries. This becomes especially important when you're also trying to maximize business deductions like office expenses. Document the business necessity for having an office in that specific location rather than your own home - maybe it's better internet, dedicated space, proximity to clients, etc. Having a clear business reason strengthens your position regardless of whether you go with rent payments or the accountable plan approach.

I've been through a similar situation with my S Corp and home office deduction. One thing that really helped was establishing a clear business purpose for why the office needed to be at my partner's location rather than my own home. In my case, it was due to better internet infrastructure and a more professional setup for client meetings. A few practical tips from my experience: - Document everything with photos and measurements showing exclusive business use - Keep detailed records of all expenses if going the accountable plan route - Have a formal written agreement regardless of which approach you choose - Make sure your salary as the sole employee meets "reasonable compensation" standards before optimizing other deductions The accountable plan approach worked well for us because my partner wasn't itemizing deductions anyway due to the higher standard deduction. This meant we weren't losing personal deductions they would have claimed, and the S Corp got the full business deduction for the reimbursed expenses. Whatever you decide, consistency in your approach and thorough documentation will be key if you ever face an audit. The IRS pays close attention to arrangements between related parties, so having everything properly documented and business-justified is essential.

Pro tip from someone who used to work at H&R Block: If you're mailing double-sided documents, use a highlighter to mark "CONTINUED ON BACK" at the bottom of each page that continues on the reverse. This little trick helps ensure nothing gets missed during processing. Also, use certified mail with return receipt. The extra $7-8 is worth the peace of mind knowing exactly when the IRS received your documents.

Yellow highlighter works fine - it's what we recommended when I worked there. Avoid red, dark blue, or green as those can interfere with scanning. Fluorescent yellow shows up clearly to human reviewers but doesn't confuse the optical character recognition systems. One more thing I forgot to mention: if you're including multiple 1099-B forms, arrange them in chronological order by date issued, not alphabetically by broker. The IRS processors appreciate this organization and it can speed up your processing time. Also make sure any corrected forms (1099-B-C) are clearly marked and placed immediately after the original they're correcting.

I can totally relate to your confusion with code P - I had the exact same panic when I first saw it! After dealing with this last year, here's what I learned that might help: Code P means it's a qualified distribution from a Roth account (either Roth IRA or Roth 401k), which is generally non-taxable. The key is to look at the actual distribution date on your 1099-R form, not when you received the document. If the distribution happened in December 2024, it goes on your 2024 return even though you're just getting the form now. Since you mentioned it's from an old 401(k), this was likely a Roth 401(k) that you either rolled over or took a distribution from. The $28,500 amount suggests it might have been the full account value. Even though code P distributions are typically tax-free, you absolutely must report it on your return. The IRS gets copies of all 1099-R forms and will send you a notice if there's a mismatch between what they have and what you reported. Your tax software should handle it fine once you enter all the information exactly as shown on the form. Don't overthink it - just input the details and let the software do the calculations. Most likely you won't owe any additional tax, but you'll have properly documented the distribution for IRS records. If you're still unsure, I'd recommend calling your retirement account administrator to confirm exactly what type of distribution this was and why it received code P. They usually have tax specialists available during filing season who can clarify these situations.

I just went through this exact situation a few months ago with my own 1099-R code P, so I totally understand your confusion! Here's what I learned that might save you some stress: First, don't panic - code P is actually good news. It indicates a qualified distribution from a Roth account, which means it should be tax-free. The distribution goes on the tax return for the year shown on the 1099-R form itself (look for the tax year box, usually in the upper right), not when you received the document. Since you mentioned this was from an old 401(k) and the amount is $28,500, this sounds like it might have been a Roth 401(k) distribution or rollover. The key thing is that even though it's likely not taxable, you absolutely must report it on your return - the IRS gets copies of all 1099-R forms and will send you a notice if there's a mismatch. Your tax software should handle it fine once you enter all the information exactly as shown on the form. You'll probably need to complete Form 8606 as well to document the Roth distribution properly. If you're still uncertain about the specifics, I'd recommend calling your retirement account administrator directly. Most have tax specialists available during filing season who can explain exactly why your distribution received code P and confirm the reporting requirements. It's worth the call to get definitive answers rather than guessing. The bottom line: report it for the tax year shown on the form, don't stress about owing additional taxes (code P distributions are typically tax-free), but definitely don't skip reporting it entirely.

Something else to consider - accrual basis can actually be beneficial during economic downturns or when your business is growing. In a downturn, you can recognize expenses earlier while potentially deferring income recognition. During growth, it gives a more accurate picture of profitability. I switched to accrual 5 years ago and it initially seemed like a headache, but now I appreciate the clearer picture it gives of my actual business performance. The key is having good systems in place to track everything properly.

One thing that really caught me off guard after switching to accrual was the timing of quarterly estimated tax payments. Since you're now recognizing income when earned (not received), you might owe taxes on money you haven't actually collected yet. This can create cash flow issues if you have slow-paying clients. I learned this the hard way when I had a big project complete in Q4 but didn't get paid until the following year. Still had to pay estimated taxes on that income in January, even though the cash wasn't in my account yet. Now I set aside tax money as soon as I invoice, not when I get paid. Also, make sure your bookkeeping software can handle accrual properly. Some basic programs aren't great at tracking the timing differences between when income is earned vs. received.