We use Drake Tax Software for our small C-corp and it works great for 1120 filing. The software costs around $650 for the business package but it's much cheaper than hiring a CPA firm. It handles the e-filing seamlessly and has good import options for QuickBooks. One thing to watch out for with your situation - if the shareholders are taking money out less than they put in, make sure you properly document whether these are intended as loans, returns of capital, or compensation. The IRS looks closely at C-corp transactions with owners because they know people try to avoid double taxation.

Just want to add that if the C-corp is operating at a loss in the first year (which is common for startups), you need to be extra careful with how you classify shareholder compensation. The IRS might question why you're paying salaries when there's no profit. Make sure any compensation is "reasonable" for the services provided. Another option nobody mentioned is using a service like Tax Preparation Financial in your area - they often have reasonable flat fees for basic C-corp returns and can handle the employment issues properly.

Quick question - does anyone know if the 6% excise tax on excess contributions continues to apply each year until you withdraw the excess? I just discovered I've had an excess HSA contribution sitting there for 2 years!

I went through this exact same situation last year with a $2,000 HSA overcontribution that I kept in cash. The IRS guidance is actually pretty clear on this - you only need to calculate earnings on what the excess contribution actually earned, not use the complex formula when the funds were segregated. Since your $1,650 was sitting in cash at 0.01%, your earnings calculation is straightforward: $1,650 × 0.0001 = about $0.17 for the year (assuming it was there the full year). That's the amount you'd need to withdraw along with the $1,650 excess. The complex formula everyone mentions is only required when excess contributions are commingled with investments and you can't directly trace the specific earnings. Since you kept yours separate in cash, you're in the clear with the simple calculation. Make sure to request a "return of excess contributions" from your HSA provider (not a regular distribution) and complete Form 5329 to report any excise tax owed for the time the excess remained in your account. Better to fix it now than let that 6% annual excise tax keep accumulating!

Has anyone here actually gotten audited by the IRS for premium tax credit issues? I'm in a similar situation but honestly thinking about just claiming the credit for all months and seeing what happens. It's only about $340 for that overlap month and seems like a lot of hassle to figure out.

I went through almost exactly this situation last year and can confirm what others have said - you'll need to repay the APTC for that overlap month. The IRS considers you ineligible for the premium tax credit during any month when you were eligible for qualifying employer coverage, regardless of whether you actually used both plans. A few practical tips from my experience: 1. Make sure to check your employer's plan documents for the exact eligibility date - sometimes it's different from when coverage actually starts 2. Keep documentation of when your employer coverage began in case the IRS asks for proof later 3. The repayment caps mentioned earlier can really help limit what you owe if your income qualifies One thing that caught me off guard was that my tax software initially missed the overlap entirely until I manually entered the employer coverage dates. Double-check that your software is accounting for both coverages correctly when calculating your Form 8962. The good news is that even though you have to repay that month's APTC, you can still claim the premium tax credit for the other 6 months where you only had marketplace coverage. It's frustrating but not as bad as having to repay everything!

Don't forget to look at the W-2 at tax time! Box 12 with code DD will show the total cost of employer-sponsored health coverage. This isn't taxable itself but can help you figure out the value. Also, if your state recognizes domestic partnerships for tax purposes (like California), the state tax implications might be different from federal.

The math on this can be pretty eye-opening! To break it down simply: you're looking at two separate tax hits. First, the $230 premium comes out of her paycheck post-tax (so she's paying income tax on money that then goes to premiums). Second, whatever amount the employer contributes toward your coverage gets added to her taxable income as "imputed income." A rough estimate: if the employer contributes around $400-500 monthly for your coverage, that's an extra $4,800-6,000 in taxable income per year. At a 22% tax bracket, that's roughly $1,056-1,320 in additional federal taxes annually, plus state taxes if applicable. You can get the exact employer contribution amount from her benefits summary or by calling HR. Once you have that number, multiply by her marginal tax rate to see the real tax cost. It's often 2-3 times higher than just the premium amount, which explains why her paycheck took such a big hit!

The specific IRS guidance on this is in Publication 529 under "Work Clothes and Uniforms." It says you can deduct the cost of clothing if: 1) You must wear them as a condition of your employment, AND 2) The clothes aren't suitable for everyday wear. It specifically mentions nurses, firefighters, police officers, and delivery workers as examples where uniforms qualify. But for tradespeople it's more about whether the clothing is specialized and not adaptable for everyday use.

As a tax professional, I want to emphasize that the "grocery store test" mentioned earlier is actually a pretty good rule of thumb, but there's one more nuance worth considering: protective equipment versus clothing. Items like hard hats, safety goggles, respirators, and specialty gloves are almost always deductible because they're clearly protective equipment rather than clothing. But when it comes to actual clothing items, the IRS really does focus on whether they're "adaptable to general usage." For electricians specifically, flame-resistant clothing designed to meet OSHA standards is typically deductible because it serves a specialized safety function. Regular work shirts, even if you embroider your company name on them, usually aren't. One thing that trips up a lot of self-employed folks: cleaning and maintenance of qualifying work clothing is also deductible. So if you have legitimate work uniforms that need special cleaning (like flame-resistant coveralls), those cleaning costs count too. The key is documentation - keep receipts and be prepared to explain why each item was specifically required for your trade and not suitable for everyday wear. The IRS can be quite strict on this deduction during audits.