Has anyone tried using the "Nutshell" series? I heard the "Federal Income Tax in a Nutshell" is pretty good for beginners who want to understand the basics without getting overwhelmed.

I'd add "Understanding Federal Income Taxation" by J. Martin Burke and Michael K. Friel to this great list of recommendations. It's specifically designed for people who want to understand tax law conceptually rather than just follow mechanical rules. What sets it apart is how it uses flowcharts and visual aids to break down complex concepts like the realization requirement, basis adjustments, and like-kind exchanges. The authors do a fantastic job explaining the policy rationale behind different tax provisions, which really helps you understand WHY the code works the way it does rather than just memorizing what it says. It's updated regularly and strikes a nice balance between being comprehensive enough for serious study but accessible enough that you won't need a law degree to follow along. The practice problems at the end of each chapter are also really helpful for testing your understanding.

Sorry this happened to you. Just to add a warning - be extra careful with this. My friend tried to claim stolen crypto as a loss in 2024 and got audited. The IRS made him provide tons of documentation. They're REALLY suspicious about crypto "theft" claims since some people try to use it to avoid taxes. Make sure you have solid proof it was actually stolen!

I went through something very similar last year when my hardware wallet got compromised and $15k in crypto was stolen. Here's what I learned from working with a tax attorney: You absolutely need to report the "sale" on Form 8949 as if you disposed of the crypto on the date it was stolen, but you can also claim a theft loss. The key is having bulletproof documentation - police report, wallet provider confirmation of unauthorized access, transaction logs showing the transfer to unknown addresses, and any communication attempts with exchanges where the thief cashed out. One thing that helped my case was getting a forensic analysis from a blockchain analytics company that traced the stolen funds and showed they were mixed/tumbled, which is classic money laundering behavior thieves use. This cost me about $500 but was worth it during my audit. Also, keep in mind that theft losses are subject to a $100 floor per incident, and you can only deduct the amount that exceeds 10% of your adjusted gross income. So depending on your income, you might not be able to deduct the full loss amount. The process is stressful but doable if you have proper documentation. Don't let the fear of an audit stop you from claiming what you're legally entitled to claim.

I completely understand your frustration! As someone who's dealt with S-Corp filings for several years, I can confirm that yes, the penalties apply even when there's no tax liability. The $210 per shareholder per month penalty is automatic under IRC Section 6699. A few key points for your situation: - The penalty starts accruing from the day after the original due date (March 15th for calendar year S-Corps) - It applies for up to 12 months maximum - Drake should calculate this penalty, but definitely verify it manually One thing that might help your client: if they have a clean filing history for the past 3 years, they may qualify for first-time penalty abatement. Also, if there were legitimate circumstances that prevented timely filing (like their previous accountant's issues), they could potentially argue "reasonable cause" for penalty relief. My advice: file the current year return ASAP, and consider submitting a penalty abatement request with a detailed explanation of the circumstances. Even if partially successful, it could save your client hundreds or thousands in penalties.

One thing I'd add that hasn't been mentioned yet - make sure to check if your client's S-Corp election is still valid! If they've been filing late consistently, the IRS might have terminated their S-Corp status without them realizing it. This would mean they'd be taxed as a C-Corp instead, which creates a whole different (and much worse) penalty and tax situation. You can check this by looking at their Entity Classification Election status or calling the IRS Business & Specialty Tax Line. If the S-Corp election was inadvertently terminated due to late filings, you might need to file for relief under Rev. Proc. 2013-30 to get it reinstated. Also, since you're new to Drake for S-Corps, double-check that the software is properly calculating the penalty on the correct number of shareholders. I've seen cases where people forgot to account for spouse shareholders or missed shareholders who only held stock for part of the year. The penalty calculation can get tricky with mid-year ownership changes. Good luck with the filing! The penalties are harsh but there are definitely options for relief if you document everything properly.

Has anyone noticed how tax software doesn't handle these weird K1 scenarios very well? I got stuck on the exact same Box 17 AC with multiple years listed. Ended up calling my tax software's support line and they said to just use the most recent year and ignore the others. For any codes without dollar amounts (like your ZZ code), they said to leave them out completely if possible or enter $0 if the software forces you to enter something.

I've been dealing with S-Corp K-1s for several years now and can confirm what others have said - for Box 17 AC with multiple years listed, you only report the most recent year (2024 in your case) on your current tax return. The prior years are there for informational/tracking purposes only. For the ZZ code with "k3 not included" and no dollar amount, this is totally normal. The Schedule K-3 is for international transactions, and if your S-Corp doesn't have any foreign activities, there's no K-3 form to include. When your tax software asks for an amount with code ZZ, you can safely enter $0. This won't cause any issues with the IRS - they understand that some codes are informational only. One tip: make sure to keep a copy of your actual K-1 with your tax records in case there are ever questions later about why certain codes show zero amounts in your return versus what's printed on the form.

I just wanted to add that you're ahead of the game by even asking this question! So many new small business owners miss their first 941 filing and end up with penalties. The fact that you're using a payroll service and asking these questions before the deadline means you're already doing great. One tip: Set calendar reminders for all your quarterly tax deadlines now that you're an employer. The 941 is due by the end of the month following the quarter (April 30 for Q1), but there are also deposit schedules for the actual tax payments that are separate from the form filing. Your payroll software should handle the payments, but it's good to verify everything is happening on schedule.

Hey Kristin! Welcome to the world of being an employer - it's definitely overwhelming at first but you'll get the hang of it. Everyone has already given you great advice about the March 12 date (it's just a statistical snapshot, not your actual filing requirement). Since you're using Gusto, I'd recommend double-checking that they're set to file your 941 automatically for you. Most payroll services offer this as part of their service, which can save you from having to worry about the filing deadlines and form preparation. If they're not handling the filing, make sure you know exactly when your Q1 form is due (April 30th) and set that reminder now. Also, don't forget that as a new employer, you might be subject to semi-weekly deposit schedules depending on your payroll amounts. Gusto should handle this automatically, but it's worth confirming so you don't accidentally miss any deposit deadlines. The deposit penalties can be pretty steep even for small amounts. You're asking all the right questions - keep it up!