I just want to thank everyone who contributed to this thread - you've all been incredibly helpful! As the original poster, I was completely lost about the bond premium situation, but now I feel like I actually understand what's going on with my 1099-INT. The explanation about how the premium gets amortized over the bond's life and reduces my taxable interest makes perfect sense now. I've already entered all my 1099-INT information into my tax software and double-checked that the Box 11 amounts are properly reducing my taxable interest income on Schedule B. For anyone else dealing with this for the first time like I was - the key takeaway is that Box 11 bond premium DOES reduce your taxable interest income, and your tax software should handle this automatically when you enter the full 1099-INT information. Just make sure to double-check that the reduction actually got applied correctly! Thanks again everyone - this community is awesome for helping people navigate these confusing tax situations!

I'm glad to see this discussion has been so helpful for everyone! As someone who works with tax issues regularly, I want to emphasize that bond premium amortization is one of those areas where it's really worth understanding the basics, especially if you're planning to invest in bonds long-term. One additional point that might be helpful - if you have bonds in a tax-advantaged account like an IRA or 401(k), the bond premium rules work differently since those accounts are already tax-sheltered. The premium amortization only matters for bonds held in taxable accounts. Also, keep in mind that if you sell a bond before maturity, any remaining unamortized premium will affect your cost basis calculation, which could impact whether you have a capital gain or loss on the sale. Your brokerage should provide this information on Form 1099-B when you sell. It's great to see community members helping each other understand these complex tax concepts - that's exactly what this forum is for!

One aspect nobody's mentioned is health insurance. As a >2% S Corp shareholder, your health insurance premiums can't be paid pre-tax through the company like regular employees. Instead, the company pays them, includes them as taxable wages on your W-2, then you deduct them on your personal return. This gets complicated and can impact your overall savings calculations, especially if you're purchasing your own health insurance as a healthcare contractor. Also, retirement options change. SEP IRAs are simple as a sole proprietor, but S Corps often use Solo 401(k)s instead, which allow for potentially higher contributions but more paperwork. Consider these factors in your total cost/benefit analysis. The tax savings need to outweigh ALL the additional complexities.

Based on your $118k income and 28-hour work week, you're right at the threshold where S Corp benefits become marginal. Here's what I'd consider in your position: Your reasonable salary calculation of $53.8k (28 hours × $37/hour × 52 weeks) is defensible, but consider using annual hours instead of weekly estimates to account for time off. The IRS likes to see documentation showing how you arrived at your salary. At your income level, you'd save roughly $9,800 in SE tax on the $64k distribution portion, but after factoring in setup costs (~$2,000), ongoing expenses (~$3,000-4,000 annually), and your state's 5.5% corporate tax (~$6,500), your net savings would be minimal - maybe $0-2,000 annually. Given the administrative burden and your stable hourly income model, I'd suggest waiting until you're consistently earning $140k+ before making the switch. At that point, the math becomes more compelling and justifies the complexity. For now, focus on maximizing your SEP-IRA contributions (up to $29,500 for 2024) and other deductions available to sole proprietors. The S Corp will still be there when your income grows.

Has anyone considered the wash sale implications with this strategy? If you're buying the same stock across multiple accounts around the same time period, and then selling at a loss in some accounts while keeping others, you could accidentally trigger wash sale rules that disallow those losses.

Another angle to consider is the reporting complexity when tax season comes around. Even if the strategy were profitable, you'd be dealing with potentially 20+ 1099-B forms, each with their own cost basis calculations and transaction details. I've handled multiple brokerage accounts before (though not nearly 20), and it becomes a nightmare to reconcile everything properly. Each brokerage may handle the reverse split rounding differently in their reporting, some might show it as a stock dividend, others as a reorganization event. You'd need to be extremely meticulous with your record-keeping to ensure you're reporting everything correctly and consistently. Also worth noting that if any of these accounts have small balances, some brokerages charge inactivity fees or account maintenance fees that could easily eat into any gains from the rounding strategy. The administrative burden alone might outweigh the potential benefits.

Does anyone know if you can transfer a 529 plan from a parent to a grandparent? My situation is backwards from most - I opened 529s for my grandkids but now their parents make more money than me and could benefit from the state tax deduction more than I can.

Great question! I went through this exact decision a few years ago with my kids. Definitely keep the 529 plans in your name (or yours and your wife's) with the twins as beneficiaries - don't put them directly in the kids' names. Here's why this matters for your situation: Since you mentioned being in a higher tax bracket, you'll want to maximize any state tax deductions available. Most states that offer 529 deductions only give them to the account owner, so having the plans in your names ensures you can claim those deductions. Also, for financial aid purposes down the road, parent-owned 529s are assessed at only 5.64% when calculating expected family contribution, versus 20% if the student owns the account. That's a huge difference that could affect aid eligibility. One more benefit - keeping ownership gives you flexibility. If one twin gets a full scholarship or decides not to go to college, you can easily change the beneficiary to the other twin or even use it for graduate school later. You maintain complete control over the funds until they're withdrawn for qualified expenses. The tax advantages (tax-free growth and tax-free withdrawals for education) are the same regardless of ownership structure, so there's really no downside to the parent-owned approach.

I've been using FreeTaxUSA for the past 3 years and it's WAY better than TurboTax or H&R Block. Federal filing is completely free and state is only $15. No hidden upgrades or confusing tiers of service. Just straightforward filing.

This is exactly why we need more people to know about these alternatives! I've been using the actual IRS Free File program for years (when I can find it buried on their website), but it's ridiculous that they make it so hard to locate. The fact that TurboTax was literally hiding their free version from search engines should be criminal. We're talking about a basic government service that every citizen needs, and private companies are deliberately making it harder and more expensive just to pad their profits. What really gets me is that my tax situation isn't even complicated - just W-2 income and standard deduction - yet I was paying $60+ every year before I found the free options. Multiply that by millions of taxpayers and you can see why these companies fight so hard to keep the system broken.