Anyone know how the new 3.8% Net Investment Income Tax applies to S-Corps? I heard there were some changes coming in 2025 that might affect distributions...

Great question! The S-Corp strategy is definitely still viable in 2025, and with $145K in business income, you're right in the sweet spot where it typically makes financial sense. Here's my take: you'll likely want to set your salary somewhere in the $70K-$90K range (depending on your specific role and local market rates), which would still leave you with $55K-$75K in distributions that avoid self-employment taxes. That could save you roughly $8K-$11K annually in SE taxes alone. A few practical tips from someone who made this switch: - Start researching payroll services now (Gusto, ADP, etc.) - you'll need one - Document your salary decision thoroughly - save industry salary surveys, job postings, etc. - Factor in the extra costs: payroll service (~$500-600/year), additional tax prep fees (~$500-1000), and any state fees - Consider timing - you generally need to elect S-Corp status by March 15th for it to be effective for the current tax year Even with all the extra costs and complexity, most businesses in your income range see net savings of $5K-$10K annually. The break-even point is usually around $60K-$80K in business income, so you're well above that threshold. Just make sure to run the actual numbers for your situation before making the switch!

One thing nobody mentioned - if you rent through these Uber programs, track your charging costs separately too! Sometimes they give you free Supercharger access, but sometimes not. If you pay for charging, those costs are deductible too, just like gas would be. I rented a Model 3 last summer and saved all my charging receipts - added up to about $90/week in deductions my tax guy said I wouldn't have been able to claim otherwise.

Great question about mixing deduction methods! I went through this exact scenario two years ago when my personal car broke down mid-year and I switched to Uber's Tesla rental program. You're absolutely right that you can't use standard mileage for a rental vehicle - the IRS is very clear about that. But the good news is that the entire $340 weekly rental fee is indeed deductible as a business expense, assuming you're using the vehicle primarily for rideshare/delivery work. The key thing to remember is documentation. When you make the switch, create a clear cutoff date in your records. For the period with your personal vehicle, track your business miles and use the standard mileage rate (currently 65.5 cents per mile for 2023). Then from your rental start date forward, keep all rental receipts and track your business vs. personal use percentage. Also don't forget about the charging costs if your rental doesn't include free Supercharger access - those are deductible too! I kept a simple spreadsheet with charging receipts and it added up to decent additional deductions. One tip: if you're on the fence about timing, consider waiting until the start of a new quarter to make the switch. It makes the record-keeping cleaner and reduces any confusion if you get audited.

Has anyone heard if leasing might be a better option right now while we wait for the point-of-sale option? I heard that when you lease, the leasing company gets the tax credit and they often pass the savings to you through reduced lease payments. Might be a workaround for those of us with lower tax liability who don't want to wait?

This is such a timely discussion! I'm actually in the exact same boat as the original poster - looking to buy a Tesla Model Y in the next few weeks and trying to figure out the best approach. From everything I've read and the great advice shared here, it seems like the key decision really comes down to your tax liability situation. If you're confident you'll have at least $7500 in tax liability for 2024, then buying now and claiming it on your tax return might work fine. But if you're like me with a lower income or variable tax situation, waiting for the point-of-sale option could save thousands. One thing I'm curious about - has anyone seen any recent updates from Tesla specifically about when they expect to implement the point-of-sale option? I know they've been pretty vocal about wanting to offer it, but I haven't seen any timeline from them directly. Also, the leasing option that @Bruno Simmons and @Aileen Rodriguez mentioned is really intriguing. I hadn't considered that as a way to get the full benefit regardless of tax liability. Does anyone know if Tesla's lease deals are competitive when factoring in the tax credit pass-through? Thanks everyone for sharing your experiences - this thread has been incredibly helpful for understanding a really confusing situation!

Don't forget to adjust your W-4 again next year! I messed this up and had way too much withheld. Your withholding needs can change a lot when you have kids because of credits like the Child Tax Credit.

Congrats on baby Emma! Just wanted to add something important that others haven't mentioned - make sure you update your W-4 to reflect your new dependent. On the current W-4 form (2020 version), you'll want to fill out Step 3 where it asks about dependents. You can claim $2,000 for Emma since she's under 17, which will reduce your withholding appropriately. Also, since you're likely eligible for Head of Household status as others have explained, make sure you check that box in Step 1 rather than Single. The combination of HOH status plus claiming your child dependent will significantly reduce how much tax is withheld from your paychecks throughout the year. This means more money in your pocket each month rather than waiting for a big refund next year. One last tip - keep good records of all your household expenses (rent, utilities, groceries, childcare costs, etc.) since you'll need to prove you paid more than half the cost of maintaining your home when you file your actual tax return next year.

Be careful about one thing - while you won't get in trouble for the withholding being wrong, make sure you're actually filing correctly based on your marriage. If you've been accidentally filing as "single" on your tax returns when you should be filing as "married filing jointly" or "married filing separately," THAT could potentially cause issues. But it sounds like you've been filing correctly and just noticed the withholding issue, so you should be fine. The withholding is just an estimate of what you'll owe.

Don't stress too much about this - it's actually a pretty common situation! The key thing to remember is that your W-4 withholding election and your actual tax filing status are completely separate things. Your employer uses the W-4 to estimate how much tax to take out of each paycheck, but when you file your return, you use your actual marital status. Since you've been married for 6 years, when you file your 2025 tax return you'll file as either "married filing jointly" or "married filing separately" (whichever is better for your situation). The IRS will calculate your actual tax liability based on that correct filing status, and since you've been having taxes withheld at the higher "single" rate all year, you'll likely get a nice refund. For getting HR to fix this going forward - try being more direct. Email them with something like "I need my W-4 updated to reflect my correct marital status. I've been married since [date] and my current withholding is incorrect. Please let me know what forms I need to complete and when this can be processed." Sometimes being specific about exactly what you need helps cut through the bureaucracy. You're essentially getting an interest-free loan back from the government next year, but obviously it's better to have that money in your paychecks now!