Just wanted to add a quick tip - when I did my OIC last year, I used the NADA guide instead of KBB for my car values. My revenue officer told me they often prefer NADA because it tends to be more conservative and realistic about used car values, especially for older vehicles with issues.

This is really great advice from everyone here! I'm going through a similar situation with my OIC and was making the same mistake of trying to do the math myself (good condition value minus repair costs). One thing I learned from my tax preparer is that you should also consider getting documentation from a used car dealer showing what they'd actually pay for your car in its current condition. Sometimes this "trade-in" value can be even more accurate than KBB or NADA for demonstrating true "quick sale" value, especially if your car has significant issues. I ended up getting quotes from three different places: a CarMax-type dealer, a local used car lot, and a mechanic who also buys cars for parts/repair. The lowest of those three values became my documented "as-is" value for the OIC. Having multiple sources of valuation really strengthened my case and showed the IRS I wasn't trying to lowball the asset value.

One thing nobody mentioned - if you had ANY taxes withheld from your paychecks (which you probably did), you DEFINITELY want to file even if you're under the required threshold. Otherwise you're just giving free money to the government that should be coming back to you as a refund!

Maya, congratulations on your first job! You're asking all the right questions. Based on what you've shared, you'll very likely need to file a tax return since you'll probably exceed the $6,000 threshold for dependents by the end of the year. Here's what I'd recommend: Keep track of your total earnings from your paystubs, and when you get your W-2 in January, that will show your exact annual income and how much was withheld for taxes. Even if you somehow end up just under the filing requirement, you should still file to get back any taxes that were withheld from your paychecks. The good news is that as a dependent with straightforward W-2 income, your tax situation is pretty simple. The IRS Free File program will have several free options perfect for your situation. Start checking the IRS website (irs.gov) in late January for the free filing options - they usually open up around the end of January/early February. Don't stress about it too much - millions of people file their first tax return every year, and the process is designed to handle basic situations like yours pretty easily!

Quick question - does anyone know if the W-8BEN form needs to be renewed? I'm also from India and submitted one 2 years ago but not sure if I need to do it again this year?

Just wanted to share my recent experience as another Indian citizen who struggled with the W-8BEN form! I was in the same boat a few months ago - totally confused about which lines to fill out and which ones I could skip. After reading through all the advice here, I ended up using a combination of approaches. First, I tried the taxr.ai tool that Clay mentioned, which was actually really helpful for understanding the form line by line. It specifically addressed my situation as an Indian nonresident alien. Then I had some follow-up questions, so I used Claimyr to get through to an actual IRS agent (took about 2 hours of waiting, but way better than my previous failed attempts). The agent confirmed that: - Line 4 (permanent residence) must be filled with your Indian address - Line 7 can use your PAN number - Part 3 can typically be left blank for individuals - For treaty benefits on line 9, you can claim both dividend and interest reductions if applicable The whole process was way less scary than I thought! My bank accepted the form without any issues. Hope this helps other Indian citizens who are dealing with this confusing form.

Great question! As others have mentioned, S corps are pass-through entities, so the corporation itself doesn't pay federal income tax on profits. However, you'll still need to make quarterly estimated tax payments on your personal return (Form 1040-ES) based on your expected income from the S corp. One thing to keep in mind is that if you're actively working in the business, you're required to pay yourself a reasonable salary through payroll. This salary is subject to payroll taxes (Social Security and Medicare), and you'll need to make regular payroll tax deposits. The remaining profits can then be distributed to you as distributions, which aren't subject to payroll taxes but are still taxable income on your personal return. Also don't forget that your S corp still needs to file Form 1120-S annually by March 15th, even though it doesn't pay federal income tax. This generates your Schedule K-1, which you'll need for your personal tax return. Since this is your first year with an S corp, I'd recommend working with a tax professional to make sure you're handling the reasonable salary requirement correctly - the IRS scrutinizes this closely.

One thing that caught me off guard my first year was the self-employment tax savings aspect of S corps. Unlike sole proprietorships where you pay self-employment tax on all business income, with an S corp you only pay payroll taxes (Social Security/Medicare) on your salary, not on distributions. This can result in significant tax savings, but only if you're paying yourself that "reasonable salary" everyone's mentioned. For quarterly estimated taxes, I use Form 1040-ES and base my payments on my expected total income for the year - both the salary from my S corp and the anticipated distributions. Don't forget to account for any tax withholdings from your S corp salary when calculating how much you need to pay in estimates. Also, since you mentioned this is your first year, make sure you understand the different deadlines: your S corp payroll tax deposits (if you have employees), quarterly personal estimated taxes (4/15, 6/15, 9/15, 1/15), and the annual S corp return (Form 1120-S due 3/15). It can feel overwhelming at first, but once you get into the rhythm it becomes much more manageable!

Side note but if you're looking at EVs, make sure you understand the new rules for the tax credit. Not all EVs qualify anymore! Has to be assembled in North America and there are battery component requirements too. Plus there are income limits ($150k for single filers). The dealer should be able to tell you if a specific model qualifies.

Just wanted to add that while you can't become truly "tax exempt" as an individual, there are some situations where people effectively pay zero federal income tax through credits and deductions. For example, if you qualify for the Earned Income Tax Credit (EITC), Child Tax Credit, and other refundable credits, you might not only eliminate your tax liability but actually get money back. However, this typically applies to lower income levels or families with children. At your $58,000 income level, you're probably past the income limits for many of these credits. The EV credit is great, but as others mentioned, it's a one-time benefit. Your best bet for long-term tax reduction is maximizing retirement contributions and taking advantage of any other credits you qualify for. Also remember that even if you eliminate federal income tax, you'll still owe Social Security and Medicare taxes (FICA) which can't be avoided.