Has anyone used TurboSelf-Employed for tracking these kinds of expenses? My accountant charges me a fortune and I'm wondering if I could DIY with the right software.

Great question! I've been self-employed for about 5 years now and have dealt with this exact situation multiple times. The key thing to remember is that you can't deduct the value of your time, but you absolutely can deduct legitimate business expenses incurred during client acquisition. Since you mentioned spending 80 hours over two weeks, I'd suggest going back through that period and documenting every actual expense you had. This might include gas/mileage if you drove to meetings, any materials you purchased for the proposal, software subscriptions you used, coffee/meals during client meetings (50% deductible), and even a portion of your home office expenses if you qualify. One thing that helped me was creating a simple spreadsheet to track all expenses by potential client, even when deals don't close. That way I have documentation ready at tax time. The IRS allows these client acquisition costs as ordinary and necessary business expenses on Schedule C, but good record-keeping is essential. Also, since this client did sign the contract, all those expenses are clearly legitimate business costs that led to actual revenue. Make sure to keep copies of your SOW, meeting notes, and any receipts from that period.

Can I piggyback on this question with a related margin interest issue? If I use margin to buy both stocks and options, but only sell the options for a profit while keeping the stocks, can I deduct all the margin interest? Or only the portion related to the options I sold?

Just wanted to add a practical tip from my experience with a similar situation. When you're preparing your taxes, make sure you have good documentation of all your margin interest payments throughout the year. Your brokerage should provide this on your 1099-INT or in your monthly statements, but it's worth double-checking the totals. Also, keep in mind that if you have multiple brokerage accounts, you'll need to aggregate all your investment income and all your investment interest expenses across all accounts when completing Form 4952. The IRS looks at your total investment picture, not account by account. One more thing - if you're planning to continue using margin in future years, consider keeping a spreadsheet to track your margin interest payments monthly. This makes tax prep much easier and helps you project whether you'll have enough investment income to fully deduct the interest each year.

Just adding - even if your S election did go through, you might want to consider if it's actually better for your situation. Depending on your circumstances, you might actually benefit more from C corp status with the current 21% flat corporate tax rate. For my small business, we deliberately revoked our S status because of the tax advantages with retained earnings. Might be worth discussing with a tax pro whether the election rejection is actually a blessing in disguise.

I had a very similar experience last year! The key thing to understand is that the IRS processes S corp elections even if you don't receive confirmation. Since your 1120 was rejected, that's actually strong evidence your S election went through. Here's what I'd recommend: First, try logging into your IRS business online account at irs.gov - sometimes you can see your entity status there without calling. If that doesn't work, you can also request a transcript of your business account online or by mail using Form 4506-T, which will show if your S election is active. For the immediate filing issue, you'll need to prepare and file Form 1120-S instead of the 1120. The good news is that if you can show you never received the CP261 notice (reasonable cause), you may qualify for penalty relief when you file the correct return late. Just make sure to include a letter explaining the situation when you submit your 1120-S. One quick tip - check your spam/junk folder for any IRS emails, and also verify they have your correct mailing address on file. Sometimes these notices get lost due to address issues.

Just wanted to add my experience - we handled a similar situation differently. Our foreign investor (30% shareholder) paid some corporate expenses directly, and our CPA advised us to treat these as capital contributions rather than loans. The key factors in our decision were: 1. There was no expectation of repayment 2. No loan agreement was created at the time 3. The payments were relatively small (under $5k total) We documented this with a corporate resolution acknowledging the payments as capital contributions, which increased the shareholder's basis in the company. This was reported on line 19 of Part IV ("Capital contributions") instead of line 9 or 22. The approach you take really depends on whether there's an expectation of repayment or not.

I think everyone is overlooking the simplest approach here. When a foreign shareholder pays expenses on behalf of the corporation, you can treat this as a reimbursable expense. The corporation should record an account payable to the shareholder, and then when funds are available, reimburse them. This wouldn't need to be reported on Form 5472 at all if the reimbursement is done within a reasonable timeframe and at the exact amount (with no interest or other compensation). It's only when the arrangement becomes a long-term financing solution that it should be treated as a loan or capital contribution requiring 5472 reporting.

Don't forget that once you move to Japan you'll need to file Form 2555 for the Foreign Earned Income Exclusion! This is huge - it lets you exclude up to $128,750 (for 2025) of foreign earned income from US taxation if you meet either the physical presence test or bona fide residence test.

I went through this exact situation when I married my Korean spouse! A few additional things to consider that I learned the hard way: If you decide to get your wife an ITIN and file jointly, be prepared for the timeline - it can take 7-11 weeks to get the ITIN, and you might need to file for an extension if you're doing this during tax season. Also, make sure to get certified copies of her passport from the Japanese consulate or use an IRS-authorized Certifying Acceptance Agent in Japan rather than trying to mail original documents. One thing I wish someone had told me: if your wife has any financial accounts in Japan with your name on them (even just as a beneficiary), you might need to report those on Form 8938 (FATCA) in addition to FBAR, depending on the account values. The thresholds are different for overseas residents. Also, since you're planning to move to Japan, start keeping detailed records of your time outside the US now. You'll need this for the Foreign Earned Income Exclusion physical presence test. I use a simple spreadsheet tracking entry/exit dates - it's saved me so much headache come tax time! Good luck with everything, and congratulations on your marriage!