Don't forget that if you're married, having your spouse be an employee of the company (a real employee with actual duties) can open up some options. You could potentially provide health benefits to employees without running into the 2% shareholder limitations. This only works if your spouse isn't also a shareholder though.

One thing I haven't seen mentioned yet is the importance of timing when implementing these strategies. If you're going to start having your S-Corp pay health insurance premiums directly, you need to make sure this is consistent throughout the entire tax year. You can't just start doing it partway through the year for the expenses you've already paid personally. Also, keep in mind that if you do switch to having the corporation pay premiums directly, you'll need to adjust your officer compensation accordingly since this will increase your W-2 wages. This might push you into a higher tax bracket, so run the numbers carefully. For those considering the spouse employment route, remember that you'll also need to factor in the additional payroll taxes and potential workers' compensation requirements depending on your state. Sometimes the administrative burden can outweigh the tax benefits, especially for smaller operations.

This isn't legal advice, but I'm a tax preparer and we see this question occasionally. The biological product vs service distinction is key here. The IRS has ruled in similar cases (like plasma donation) that selling biological materials is not self-employment. Look at PLR 8814010 and the Garber case for precedent. Those deal with plasma, but the principle applies to sperm donation too. To be safe, report the income on Schedule 1, Line 8 (Other Income) and include a brief description like "Biological materials donation - 1099-MISC." This clearly shows you're not trying to hide income but also aren't classifying it as self-employment.

Random question - but did they withhold any taxes from your payments? When I donated last year they didn't withhold anything and I got hit with a big tax bill because I didn't set aside money. Just a heads up to maybe make estimated tax payments if you continue donating.

22 The same thing happened to me last year! Check your Nerdwallet confirmation email very carefully - there should be a section that shows the scheduled payment date. A lot of tax software defaults to withdrawing on the due date (April 15th) rather than immediately when you file. If you're worried, you could always make a direct payment through the IRS website using their Direct Pay feature, but keep records of both payment attempts in case you need to request a refund for double payment later.

I had a very similar experience with FreeTaxUSA last year! The key thing to understand is that there's often a delay between when your return is "accepted" and when the payment is actually processed. The IRS acceptance just means they received your tax forms successfully, but the payment processing happens on a separate timeline. What saved me a lot of stress was checking my original filing confirmation very carefully - it turned out I had unknowingly selected a payment date of April 15th instead of immediate withdrawal when I filed in early March. Many tax software programs default to the tax deadline date unless you specifically choose otherwise. I'd recommend logging into your Nerdwallet account and looking for any payment scheduling details in your filing summary. Also check all email confirmations and PDF attachments - sometimes the payment date is buried in there. If you can't find it or want peace of mind, you could always make a backup payment through IRS Direct Pay, just keep detailed records in case you need to request a refund for any overpayment later.

My accountant told me to just use a percentage of the original purchase price rather than trying to figure out fair market value. He said 70% of original cost for items 1-2 years old, 50% for 3-4 years old, and 30% for 5+ years old. Has anyone else heard of this approach?

This is exactly the situation I was in last year! I converted my townhouse to a rental and kept most of my furniture. Here's what I learned through the process: You definitely can depreciate those items, but documentation is key. I created a spreadsheet with each item, its original purchase date, estimated fair market value at conversion, and took photos of everything. For valuation, I checked similar items on Facebook Marketplace and eBay sold listings to get realistic fair market values. One tip that saved me time: for items under $100 each, I grouped them by room (like "Living room decor - $250" or "Kitchen utensils - $180"). This kept the paperwork manageable while still capturing the value. The IRS allows reasonable estimates for fair market value, so don't stress too much about being exact to the dollar. Just be consistent in your approach and keep good records. I used the 5-year MACRS depreciation schedule for everything except some electronics that qualified for 3-year depreciation. Also, consider whether you want to take Section 179 deduction for some items instead of depreciating them over time - sometimes it makes sense to expense smaller items immediately rather than depreciating them.

One other thing to consider - depending on your state, you might be able to get some state tax relief even if you can't lower your federal bracket. Some states have more generous deductions or lower rates for certain types of income. What state are you in?

I'm dealing with a very similar situation after receiving a large severance earlier this year. One strategy that worked well for me was timing my year-end bonus deferral at my new job - if your employer offers this option, you might be able to defer some of your December income to next year. Also, don't forget about the potential for increasing your state tax withholding if you're in a state with income tax. While it won't change your federal bracket, making sure you're not hit with additional state penalties can help your overall tax situation. Have you looked into whether you can contribute to a SEP-IRA if you did any freelance or consulting work during your unemployment period? Even small amounts of self-employment income can open up significantly higher contribution limits than traditional IRAs. The key is to act quickly since we're getting close to year-end. Many of these strategies need to be implemented before December 31st to count for this tax year.