Has anyone had experience with how state taxes treat the PPP loan forgiveness for S-Corps? I know federally it's tax-exempt, but I've heard some states are treating it differently and it's causing issues with the state-equivalent of the 1120S.

Just went through this exact situation with my S-Corp last month! The PPP forgiveness definitely goes on Schedule K line 16b as tax-exempt income, and yes, it increases your shareholder basis even though it's not taxable. For Schedule M-2, you'll report it on line 3 as "Other additions" to your AAA (Accumulated Adjustments Account). This is crucial because it affects your ability to take distributions without tax consequences later. One thing that tripped me up initially - make sure your QuickBooks entries are set up correctly. I created a separate income account called "PPP Loan Forgiveness" and marked it as non-taxable income. This way it flows through properly for tax reporting but doesn't mess up your regular P&L analysis. The $42,000 forgiveness will definitely help your basis position, which is great if you need to take any distributions or if the business has losses to pass through. Keep all your forgiveness documentation with your tax records - you won't need to attach it to the return, but the IRS could ask for it later.

Anyone know if this affects Medicaid eligibility? My sister is disabled and on SSI, and I want to claim her as a dependent, but I'm worried it will mess up her benefits. Does the IRS report to Medicaid?

This is such a helpful thread! I'm in a similar situation with my adult nephew who has autism. He's 26, receives SSI, and lives with me. I've been scared to claim him because I didn't want to mess up his benefits or get in trouble with the IRS. Reading through everyone's experiences, it sounds like the key is really documenting that support calculation properly. I think I provide way more than half his support when you factor in housing, food, and all his therapy appointments I drive him to, but I never actually sat down and calculated it all out. The fair rental value tip is really helpful - I never would have thought to include that in the support calculation. Going to check some local room rental listings this weekend and start gathering receipts. Thanks everyone for sharing your real experiences instead of just guessing!

Welcome to the world of W2 employment! That 21% withholding rate is actually pretty typical for your income level. Here's a rough breakdown of what you're probably seeing: - Federal income tax: ~12-15% (depends on your W-4 filing status and allowances) - Social Security: 6.2% - Medicare: 1.45% - State tax: varies by state, could be 0-8%+ - Possibly local taxes or SDI depending on your location The good news is that withholding is just an estimate - it's designed to get you close to what you'll actually owe. When you file your tax return next year, you'll either get a refund if too much was withheld, or owe a bit more if not enough was taken out. Pro tip: Keep your first few pay stubs and compare them when you do your taxes next year. This will help you understand whether your withholding is on target or if you need to adjust your W-4 for the following year. Most people prefer to get a small refund rather than owe money, but you don't want to give the government too big of an interest-free loan either!

Just wanted to add my perspective as someone who went through this exact same shock a few years ago! That 21% is definitely normal - I remember feeling like I was being robbed when I saw my first real paycheck. One thing that really helped me was setting up a simple spreadsheet to track my paystubs throughout the year. I'd note the gross pay, total taxes withheld, and my take-home amount. By the time tax season rolled around, I had a clear picture of whether I was on track for a refund or if I'd owe money. Also, don't forget that some of those "taxes" might actually be beneficial deductions! Things like health insurance premiums, dental/vision coverage, or retirement contributions show up as deductions but they're going toward your benefits. Make sure you're reading your paystub carefully to understand what's actually tax withholding versus other deductions. The learning curve is steep at first, but you'll get the hang of it. And honestly, once you understand how it all works, you can make strategic decisions about things like retirement contributions or flexible spending accounts that can help optimize your take-home pay while reducing your tax burden.

Last year I was in your shoes (except with just one kid from prior relationship). I almost let my boyfriend claim all of us thinking it would be better... thank god I filed my own return! 😂 Got almost $5,000 back with EITC and Child Tax Credit with my low income. The tax system actually benefits single parents with lower incomes in many cases. My boyfriend's refund would have only increased by like $500 if he claimed me and my son. Run the numbers both ways if you want, but I'd bet money you'll come out ahead filing on your own.

Based on your situation, you should absolutely file your own return and claim your two biological children. With a $10,000 income and two qualifying children, you're likely looking at a substantial EITC refund - potentially several thousand dollars that you'd completely lose if your boyfriend claims you as a dependent. Here's the key issue: even if your boyfriend *could* claim you as a dependent (which requires very specific conditions), doing so would disqualify you from claiming your own children and receiving the EITC. The EITC is designed to benefit lower-income working families, and with two kids, your credit could be significant. A few important points to verify: - Make sure your boyfriend cannot claim either of your two biological children (they need to pass the qualifying child tests for him, which is unlikely if they're not his biological children and didn't live with him the full year) - Coordinate carefully so there's no overlap in who claims which child - Consider filing as Head of Household if you qualify, which could provide additional benefits The math almost certainly works in your favor to file separately. You'd be leaving potentially thousands of dollars on the table otherwise.

One important thing nobody's mentioned - if you file on time but your return gets rejected after the deadline, make sure you keep proof of your original filing attempt! Screenshot the confirmation page showing you submitted before the deadline. This has saved me from penalties twice when dealing with rejections. The IRS system timestamps your submission attempt, not just the final acceptance.

Great question about payment timing! As others have mentioned, you should always make your payment by the filing deadline regardless of acceptance status. I learned this the hard way a few years ago when I waited for acceptance and ended up paying interest on late payments. One thing to add - if you're ever unsure about your exact tax liability close to the deadline, it's better to overpay slightly than underpay. The IRS will send you a refund for overpayments (though it takes time), but underpayments start accruing interest and penalties immediately after the deadline. Also, for future reference, you can make payments online through IRS Direct Pay or EFTPS even if your return hasn't been accepted yet. Just make sure to include your SSN and tax year so the payment gets properly credited to your account when your return is eventually processed. Glad your return got accepted! The 1095-A forms can definitely cause processing delays, especially when combined with dependent status questions.