I totally missed the Savers Credit last year when I filed with FreeTaxUSA. Would it be worth filing an amended return? I put about $1,800 into my Roth IRA last year and my income was around $32,000.

This is such an important reminder! I work in HR and see this all the time - employees contributing to their 401k through payroll deduction but completely unaware they could be getting additional tax credits for it. What's really frustrating is that many tax prep services don't always catch this either, especially the cheaper online options. I've started mentioning the Savers Credit during our annual benefits enrollment meetings because so many of our lower-income employees qualify but never claim it. One thing to add - if you're married and both spouses contribute to retirement accounts, you can potentially get the credit for both contributions (up to the annual limits). And remember, even small contributions count! You don't need to max out your retirement account to benefit from this credit.

This thread has been incredibly helpful! I'm in a very similar situation - my partner makes about $5,800 annually, so just over the dependent threshold. One thing I wanted to add that I learned from my benefits administrator: make sure you understand whether your employer calculates imputed income based on the full premium cost or just their contribution portion. My company only counts their subsidy as imputed income, not the total premium cost, which made a significant difference in my tax impact. Also, for anyone considering this, don't forget that some employers offer flexible spending accounts (FSA) that can help offset some of the additional tax burden. Even though the imputed income for your partner's coverage is taxable, you can still use pre-tax FSA dollars for their medical expenses. Has anyone here dealt with how this affects state taxes? I'm in California and trying to figure out if the state follows the same rules as federal for domestic partner coverage taxation.

I went through this exact situation two years ago and wanted to share a few additional considerations that might help. My partner makes around $6,200 annually, so like yours, just over the IRS dependent threshold. One thing that surprised me was how the timing of enrollment affected my taxes. I added my partner mid-year (July), so I only had imputed income for half the year. This actually helped me ease into understanding how it would impact my overall tax situation before committing to a full year. Also, make sure to ask your benefits administrator about the "look-back" period if your partner's income fluctuates. Some employers will reassess domestic partner eligibility annually based on the previous year's income, while others look at projected current year income. This could matter if your partner's income changes significantly from year to year. Another practical tip: if you're using direct deposit, the imputed income will show up in your regular paycheck deposits, so your take-home might be less than expected even though your gross pay appears higher on your paystub. I had to adjust my budget when I first noticed this. The good news is that even with the extra tax burden, it was still much cheaper than my partner getting individual coverage through the marketplace. Just make sure you factor in the full annual impact when making your decision!

This is really helpful information! I'm dealing with a similar situation but with a December 31st fiscal year end for my S-Corp. Just to make sure I understand the pattern correctly - since my fiscal year ends December 31, 2024, I would file a 2024 tax return by March 15, 2025, covering the period January 1, 2024 through December 31, 2024. The confusing part for me is that this means my S-Corp return and my personal return would both be for the same tax year (2024), but my K-1 income from the S-Corp gets reported on my personal return. Is there any timing issue I should be aware of when both returns are due around the same time in 2025? Also, @Mateo Sanchez, your point about needing a valid business purpose for non-calendar fiscal years is concerning. How do you determine if your fiscal year qualifies as a "natural business year"? My business is seasonal and most of our revenue does come in the last few months of the calendar year, so I'm wondering if that helps justify the December 31st end date.

Great question! I was in the exact same boat when I first set up my S-Corp with a fiscal year end. The rule is straightforward once you understand it: you file based on the calendar year in which your fiscal year ENDS, not when it begins. So for your fiscal year ending September 30, 2024, you'll file a 2024 tax return (Form 1120-S) due March 15, 2025. This return covers your business activity from October 1, 2023 through September 30, 2024. One thing that helped me keep this straight: think of it as "which year am I closing the books in?" Since you're closing your books in 2024 (September 30, 2024), that's your 2024 tax year. Also, don't forget that even though your S-Corp files for 2024, you'll report your K-1 income on your personal 2024 return too (due April 15, 2025). The timing works out since your S-Corp return is due first and should generate your K-1 in time for your personal filing. If you need more time, you can always file Form 7004 for an automatic 6-month extension on the S-Corp return. Good luck with your second year - it gets easier once you get the rhythm down!

Don't forget quarterly estimated tax payments if you go 1099! That was my biggest shock when I switched to contracting. You have to basically be your own payroll department and send estimated payments 4x per year or face penalties. It's not just about which option nets more money but also the administrative overhead.

Another consideration that might tip the scales: as a 1099 contractor, you'll have much more flexibility with retirement contributions. You can potentially contribute up to $69,000 annually to a Solo 401(k) (for 2024), which is way more than the typical $23,000 employee limit plus that 3% employer match you'd get as a W2. If you're disciplined about maxing out retirement savings, the tax deferral benefits of a Solo 401(k) could be massive. You could potentially reduce your taxable income significantly more than you'd lose by giving up the employer match. Plus, you get to control your investment options completely instead of being limited to whatever plan the employer offers. The key is actually doing it though - it requires more self-discipline than having automatic payroll deductions, but the potential upside is substantial if you're already a good saver.

If you're a solo owner, don't forget about health insurance! Your S-Corp can reimburse you for health insurance premiums, which creates a business deduction for the S-Corp and isn't subject to FICA taxes. Just make sure it's set up correctly - the S-Corp should reimburse you after you pay personally, and it needs to be documented properly with a formal plan.

One thing I haven't seen mentioned yet is business meals and entertainment - if you've been meeting with clients or potential customers throughout the year, make sure you're capturing those expenses. For 2024, business meals are still 50% deductible if they're directly related to your business. Also, don't overlook professional services you might have used - legal fees, consulting, marketing services, etc. Even subscriptions to industry publications or software you use for business can add up. With your $145k revenue, you might also want to look into whether you can shift some income to next year if you have any outstanding invoices you haven't sent yet, or consider prepaying some 2025 business expenses before you file. Just make sure everything is legitimate and properly documented! Time is tight but these smaller deductions can really add up when you're dealing with a six-figure S-Corp income.