Don't overlook your bank! Chase, Bank of America, and Wells Fargo all offer payroll services for small businesses that are surprisingly affordable if you're already a business customer. Worth checking what yours offers.

Just wanted to add another perspective here - we went with Gusto Simple for our 2-person setup and it's been solid. Yes, it's a bit more than some options at $40/month + $6 per employee, but the peace of mind is worth it. What really sold me was their customer support. When we had questions about setting up our S-Corp payroll correctly (since we're owners paying ourselves), they actually helped walk us through the reasonable compensation requirements and made sure we were structured properly from day one. The automatic tax filing has been flawless for over a year now, and the year-end W-2 generation was seamless. Sometimes paying a little extra upfront saves you from much bigger headaches down the road with compliance issues.

Are we sure about the Roth IRA part? I thought kids could only contribute to retirement accounts if they're at least 18?

This is such a great opportunity for your daughter! I started hiring my 15-year-old son in my consulting business last year and it's been amazing for teaching him work ethic and financial responsibility. One thing I'd add to the excellent advice already given - consider having your daughter open that Roth IRA as soon as she starts earning. Even if she only contributes $500-1000 the first year, starting at 12 gives her decades of tax-free compound growth. The math is incredible when you start that young. Also, don't forget about state taxes. While the federal standard deduction protects most of her earnings, some states have lower thresholds or don't follow the federal standard deduction rules. Worth checking your state's specific requirements. The documentation piece that others mentioned is crucial. I learned this the hard way when I got some questions from the IRS (not an audit, just clarification). Having detailed records of what work my son actually performed and when he worked made all the difference. Good luck with this - you're giving her an incredible head start!

Don't forget to look into vocational rehabilitation services in your state! When we needed a modified vehicle for our daughter, our state's voc rehab program covered about 40% of the modification costs. They won't help with the basic vehicle purchase, but they often have funding for accessibility modifications, especially if your child will eventually need transportation for education or employment. The waiting lists can be long though, so apply ASAP.

I went through this exact situation two years ago when we bought a wheelchair-accessible van for my son. Here's what I learned the hard way: You can only deduct the cost of modifications that exceed what a standard vehicle would cost, and only if your total medical expenses exceed 7.5% of your AGI. Keep meticulous records separating the base vehicle cost from accessibility features. But here's the key thing I wish someone had told me: get a detailed letter from your daughter's doctor explaining the medical necessity BEFORE you make the purchase. The IRS may question whether certain features were truly medically necessary versus just convenient. We had to go back and get documentation after the fact, which was a hassle. Also, seriously reconsider that 401k withdrawal. The 10% penalty plus taxes could eat up a huge chunk of your money. We ended up getting a medical loan at a much lower effective cost. Some credit unions have special programs for disability-related expenses with better rates than the penalty you'd face on retirement funds. One more tip: if you're buying from a dealership that specializes in accessible vehicles, they often have financing relationships and can help you understand exactly which portions qualify for medical deductions. Much more helpful than general dealers.

Instead of a 529 or UGMA, have you considered just investing in a regular brokerage account in your own name and then gifting portions to your nephew when he needs it for college? That's what I did for my niece. The advantages: you maintain complete control, there's no paperwork to set up special accounts, and you can decide year by year how much to give. When she started college, I just gave her $15,000 the first year (under the gift tax exclusion), then did the same for the following years. The disadvantage is you'll pay taxes on all gains along the way, and there's no special tax advantage. But the simplicity and flexibility worked for my situation.

Based on everyone's great advice here, it sounds like a 529 plan is definitely your best bet for what you're trying to accomplish! I'm in a similar situation with my nephew and went through this same research process last year. A few additional points that might help: First, make sure to choose a 529 plan from a state that offers good investment options and low fees, not necessarily your own state (unless your state offers a tax deduction). Nevada, Utah, and New York consistently rank well for their plans. Second, consider setting up automatic monthly contributions rather than trying to time lump sum investments. With your nephew being only 6, you have 12 years for dollar-cost averaging to work in your favor. One thing I wish someone had told me earlier - you can actually change the beneficiary of a 529 to another family member if needed. So if your nephew gets a full scholarship or decides college isn't for him, you could potentially redirect it to future grandchildren, or even use it for yourself if you wanted to take classes later in life. The tax advantages really do add up significantly over time compared to a regular investment account, especially with 12 years of growth ahead of you. Good luck with whatever you decide!

Has anyone used TurboTax to claim home office deductions like this? The software kept giving me warnings when I tried to deduct my home office renovation costs last year.

I went through something very similar in 2020-2021 when I claimed renovation expenses for my home office setup. The key distinction the IRS agent explained to me is that major renovations like what you described are typically considered "capital improvements" rather than startup costs or regular business expenses. Capital improvements need to be depreciated over time (usually 39 years for home office improvements) rather than deducted all at once. The fact that you deducted the full $18,500 in one year as startup costs is likely what triggered their attention, especially combined with zero income. When I dealt with my situation, I had to file an amended return using Form 8829 to properly categorize the renovation as a capital improvement and start depreciating it. The IRS was actually pretty reasonable about it once I showed I was genuinely trying to run a business and had documentation of my business activities (even though I wasn't profitable yet). My advice: Don't panic, but do take this seriously. Gather all your receipts, any evidence of business activity (marketing efforts, business registration, etc.), and consider consulting a tax professional before responding. The IRS agent is likely just trying to understand if this is a legitimate business expense that was incorrectly categorized rather than looking to penalize you.