I'm actually a freelance developer who went through exactly this process last year. One thing I didn't see mentioned yet - don't forget you also have the option of a Traditional or Roth IRA on top of your Solo 401k contributions (subject to income limits for direct Roth contributions). In my experience, the paperwork for setting up a Solo 401k was a bit of a pain, but Vanguard walked me through it. You will need an EIN from the IRS website (free and takes like 5 minutes online). The big advantage is that you can contribute WAY more than with just a SEP IRA when you're somewhere in that $50k-$100k self-employment income range.

Quick heads up - something nobody mentioned yet is that if you go the Solo 401k route, once your account balance hits $250,000, you'll need to file Form 5500-SF annually. Not a huge deal but something to be aware of for future planning.

Just wanted to mention that if military service or living abroad applies to you, you might qualify for additional extensions. Military members in combat zones get automatic extensions, and US citizens living overseas automatically get an extra 2 months (though they have to request the additional extension to October like everyone else).

I understand your financial stress, but I have to echo what others have said - there's generally no second extension beyond October 15th for individual returns, even for financial hardship. However, since you mentioned you're expecting a refund, here's something important to consider: there's actually NO penalty for filing late when you're owed money back. The only downside is delaying getting your refund. Given your tight financial situation with the 401k loan payments, wouldn't it make sense to file as soon as possible to get that refund money? You have up to 3 years from the original due date to claim it, but why wait when you need the cash now? If you're missing some documents, you can request wage and income transcripts from the IRS (Form 4506-T) to see what they have on file. This might help you piece together what you need to file, even if you don't have all your original paperwork.

I've been using QuickBooks for my online business, and they actually have a feature to help with inventory adjustments like this. If you're using QuickBooks or similar software, you might want to check if they have a specific process for handling inventory count corrections. In my case, I was able to make an inventory adjustment entry that clearly documented the reason for the change. This created a paper trail showing exactly what happened and when I discovered the error. My tax software then helped me address Line 35 appropriately with the correct wording.

I went through something very similar with my small retail business last year. One thing I'd add to the great advice already given here is to make sure you're prepared for potential follow-up questions if the IRS does review your return. In addition to the Line 35 explanation, I kept a simple spreadsheet showing the original count vs. corrected count for each affected item, along with the unit cost and total value difference. I also noted the date I discovered the error and what caused it (in my case, I had double-counted some items that were stored in two different locations). My CPA recommended keeping this documentation for at least 3 years in case of questions. She said having this level of detail ready actually reduces the chance of extended scrutiny because it shows you're being thorough and transparent about the correction. Also, since you mentioned you're behind on your inventory count - this might be a good time to implement a more systematic counting process for future years. I started doing quarterly spot checks on my highest-value items, which has helped me catch errors much earlier. Good luck with your filing!

Has anyone here actually been audited regarding prepaid expenses? My CPA is super conservative and basically refuses to let me prepay anything except trivial amounts. Says it's a "red flag" but I think he's being overly cautious.

Great question about prepaying expenses! I actually work as a tax preparer and see this situation all the time with small business clients. The key is understanding that legitimate prepayments are perfectly acceptable - it's not about gaming the system, it's about timing your cash flows strategically. One thing I'd add to the excellent advice already given: consider prepaying your quarterly estimated taxes for next year if you expect similar income levels. You can make your Q1 estimated payment in December and deduct it immediately, which can provide significant tax savings without any compliance risk. Also, don't overlook professional development expenses - conference fees, certification renewals, or training courses scheduled for early next year can often be prepaid in December. These are usually clear-cut deductions that auditors rarely question. Just make sure whatever you prepay represents a genuine business expense you would incur anyway. The IRS doesn't care about the timing strategy as long as the underlying expenses are legitimate and properly documented.

Just to add another data point - this EXACT issue is why I stopped using TurboTax for my foreign tax returns. I switched to TaxAct which actually lets you override the amount on line 19 without jumping through a million hoops.

I went through this exact same issue last year! The key thing to understand is that Form 1116 doesn't automatically force you to use all your foreign tax credits - you absolutely can elect to carry forward excess amounts. Here's what worked for me: On Form 1116 Part III, line 19 is where you enter the amount of foreign tax credit you want to claim for the current year. Most tax software defaults to the maximum allowable amount, but you can manually enter a lower amount if you want to preserve credits for future years when you might have higher tax liability. Since you mentioned having different categories (like passive income), make sure you're filling out separate Form 1116s for each category. The carryover election is made separately for each category. One tip - if your tax software won't let you override line 19, look for an "override" or "manual entry" option in the forms section. Every major tax software has this capability, though they sometimes hide it pretty well! If all else fails, you might need to file a paper return to have complete control over your foreign tax credit elections. Keep detailed records of your carryover amounts since they can be used for up to 10 years. Good luck with your return!