Thanks for bringing up the recapture issue - that's something I wasn't aware of. What exactly is the "recovery period" and how long would he need to maintain business use? He plans to use it exclusively for business for at least 5 years. Also, do you know if there's an income limit that might prevent him from claiming the full EV credit? His 1099 income fluctuates year by year.

The recovery period for vehicles is typically 5 years, so your father's plan to use it exclusively for business during that time would avoid recapture issues. If business use drops below 50% during those 5 years, he would need to recapture the excess depreciation taken and report it as ordinary income. Yes, there are income limits for the EV credit. For a single filer, the credit begins to phase out at $150,000 AGI and is eliminated at $160,000. For married filing jointly, those thresholds are $300,000 and $310,000 respectively. With fluctuating 1099 income, he should do some tax planning to see if he'll fall under these limits in the year of purchase. If he's close to the threshold, he might want to consider timing the purchase or implementing strategies to reduce his AGI for that year.

This is an excellent point. The Inflation Reduction Act changed the requirements, and now the vehicle must meet North American final assembly requirements. Additionally, there are critical mineral and battery component requirements that affect the credit amount. Tesla has been adjusting their supply chain to qualify, but it varies by model and can change.

My friend is a tax preparer and she says most W2 employees with straightforward situations are wasting money on professional preparation. Wouldn't someone be better off just using that money to increase their 401k contributions?

For truly straightforward W2 situations, your friend is probably right. If someone makes $60k with no dependents, minimal investments, and takes the standard deduction, professional preparation might not provide enough value. But the original poster is describing a much more complex situation - $580k household income, variable commission-based pay, and a new dependent. At that income level, even small optimizations can save significant amounts. The tax code becomes more complex at higher income levels, with various phase-outs, alternative minimum tax considerations, and planning opportunities. The value of proper tax planning typically far exceeds the cost of preparation in these scenarios.

Honestly, for your income level ($580k), I'd avoid H&R Block. Nothing against them, but they're generally better for straightforward tax situations. Most of their preparers don't have the specialized knowledge to optimize taxes for high-income professionals with variable compensation. You'd be better off with a CPA who specializes in working with sales professionals or high-income individuals.

That's actually a really good point I hadn't considered. I did talk to my parents before filing the amendment and they agreed I should file as independent since I provided more than half of my own support last year. But now that you mention it, I'm not 100% sure they didn't already claim me on their return that they filed back in February. Should I have them check their return before I fix mine? Would that affect the specific error I'm getting about the credits not matching?

Definitely have them check their return first. The error you're getting about credits not matching could actually be indirectly related to this dependent status issue. When you change from dependent to independent, it affects multiple calculations throughout your return. The issue might be that TurboTax is trying to give you credits that you're eligible for as an independent filer, but the system is getting confused because there's conflicting information about your status in the IRS database. If your parents claimed you, the IRS computers may be rejecting certain credits you're trying to claim on your amended return, causing those total amounts to be inconsistent.

I tried TurboTax support for a similar issue and they were useless. The rep just read me the same error message I already had and suggested I "check my numbers." No specific guidance at all. Maybe I just got a bad rep though.

8 What's considered a "reasonable salary" exactly? I've heard different things - some say 50% of profits, others say market rate for your position. I'm also wondering about the payroll part, do you use a service for that or DIY?

5 The "reasonable salary" requirement is probably the trickiest part of S Corp compliance. There's no fixed percentage or formula - the IRS evaluates it case by case. The most defensible approach is researching what similar positions earn in your industry and location. BLS.gov has salary data that can help document your reasoning. I absolutely recommend using a payroll service rather than DIY. I tried handling it myself initially and it was a nightmare keeping up with all the filing requirements and deadlines. I now use Gusto which costs about $45/month but handles all the calculations, filings, and direct deposits automatically. The peace of mind is worth every penny, especially since penalties for incorrect payroll tax filings can be steep.

16 Interesting point about the short tax year filing. Would that mean two separate state filings as well? And what about quarterly estimated tax payments - would those need to be recalculated mid-year?

This is great advice but in my experience these temp agencies are super stingy with reimbursements. Did you have to show them proof of what you were deducting before to convince them?

I didn't have to show previous tax returns, but I did prepare a simple spreadsheet showing my effective income before and after deductions when I was 1099 versus the proposed W2 rate. Made it clear I needed either reimbursement for specific expenses or a higher rate to maintain the same effective income. Most employers understand this math once you lay it out clearly. The key is bringing it up during the initial negotiation phase, not after you've already accepted the rate. I've found being direct but professional works best - "My standard rate accounts for business expenses I previously deducted as a 1099 contractor, including software licenses and equipment. How does your company typically handle these expenses for W2 contractors?

The provision is technically set to expire after 2025, but nobody knows for sure if Congress will extend it or let it revert. Election years make tax planning extra fun lol. Might be worth having a conversation with your clients about whether they'd be open to 1099 arrangements with proper contracts that address their misclassification concerns.