I've thought about it but wasn't sure if my situation warranted a CPA. Would you mind sharing roughly what you paid for that service? And did they help specifically with tax-loss harvesting strategies or more general tax planning?

I paid around $350 for the initial consultation and tax plan development, and then about $400 for each year's tax return preparation. Considering he saved me over $8,000 in taxes through better loss harvesting strategies and finding missed deductions, it was absolutely worth it. He specifically helped with creating a tax-loss harvesting strategy across multiple years, identifying which specific investments to sell when, and properly documenting everything for the IRS. He also advised on how to structure my investments going forward to be more tax-efficient. For someone with $207k in losses like you have, the potential tax savings would likely be much higher than what I experienced.

Not OP, but I'm guessing crypto or maybe options trading. Those are usually the culprits when you see wild swings like $267k gain followed by $210k loss. Regular stock investing rarely produces that kind of volatility unless you're heavily concentrated in a few speculative stocks.

It was a combination of factors. I had a concentrated position in a few tech stocks that did extremely well in 2022, and I got overconfident. In 2023, I started trading options with larger positions than I should have, and then doubled down when things started going south. I also had some crypto that crashed. The perfect storm basically. I've definitely learned my lesson about diversification and position sizing. I'm working with much smaller position sizes now and have moved a significant portion of my portfolio to index funds. Still have some individual stocks but with strict limits on how much I allocate to any single position.

Thank you for this! That's actually really good to know. So I did the right thing by filing even though I can't pay right now. Do you know if there's any way to get the penalties waived? I read something about "first time abatement" somewhere.

Yes, there is a First Time Penalty Abatement that the IRS offers if you haven't had any penalties in the past 3 tax years. You usually need to call and request it, and they don't automatically tell you about it. It won't waive the interest, but it can remove the failure-to-pay penalties. Definitely worth asking for if this is your first time owing or being late with payment. You typically need to have paid the tax or set up a payment plan before requesting the abatement.

I did this last year. The processing fee was around 2% of the tax amount. My credit card had 22% APR, while the IRS interest rate was like 6-7%. So unless you can pay off that credit card REALLY fast or have a 0% intro offer, the IRS plan is usually cheaper.

Is it even worth claiming home office then? I've heard it reduces your mortgage interest deduction and complicates selling your house later because of capital gains implications. Some of my friends say to avoid it completely.

I didn't make any special elections, so I guess it's the default (sole proprietorship)? Is that bad? Should I have chosen S-Corp instead?

For your first year with more expenses than income, the default sole proprietorship treatment is actually perfect! This allows your business losses to directly offset your W-2 income on your personal return. If you had elected S-Corp status, the rules for how losses flow through would be more complicated and potentially less beneficial in this startup phase. As your business becomes profitable, S-Corp status might make sense to save on self-employment taxes, but for now, you're in the ideal structure to maximize the tax benefit of your startup losses. You made the right choice by sticking with the default!

How often do you need to document shareholder meetings if you're the only owner? Is that even necessary for a single-member S Corp? Seems like excessive paperwork.

Yes, it's still necessary even as a single owner! I hold and document quarterly meetings with myself (sounds ridiculous, but it's important) and maintain a corporate minute book. My accountant advised doing this because maintaining the corporate veil is critical - if you're ever challenged, you need to show you're treating the business as a separate entity. The documentation doesn't need to be complex, but should demonstrate you're making business decisions as a corporation rather than as an individual. This includes formally approving major purchases, loans, salary changes, etc. Many single-owner S Corps get sloppy with this paperwork and it can create real problems during an audit.

This is actually a common misconception. S Corp shareholders who own more than 2% can still deduct health insurance premiums on their personal returns (Form 1040) as an adjustment to income, so it ends up being a wash tax-wise in most cases. You just can't deduct it directly on the S Corp return.

Do you write any additional info on the receipts? Sometimes I get receipts that aren't clear what they were for.

Great question! Yes, I absolutely write notes on any vague receipts right away while the purchase is still fresh in my mind. For business meals, I jot down who I met with and the business purpose. For supplies or other purchases, I note what project they were for. I also staple any relevant info together - like if I have an email approving a business expense, I'll print and staple it to the receipt. Makes it much easier to justify deductions if you're ever questioned about them.

I use QuickBooks for my small business and the receipt capture feature is decent. You take pics in the app and it attaches them to transactions. Not perfect but integrates well if you're already in that ecosystem.