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Just a heads up that there's a huge difference in pricing for K-1 processing between the big chains and independent tax preparers. I got quoted $175 extra for a K-1 at [big chain], then went to a local CPA who only charged $50 more than their basic return price. The independent preparer also explained exactly why there was an additional charge (additional schedules and time) rather than just saying "that's our policy.
Do you think it's worth going to a CPA versus an EA for K-1 stuff? I've heard mixed things and I'm not sure if I need the extra credentials for something like this or if I'm just paying for a fancier title.
Both CPAs and EAs are qualified to handle K-1s, but in my experience, the difference comes down to their business model and specialization rather than credentials. EAs often focus exclusively on tax preparation and may have more experience with unusual tax situations for individuals, while some CPAs split their time between tax work and other accounting services. What matters most is finding someone who regularly deals with K-1s and partnership taxation, regardless of which credential they have. I'd recommend interviewing a few preparers and asking specifically about their experience with K-1s from your type of investment rather than just looking at the credentials after their name.
Has anyone used the self-preparation software options for K-1s? I have TurboTax Deluxe and just realized it won't handle K-1s - they want me to upgrade to Premier for another $40. Is that still the cheapest option or are there better alternatives?
I used FreeTaxUSA last year for my return with 2 K-1s and it only cost $15 total (federal was free, state was $15). Way cheaper than TurboTax's Premier or Self-Employed versions. It handled everything correctly including some complicated passive activity limitations. The interface isn't as polished as TurboTax but it gets the job done well.
Another option: check if the company is large enough to have a vendor management or accounts payable department. Sometimes the people sending these requests are just following a script and don't know there are alternatives. I've had success emailing AP departments directly with a completed W9 and a polite explanation that I prefer not to use third-party systems due to privacy concerns. About 75% of the time, they'll just accept it and process it manually. The other 25%, they insist on their system, and then you have to decide if the work is worth it.
This is a great suggestion. Do you typically just call their main number and ask for accounts payable? I'm dealing with a medium-sized marketing agency if that helps.
For medium-sized agencies, I usually check their website first for direct contact info for their finance team. If that doesn't work, yes, calling the main number and asking for accounts payable or vendor management usually works. Marketing agencies tend to be more flexible than large corporations in my experience. Just be polite but firm that you're happy to provide your tax information but prefer to use the standard IRS form. I usually say something like "for consistency in my record-keeping" rather than making it sound like I don't trust their system.
Has anyone tried just printing out the third party TOS, crossing out the parts you don't agree with, signing it, and scanning it back? That's what my accountant suggested when I ran into this. Send it with a note saying "I've agreed to the modified terms as indicated." The worst they can do is say no, and sometimes they just process it anyway because nobody actually reads what you send back.
I work in accounts payable and please don't do this. It creates a huge headache for us and will likely result in your documents being rejected or severely delayed. Most large companies have automated systems that flag modified forms for manual review, which puts your paperwork at the bottom of a very long queue.
Just to add another perspective here - NOL carryforwards from S-corps have some additional complexities people often miss. Remember that your ability to deduct the loss is limited by: 1) Your basis in the S-corp 2) At-risk limitations 3) Passive activity loss rules Without sufficient basis, you can't take the loss even if it flows through on the K-1. If your S-corp had debt that you personally guaranteed, that can increase your basis and allow more loss deduction.
Thanks for bringing this up - I hadn't considered the basis limitations! Any simple way to calculate my basis? I've had the S-corp for about 5 years, started with $5K initial investment, and have been putting in some money each year to cover expenses (around $15K total over the years). Never taken any distributions.
Your basis starts with your initial investment ($5K) and increases by any additional capital contributions ($15K) and any income that was reported to you on K-1s over the years. It decreases by losses and any distributions you took. So if you never took distributions, your basis would be $5K + $15K + any income reported on K-1s from previous years - any losses from previous years. You'll need to look at all your old K-1s to track this properly. If your basis went to zero in a previous year, any excess losses would be suspended and carried forward until you have basis again. This is separate from the NOL rules and often catches people by surprise.
Has anyone used TurboTax for handling NOL carryforwards from an S-corp? I'm in a similar situation and wondering if it can handle this correctly or if I need to go to a CPA.
I tried using TurboTax for my S-corp NOL last year and it was a nightmare. It kept asking me questions that didn't make sense for an S-corp, and I don't think it properly tracked my basis. I ended up paying a CPA to fix everything and it cost me way more than if I'd just gone to them in the first place.
Another thing nobody mentioned yet is that sometimes these ultra-wealthy people use their company perks to reduce personal expenses, which is another form of tax avoidance. Like when a company pays for "business travel" on a private jet, security personnel, housing for "business purposes," etc. These are business expenses for the company (tax deductible) but provide personal benefit to the executive without counting as taxable income. Musk for example has used company resources for personal security and travel - completely legal if structured properly, but effectively gives him benefits that would otherwise require taxable income.
Just to add another layer to this conversation - one thing the "buy, borrow, die" strategy relies on is the stepped-up basis rule at death. This means that when someone inherits assets, the cost basis resets to the market value at the time of inheritance. Example: If Musk bought Tesla stock at $10 and it's worth $1000 when he dies, normally selling would trigger capital gains tax on the $990 profit. But his heirs get a stepped-up basis to $1000, so if they sell at $1000, they pay ZERO capital gains tax on all that appreciation. This is why super wealthy people can borrow against assets their whole lives, never sell, and then pass enormous wealth to the next generation without anyone ever paying capital gains tax on decades of appreciation. It's completely legal but definitely a huge advantage that most average people can't access.
Oliver Zimmermann
Have you looked into the Credit Karma Tax platform (now called Cash App Taxes)? It's completely free for federal and state filing, even with complex returns. I switched from TurboTax to them two years ago and haven't looked back. It's not fully forms-based like you're asking for, but it gives you much more flexibility to jump between sections without forcing you through the entire interview process again. And you can't beat the price - FREE.
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Miguel Silva
ā¢I've heard mixed things about Cash App Taxes - doesn't it have limitations on which forms it supports? I need to file some investment forms and I think I read somewhere that they don't support all of them. Have you used it with any complex investing situations?
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Oliver Zimmermann
ā¢You're right that it does have some limitations. It works for most common investment forms (1099-B, 1099-DIV, etc.), but doesn't support some of the more obscure forms. I have fairly standard investments and it worked fine for me. They don't support foreign income, multiple state filings, or K-1 forms for partnerships. If you need any of those, it wouldn't work for your situation. Their website has a complete list of supported forms that's worth checking against your specific needs before you invest time in entering all your data.
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Natasha Volkova
For California residents, don't forget about CalFile! It's the state's free e-filing system for CA state taxes. Obviously doesn't help with federal, but at least you can save money on the state portion. I combine CalFile for my state return with a cheaper option like FreeTaxUSA for federal. That way I'm only paying for one return instead of two.
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Javier Torres
ā¢CalFile is great but they have income limits and other restrictions. Worth checking if you qualify first: https://www.ftb.ca.gov/file/ways-to-file/online/calfile/qualifications.html Not everyone will be eligible unfortunately!
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