Thanks for mentioning this! Do you know if there's an income limit for claiming the American Opportunity Credit? And can I claim it if I'm also deducting business expenses related to my small business?

Yes, there are income limits for the American Opportunity Credit. It starts to phase out at $80,000 for single filers ($160,000 for married filing jointly) and is completely phased out at $90,000 for single filers ($180,000 for married filing jointly). You can absolutely claim both the education credit and your business deductions - they're completely separate. The education credit goes on your personal return while your business expenses go on Schedule C. They don't conflict with each other at all. Just make sure you're not double-dipping by trying to claim business education expenses as both a business deduction and an education credit.

Wait what?? I've been deducting mileage for my W-2 job for years! When did this change? Am I gonna get audited now? 😨

Do you know which other states besides California might still allow these deductions? I'm in New York and wondering if I might be able to at least get some benefit on my state return.

New York does still allow miscellaneous itemized deductions subject to the 2% floor, including unreimbursed employee business expenses! So while you can't take these deductions on your federal return, you can still claim them on your New York state return. Minnesota and Arkansas also didn't fully conform to the TCJA changes regarding these deductions. Several other states have their own versions of itemized deductions that might help, but the rules vary significantly. Just make sure you're keeping detailed records - date, starting location, ending location, mileage, and business purpose for each trip.

I appreciate this suggestion! Do you happen to know if there are any red flags this might raise with the IRS? And roughly what percentage of my work would need to fall under the S-Corp for this to make sense financially?

This approach definitely needs careful consideration as the IRS does scrutinize arrangements where someone works as both an employee and contractor for related entities. The work performed under each arrangement must be legitimately different to justify the separate classification. Generally, CPAs recommend at least 15-20% of your total income should come through the S-Corp for the setup and maintenance costs to make sense. Remember there are additional expenses with an S-Corp including separate accounting, potentially additional insurance, and compliance requirements. The miles between locations would only be deductible for travel related to your S-Corp work, not your W2 employment.

That's really helpful. We have 3 people on our tax team right now, but we're planning to grow. Would you recommend starting with something simpler and migrating later, or just jumping into OneSource to avoid multiple transitions?

With a team of 3, I'd probably recommend starting with something simpler unless your corporate structure is already quite complex. The licensing and implementation costs for OneSource are substantial, and you won't utilize many of the advanced features right away. If you're definitely planning to grow significantly in the next 1-2 years, it might make sense to start with OneSource to avoid multiple transitions. But if growth will be more gradual, you could save considerably by using a mid-tier solution for now and migrating when you have 5+ tax specialists.

I've used both extensively. Thomson OneSource is stronger for corporate tax work, especially complex multi-entity structures. CCH Axcess has better workflow management and is more intuitive for new users. If you're primarily focused on corporate income tax with multi-state filings, Thomson has the edge. For a balanced practice with both individual and corporate clients, CCH might be better. Thomson's document management isn't as seamless as CCH's, but their calculation engine is more robust for complex scenarios.

That's a great suggestion I hadn't thought of! Do you know if these built-in calculators typically handle all the different pre-tax options and show the tax implications clearly? Our HR system is ADP but I haven't fully explored all its features.

Most employer HR systems with these calculators do handle all the pre-tax options specific to your company's benefits package. They're usually more accurate than generic calculators because they're configured with your exact benefit structure. ADP definitely has this feature! Look for something called "Paycheck Modeling" or "Net Pay Calculator" in your ADP portal. It should let you adjust all available pre-tax deductions and show exactly how they affect your take-home pay. If you can't find it, ask your HR department - sometimes these features aren't enabled by default.

I use the TurboTax tool every year after doing my taxes. It's decent but doesn't really show the impact of changing pre-tax deductions in real-time. It's more focused on getting your W-4 withholding right than optimizing across different pre-tax options. I ended up using a combination of that plus a separate calculator for my 401k/HSA decisions.

Thanks for the feedback! You're right that it's more withholding-focused. I just found it useful as one piece of the optimization puzzle. I've been looking for something more comprehensive that shows the trade-offs between different pre-tax options in real-time.

How do we handle the expenses for equipment and software? We've been sharing the costs pretty informally. Do we need to track every single purchase?

You absolutely need to track every single purchase related to your YouTube work. Keep all receipts (digital or physical) and note which partner paid for what. The partnership should track all these expenses, even if they came from personal funds. For equipment and software, these are legitimate business expenses that can offset your income. Just make sure you're only deducting the business portion (if you also use things personally). You'll need to decide if certain equipment should be depreciated over time rather than expensed immediately - this depends on cost and expected useful life.

That's actually tax fraud and could get both of them in serious trouble. The IRS isn't stupid - they know people try these "creative" approaches. What you're describing is trying to avoid paying self-employment taxes and income taxes by mischaracterizing business income as gifts. The company clearly views them as a single business entity, which is why they're asking for one W-9. The proper way to handle this is exactly what the top comments suggest - file as a partnership, get an EIN, and each partner reports their share of income on their personal returns.