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Don't forget about education-related deductions! As a full-time student, you might qualify for the American Opportunity Credit which gives you up to $2,500 back. The great thing is it's partially refundable - meaning up to $1,000 comes back to you even if you don't owe taxes. You need Form 8863. Also, college textbooks and required course materials count toward the education credits! Keep all those receipts. I missed out on claiming these for two years before my tax preparer caught it.
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.
I agree with Profile 12's advice on the vehicle! One thing to add - you mentioned you bought the car mainly for work. Keep track of your business mileage percentage. If you use the car 80% for business, you can deduct 80% of the interest on your car loan, as well as 80% of things like parking fees, tolls, and garaging costs. Also, since you're working as both W-2 and self-employed, make sure you're clear on which miles are for which job. You can't deduct mileage for your W-2 jobs (that deduction was eliminated), but you CAN deduct it for your self-employment.
Wait what?? I've been deducting mileage for my W-2 job for years! When did this change? Am I gonna get audited now? 😨
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Another option to consider: if you're driving your own car between hospitals, keep detailed records of your mileage and vehicle expenses anyway, even though you can't deduct them now. Tax laws change, and there's already talk about possibly reinstating some of these deductions after 2025. Also, some states still allow these deductions on state income tax returns even though they're not allowed federally. California, for example, didn't conform to all the TCJA changes.
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.
Just a quick tip: if your current employment situation makes it impossible to get reimbursed and you're losing significant money on these inter-hospital commutes, you might consider talking to a CPA about whether setting up an S-Corp would benefit you. Some physicians can legitimately practice under mixed employment models. Not everyone can do this though - it depends on your contracts and state regulations.
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.
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Going back to your original question about Thomson OneSource - one thing to consider is the size of your tax team. We found it was overkill for our needs when we only had two people handling tax matters. The system seems designed for larger departments with specialized roles. The reporting capabilities are excellent though, especially for executive presentations and audit preparation. If your company has complex holdings or multi-entity structures, OneSource handles the consolidations very well.
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.
Has anyone used both Thomson OneSource and CCH Axcess? We're trying to decide between the two and I'd love to hear a comparison.
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.
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Something no one has mentioned yet - your employer's HR/benefits system might already have this calculator built in. I discovered that our Workday system has a "paycheck simulator" that lets you adjust contributions and see the impact on take-home pay. It's super accurate because it already has all your specific benefit options programmed in. Worth checking your company's HR portal before looking elsewhere. The benefit is that it will be pre-loaded with your company's specific benefit options and contribution limits.
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.
Has anyone tried TurboTax's W-4 withholding calculator? It's not exactly what you're looking for, but I found it helpful for optimizing overall tax withholding while balancing pre-tax deductions. It helped me avoid owing at tax time while maximizing my monthly take-home pay.
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.
Honorah King
Don't forget that besides filing a federal tax return, you may also need to file a state tax return depending on where you live! Some states have different minimum thresholds than the federal government. Also, since you're doing graphic design work, make sure you track ALL your expenses. Things like: - Software subscriptions (Adobe etc) - Computer equipment - Art supplies - Website hosting - Training/courses related to your design work - Portion of internet/phone bills used for business This can significantly reduce your taxable income and therefore how much you actually pay in taxes!
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Melina Haruko
•Thank you for mentioning state taxes! I completely forgot about that aspect. Do you know if most states follow the same $400 self-employment threshold as federal, or does it vary a lot by state?
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Honorah King
•State tax requirements vary quite a bit. Some states like Florida, Texas, and Nevada don't have any income tax at all, so you wouldn't need to file a state return there. Other states have their own thresholds that might be different from the federal $400 self-employment threshold. For example, California requires filing if you have any income tax withheld or if your income exceeds certain thresholds based on filing status and age. Some states also have special rules for self-employment income specifically.
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Oliver Brown
Just to add one more piece to this - even tho ur required to file with over $400 in self employment income, you might not actually owe income tax if your total income is under the standard deduction ($12,950 for 2022). BUT you'll still owe self-employment tax of 15.3% on your net profit (revenue minus expenses). That's why tracking all your business expenses is SUPER important - every dollar of legitimate business expense reduces your taxable profit.
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Mary Bates
•This is so important! When I first started freelancing, I didn't track expenses properly and ended up paying way more in self-employment tax than I needed to. Now I keep receipts for everything business-related.
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