Thanks for being honest about this! That makes so much more sense why she was so pushy about it. Do you guys also get penalized if someone takes their paperwork elsewhere? She made it sound like I was causing her some kind of problem.

We don't get penalized exactly, but we have quotas for how many returns we need to both prepare AND file. So when someone doesn't file with us, it hurts our completion numbers which can affect future scheduling and bonuses. Some preparers take it personally when clients don't file through them because they think you don't trust their work. But most of us understand it's just business. You already paid for the preparation service which is the bulk of the work anyway.

This is bad advice. I've had professionals miss legitimate deductions many times. Last year my "professional" preparer missed my student loan interest deduction completely even though I gave him the 1098-E form. That was $500 down the drain until I caught it.

What about software subscriptions? I use estimating software and a scheduling app for my contracting business. Are those deductible too?

Absolutely! Software subscriptions used for your business are definitely deductible business expenses. That includes estimating software, scheduling apps, accounting programs, design software - basically any digital tools you use primarily for your contracting work. I'd also recommend tracking the subscription costs separately in your bookkeeping since they're a different category from physical supplies or equipment. This makes tax time much smoother when you're categorizing all your deductions.

I used it last year for my freelance work. It's decent and walks you through most deductions, but I still found myself Googling a lot of specific questions about what qualifies. The biggest advantage is it helps calculate the self-employment tax automatically and carries information forward to your next year's return.

Yes! Create an account on irs.gov and access your "Tax Records". There's a section called "Wage & Income Transcript" that shows all income reported to the IRS under your SSN including W-2s, 1099s, etc. If your unemployment 1099-G is showing up there, then yes, the IRS knows about it. That's also why they'll eventually catch the discrepancy - they have the info but will take time to match it against what you reported. Way better to fix it yourself before they send a notice.

Thanks for this info! I just checked my transcript and yep, there it is - my 1099-G from unemployment is definitely showing up. Guess I better get that amendment filed asap before they come after me.

Yeah but waiting for them to catch it means you'll definitely pay interest on what you owe. The interest starts accruing from the original due date. If you amend now you still pay interest but for a shorter time period = less money.

She mainly did option 2 - she acknowledged it could be useful and said she'd look into the details for my specific situation. She didn't dismiss it, which is good, but I'm still concerned that I had to bring it to her attention rather than her suggesting it as a potential strategy. Does that seem reasonable?

That's actually a good response from her. Being willing to research and verify rather than dismissing or blindly accepting shows professional diligence. While ideally she would have suggested this strategy herself, the reality is that tax professionals can't possibly know every strategy for every client situation off the top of their heads. What matters more is her willingness to explore options you bring up and whether she proactively suggests other strategies during your planning sessions. If this is the only instance where you've felt her knowledge was lacking, I wouldn't worry too much. However, if you regularly find yourself educating her on tax strategies you've researched independently, it might be worth finding a CPA who specializes more specifically in small business and S-corp taxation.

This is really good advice. Do you have any recommendations for resources where business owners can educate themselves on potential tax strategies? I feel like I don't know enough to even ask the right questions sometimes.

Omg yes!!! I'm in CA and didn't realize there was a separate state withholding form. Got absolutely destroyed at tax time. Had to set up a payment plan. Check ur state requirements!!!

That's a great point about California! Several states actually require their own withholding forms separate from the federal W4. California uses the DE 4 form, New York has the IT-2104, and Illinois uses the IL-W-4. Always check your paystub to make sure you're seeing both federal and state withholding amounts. Tax agencies don't notify you if you're not withholding enough - they just wait until filing time and then hit you with the bill and sometimes penalties. Better to slightly overwithhold and get a refund than to underwithhold and owe money plus potential underpayment penalties.

Actually, the W4 form changed in 2020 and doesn't use allowances anymore! It's a completely different system now. You might want to submit an updated one with your employer.