Does this actually work? I tried creating an IRS account last year and they couldn't verify my identity online so I had to mail in a form. Never heard back after that.

It can definitely work, but not everyone can successfully create an online account. The IRS has pretty strict identity verification requirements. If you have certain credit freezes, recently moved, or don't have specific types of accounts they use for verification, you might get rejected. In that case, you can request a transcript by mail, but that defeats the purpose of getting quick access to solve an e-filing problem. Using the $0 AGI trick or calling the IRS directly might be faster options.

Don't mail your return if you can avoid it!!! I paper filed last year and it took 9 MONTHS to get my refund. The IRS is still processing paper returns from last year. Electronic is way faster if you can solve the AGI issue.

Wait WHAT? You had to pay $800 for a business that never operated? That seems absolutely ridiculous! Is that legal?

Yes, unfortunately it is legal. California charges an $800 minimum franchise tax to all LLCs registered in the state, whether they do business or not. Many states have similar fees, though California's is notoriously high. The logic behind it is that you're paying for the privilege and benefits of having limited liability protection, regardless of whether you use it. First-year LLCs in California now get a break on this fee, but after that, you owe it annually until you properly dissolve the entity. That's why it's so important to formally dissolve an LLC you're not using - otherwise these fees keep accumulating year after year.

I actually haven't done that part yet - I only dealt with the tax returns through the revenue department! Thanks for pointing this out. Looks like I need to file dissolution paperwork with the Secretary of State as well to completely close everything down.

Thanks for this tip! I looked more carefully at the error screen and found a tiny "proceed with caution" link in gray text at the bottom. When I clicked it, there was another screen asking me to confirm I wanted to continue despite the warning. After I clicked through that, it actually did let me submit! My return has been accepted by the IRS already. Can't believe the solution was that simple after all the stress. Do you think I need to worry about this $1 discrepancy causing problems later? Like will I get a letter from the IRS about it?

Glad it worked for you! You shouldn't worry about that $1 discrepancy at all. The IRS has a tolerance threshold for small differences - they don't pursue amounts that small because the processing cost would exceed the collection amount. I've had small discrepancies like this in previous years (usually from rounding differences) and never received any follow-up letters or notices. The fact that your return was accepted means their system didn't flag it as an issue worth pursuing. You're all good!

I actually work in software development (not for tax software though) and this is unfortunately common with complex calculation systems. The ACA premium tax credit calculation involves multiple variables and lookups that can create edge cases the developers didn't anticipate. The software companies prioritize fixing the most common scenarios first, and partial-year coverage affects a smaller percentage of users.

That makes sense but it's still super frustrating as a user! Seems like after several years of the ACA being in place, they should have figured out these calculations by now. These aren't exactly obscure scenarios - people change insurance all the time. What bothers me most is how the average person would have no way of knowing if their calculation is wrong. We just trust what the software tells us. Makes me wonder how much money the IRS collects from people who overpay because of software errors.

I actually haven't looked into the S-corp angle yet. How complicated was it to set that up? And does your accountant think the educational assistance program would work even for something like nursing school that leads to a different license?

Setting up the S-corp wasn't too complicated with my accountant's help - took about a month total. The key advantage is that the Section 127 educational assistance program doesn't have the same "current skills" requirement as Schedule C deductions. The program can cover any education, even if it leads to a new credential or license, as long as you set it up properly and follow the rules. My accountant confirmed it would work for nursing education. The $5,250 annual limit is the main restriction, so it wouldn't cover full-time tuition, but it's a tax-free benefit that could significantly reduce your out-of-pocket costs while staying completely above board with the IRS.

This is actually really smart. My sister went this route and had her entire nursing program paid for by working 24 hours/week at the hospital. She kept her weekend lash business going too. Much cleaner from a tax perspective!

Thanks for breaking this down! So for my situation with no kids, renting an apartment, but living in a high tax state (NY), it sounds like the SALT cap would be the biggest factor to consider? The guide I saw didn't mention how this interacts with Schedule C income.

The SALT cap would definitely be a significant factor for you living in NY. For your Schedule C photography income, the SALT cap interacts a bit differently than with your regular income. While your state/local income taxes are subject to the SALT cap, your business expenses on Schedule C remain fully deductible as business expenses. One thing many people miss is that self-employment taxes (the 15.3% for Social Security and Medicare) apply to your net Schedule C income regardless of SALT considerations. Make sure you're tracking all legitimate business expenses for your photography work to reduce that SE tax burden.

Most simplified guides completely overlook the AMT implications, which is a huge oversight for people with stock options. The AMT has been modified several times in recent tax legislation, with exemption amounts and phaseout thresholds changing. If you have stock options, especially incentive stock options (ISOs), you need specialized tax advice because the regular vs. AMT calculation can vary dramatically. Generic tax plan summaries almost never capture these nuances.

That's what I was worried about. I exercised some ISOs last year and the tax implications were completely different than what the general calculators showed. Guess I'll need to talk to my accountant about this specifically rather than relying on these guides. Thanks!