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.

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.

Thank you!! This is exactly what I needed to know. When you made the switch, did you have to wait for formal approval before filing your taxes as an S-Corp, or could you file that way based on having submitted the election form?

When I submitted my Form 2553, I did wait for the formal approval letter before filing my taxes as an S-Corp. However, if you've submitted the form and tax season is approaching, you have options. You can file an extension to give yourself more time to resolve this. This doesn't extend your payment deadline, but it gives you until October to file the actual returns. In the meantime, you can keep following up with the IRS about your election status. If you're confident you submitted everything correctly, you could also proceed with filing as an S-Corp, attaching a copy of your submitted Form 2553 to your return with an explanation that it's pending approval.

For 2024, you needed to file Form 2553 within 2 months and 15 days of the beginning of the tax year (so by March 15, 2024 for calendar year businesses). But you can still file late with a "reasonable cause" statement explaining why you missed the deadline, and the IRS may accept it. Or you can just make the election for 2025 instead.

Thanks for the info! Guess I missed the deadline for this year. I'll probably just plan to do it for 2025 rather than trying to explain a late filing. Do you know if I should file it now for next year or wait until January?

Thank you for mentioning this! I was wondering about the documentation part. Do you recommend keeping these records for the standard 3 years like regular tax returns?

I actually recommend keeping extension documentation for at least 6 years, even though the standard recommendation for most tax records is 3 years. The reason is that extension issues can sometimes take longer to surface. Plus, these documents don't take up much space digitally. I create a tax folder for each year with subfolders for "Extension" and "Final Return" and keep all confirmation numbers, screenshots, and payment records organized there. It's saved me more than once when questions came up years later.

I switched from TurboTax to FreeTaxUSA two years ago and haven't looked back. They handle K-1s just fine in my experience (I get one from an S-Corp). Their interface for recording extension payments is actually more straightforward than TurboTax too - it's right in the "Payments" section and clearly labeled. Federal filing is free and state is only around $15. For extensions, they guide you through the same Form 4868 process.