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!

1 I actually didn't know that was an option! Would the loan show up on my credit report? And what happens if I leave my current job before it's paid back?

22 401k loans don't appear on your credit report since you're essentially borrowing from yourself, not a financial institution. If you leave your job before repaying the loan, that's where it gets tricky. You'll typically need to repay the full remaining loan balance by the tax filing deadline (including extensions) for the year you leave your job. If you don't repay by that deadline, the outstanding loan amount is treated as a distribution, subject to taxes and the 10% early withdrawal penalty - exactly what you were trying to avoid in the first place. So only do this if you're stable in your job.

17 Does tax software like TurboTax automatically include this form when you report a 401k withdrawal or do you have to specifically request it?

I asked my tax preparer about this last week! Amended returns for tax year 2021 would normally be due by April 18, 2023 (the standard 3-year amendment period). If you're in the disaster area, this deadline is also extended to October 16, 2023. So yes, you have until October to file that 2021 amended return!

Thank you so much for checking on this! That's a huge relief as I'm still gathering documentation for some expenses that were damaged in the flooding. Good to know I have until October to get everything together for the amendment.

It's automatic! If your primary residence or business is located in the federally declared disaster area, you don't need to file any extension forms. The IRS automatically provides the relief to anyone in the covered disaster areas. The system is set up to recognize your location based on your address on file with the IRS.

Thanks for that reminder! How much interest did they pay you, if you don't mind me asking? Mine was only $18.42 for a refund that was delayed about 4 months. I wonder if it's even worth reporting such a small amount?

Mine was only $32.16 for a refund delayed about 6 months, but yes, you absolutely should report even small amounts like $18.42! The IRS computer systems automatically match all 1099-INTs against your return, regardless of amount. There's technically no minimum threshold for reporting interest income. Even though it seems insignificant, the IRS notice I received for forgetting to include it cost me far more in penalties and interest than the original amount. Plus, dealing with IRS notices is a huge headache that's definitely not worth risking over a small amount.

It's taxed exactly the same as any other interest income (like from a bank account). It will be taxed at your ordinary income tax rate - not at capital gains rates. So if you're in the 22% tax bracket, you'll pay 22% on that interest. Just report it on Schedule B along with any other interest income you received during the year.