That's a great point I hadn't thought about. So should I be submitting some kind of expense report to my own S-corp for reimbursement? Or is it enough to just document everything in my company records?

You should definitely be submitting formal expense reports to your S-corp for reimbursement. This creates the proper documentation that shows you're following an "accountable plan" which is critical for this arrangement to work properly with the IRS. The expense report should include the business purpose, dates of travel, locations, and calculation of the per diem amounts based on the State Department rates. Your S-corp should then reimburse you directly for these expenses. In your company records, these would be logged as business travel expenses, and on your personal taxes, the reimbursements wouldn't be considered income since they're under an accountable plan.

I tried using TurboTax for this last year and it was a nightmare. The software doesn't have clear guidance on foreign per diems. I ended up manually calculating everything and entering it as "other business expenses" with detailed notes. Not ideal but it worked.

Wait, I thought scholarships used for room and board counted as earned income, not unearned? This is why tax stuff makes my head explode. Can anyone clarify this? I might have filed wrong last year.

That's a common confusion. For general tax purposes, taxable scholarships (amounts used for room, board, etc.) are considered earned income. However, specifically for the Form 8615 "kiddie tax" rules, these same taxable scholarships are counted as unearned income when determining if the child meets the $2,600 threshold. It's frustrating that the same money is classified differently depending on which tax rule you're looking at. For filing requirement purposes, taxable scholarships are earned income, but for kiddie tax purposes, they're unearned income. This dual classification is exactly why so many people get confused about Form 8615.

I used TurboTax for my son's return with almost the exact same situation. The software asked if he was required to file (not if he wanted to file, but if he was required). I answered no, and it correctly didn't include Form 8615. Just make sure you answer the "required to file" question accurately based on the thresholds, not based on whether you're actually filing. TurboTax also correctly included the taxable scholarship as income but didn't trigger the kiddie tax form since he wasn't required to file.

Do you have any documentation on this approach? I've never heard of being able to include coffee as part of home office expenses and want to make sure I don't get audited.

I don't have official documentation, just what my CPA advised me. The key is not to list "coffee" as a line item but to incorporate reasonable office supplies/consumables into your overall home office deduction. The regular home office deduction already accounts for things like this. My approach is just making sure that my home office is legitimate (dedicated space, regular use for business, etc.) and then taking the standard deduction for it. I don't specifically break out coffee as a separate expense - it's just considered part of the overall home office usage.

This is really good advice that people overlook. What was your experience with the audit like? Did they focus on small deductions or bigger issues?

Are you in California by any chance? That $800 minimum tax is brutal. Do you think the liability protection is worth that annual fee for a small side business making maybe $15k a year?

Yep, California's $800 LLC tax is exactly what I was referring to! For a business only making $15k annually, I personally don't think the LLC is worth it unless you're in a high-liability industry. That $800 represents over 5% of your gross revenue before any other expenses. Many small business owners don't realize they can get decent liability protection through good business insurance policies without the LLC structure and fees. A general liability policy might only cost $500-700 annually compared to the $800 state fee plus LLC formation costs.

You can have a single LLC that covers multiple business activities if you want. On your Schedule C, you'd either need to: 1) file separate Schedule Cs for each substantially different business activity or 2) use the primary business code that represents your main activity. For tax purposes, it's more about properly categorizing and reporting the different income streams than about having multiple LLCs.

Do you know if there's a way to easily determine which states require their own estate tax returns? I'm in Florida but my mom owned property in two other states as well.

Florida doesn't have a state estate tax, so you're good there. But if your mom owned property in other states, you may need to file non-resident estate tax returns in those states depending on which ones they are. Currently, only 12 states plus DC have estate taxes: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. If the properties are in any of these, you'll likely need to file. Some states have exemption thresholds much lower than the federal one, so even smaller estates might owe state estate taxes. I'd recommend checking the tax department websites for each state where property was owned just to be safe.

I used TaxAct for my father's estate last year and it handled the K-1 from his business partnership really well. It was much cheaper than TurboTax and had specific guidance for estate returns. They have a section specifically for fiduciary returns that walks you through the 1041 step by step.