Would those software options be overkill for a really small contracting business? I have similar basis issues but my revenue is under 100k and I only have a few transactions per month. Seems like these might be expensive professional-grade software.

You're right that they can be expensive for a small operation. UltraTax starts around $2,000 which definitely isn't worth it just for one form. There are more affordable options though - Drake Tax has an S Corp module that's more reasonably priced at around $350 for a year. For a business under 100k with few transactions, you might actually be better off with a specialized accountant for this one issue. Once you understand how basis works for your specific situation, you can probably handle it yourself in future years by creating a simple spreadsheet to track your basis adjustments. The first year is always the hardest with basis calculations, especially when you have losses and personal payments of business expenses.

Thanks for sharing your experience. Did you end up going with a full-service accountant then? The cost is definitely a factor for me, especially since my business is pretty small. I'm hoping there might be a middle ground where someone could help me understand the basis calculations without taking on the full return.

I did end up hiring a full-service accountant and honestly it was worth every penny. They found several things I'd been doing wrong beyond just the basis issues. It cost about $950 for both my personal and S Corp returns, which felt steep at first, but they found almost $3,600 in additional deductions I'd missed in previous years. The middle ground might be a consultation. Some accountants will do a 1-2 hour paid consultation where they'll review your specific basis situation and teach you how to handle it, without actually preparing the return. My accountant now offers this for $175/hour. They can show you exactly how to track basis going forward, which might be worth it even if you only use them once.

Thanks for pointing this out! Yes, we are both claiming the credits separately based on our individual self-employment incomes. My wife's income is higher than mine, so her credits are calculating higher too. Do you know if we need any specific documentation to prove we were caring for our kids during those days? I'm worried about potential audit flags since this is making such a big difference in our taxes.

You should definitely keep documentation showing that your children's schools or care facilities were closed during the periods you're claiming. Things like emails from the school about closures, announcements from the daycare, or any formal communications about COVID-related shutdowns. Also maintain a calendar or log showing which days you had to reduce work hours to provide care. Note the days you would normally have worked but couldn't due to childcare responsibilities. And keep records of your normal work schedule pre-COVID to establish your baseline. If possible, document how your business income was affected - comparing earnings or billings from similar periods before the pandemic might help demonstrate the impact. The more documentation you have connecting the care needs to your reduced work hours, the better position you'll be in if questioned.

I had the same experience! TurboTax gave me a much smaller credit than FreeTaxUSA. My accountant explained that some software was more aggressive in their interpretations of the rules while others were more conservative. He recommended documenting everything carefully in case of an audit, regardless of which calculation you go with.

Thanks for the tip! I just looked at the actual Schedule D form in the PDF and you're right - there's a discrepancy. The main software screen shows $0 carryover, but Schedule D Line 16 is showing the $4,000 remaining loss amount. So it looks like the calculation is correct in the actual forms but just displaying wrong in the summary screen? Do you think I should contact the software company about this display issue or just ignore it since the actual form seems correct?

If the actual Schedule D shows the correct $4,000 carryover amount, then your tax return is being filed correctly and you should be fine. This is definitely just a display issue in the software interface. It's still worth reporting to the software company since others might be confused by the same issue. Take screenshots of both the incorrect summary page and the correct Schedule D to include with your report. But as far as your taxes are concerned, you're good to go - the IRS receives the actual forms, not the software's summary screens.

This is good advice. Numbers get fuzzy when we rely on memory. I've messed up carryovers before because I was working from memory instead of having my previous return open while doing my current taxes.

That's really helpful context. The mobile home was repossessed rather than sold, and I don't think there were any investment accounts generating income. Does that mean the estate might not have needed to file either? I'm trying to figure out if we're in deep trouble or if this might be a relatively minor issue.

Based on what you've described, it sounds like the estate tax situation might be fairly straightforward. If the manufactured home was repossessed rather than sold by the estate, there wouldn't be income from that transaction. Without investment accounts generating income, the estate may have had minimal or no taxable income. That said, estates still have filing requirements even with zero tax liability in many cases. The 1041-ES forms you received suggest the IRS believes there is some obligation, but it could be much simpler than you fear. Getting the transcript information from the IRS will help clarify exactly what they're expecting.

This is super important. My family got hit with massive penalties that were almost more than the taxes themselves. Request first-time penalty abatement if this is your first tax issue - the IRS will often grant it if you have a clean compliance history.

Should people proactively contact their benefits offices about potential discrepancies, or just wait to see if they get flagged?

Generally, it's better to wait until you're contacted unless you realize you've made a significant error that would affect your eligibility. The verification systems are designed to filter out minor discrepancies, and proactively contacting benefits offices often just creates confusion when there might not be an issue. If you do discover you've made a major reporting error that would affect your eligibility, then yes, you should contact the appropriate office to correct it. But for small differences in how income is categorized or reported, the cross-referencing systems typically have thresholds for what triggers a review.

From what I've read, it includes pretty much all federal benefit programs - Social Security, Medicare, Medicaid, SNAP, Housing assistance, veterans benefits, etc. But the focus is primarily on programs where eligibility is tied to income levels.