Lol I did the same thing when I first moved to Texas! But there are still 9 states with no income tax right? Florida, Texas, Washington, Alaska, Nevada, South Dakota, Wyoming, New Hampshire (only on dividends and interest), and Tennessee if I remember correctly.

You're right, there are 9 states with no income tax. Florida, Texas, Washington, Alaska, Nevada, South Dakota, Wyoming are fully income-tax free. Then New Hampshire only taxes investment income but not wages, and Tennessee phased out their tax on investment income so it's now completely income-tax free too. It's amazing how many people in these states still worry about state returns! The Direct File confusion is only relevant if you actually have to file a state return in the first place.

I had a similar situation last year with property in two states. Direct File isn't great for multi-state situations in my experience. It'll handle your federal return fine with the SSA-1099 and rental income, but for the Georgia state return, it gets complicated. When it transfers data to Georgia's system, it might not properly allocate which income is subject to Georgia tax vs what's exempt. I ended up using a paid preparer for this specific situation.

How complicated was it to switch from partnership to S-Corp taxation? Did you have to create a new entity or just file some paperwork? Also, ballpark, how much did you save in taxes by making the switch?

The switch wasn't that complicated - just filed Form 8832 to be taxed as a corporation and then Form 2553 for the S-Corp election. Didn't need to create a new entity at all. The LLC remained the same, just the tax treatment changed. As for savings, it varies based on profit levels, but we probably saved around $15,000-$20,000 in self-employment taxes the first year after switching. The key is paying ourselves reasonable salaries (which are subject to FICA taxes) and taking the rest as distributions (which aren't). Just make sure you have a good accountant to help determine what's "reasonable" for your industry and area.

Nevada is way better for LLCs if you can establish a presence there. No state income tax and way lower fees. That's what my cousin did with his construction business after getting killed with California fees for years.

That sounds really promising. Do you find the monthly bookkeeping actually helps with your business throughout the year or is it mainly just for tax prep?

It's been incredibly helpful throughout the year. I get monthly profit and loss statements that help me track where money is going, which has helped me identify areas to cut costs. The bookkeeper also helps me understand which parts of my business are most profitable. Tax time is so much easier now too. Instead of scrambling to organize a year's worth of receipts and transactions, everything is already categorized and ready. My CPA literally told me I'm saving money on tax prep because they don't have to spend hours organizing my financial information first.

I tried that route one year and ended up missing a major deduction that an accountant caught the following year. Software is fine for W-2 employees but business taxes have too many gray areas where professional judgment matters.

What exactly happens if you miss the deadline completely? Does the IRS automatically find out and penalize you, or is it something that only comes up if you get audited? Asking for a friend who may have missed this deadline last year...

If the excess contributions aren't removed by the deadline, they unfortunately remain in the plan and yes, they can be double-taxed. The excess amount will still be included in your taxable income for the year you made the contribution, and then it will be taxed again when you eventually withdraw it in retirement. There's no immediate penalty per se, but the double taxation is the real cost. The IRS doesn't automatically flag this - it would typically only come up during an audit. However, many plan administrators now report contribution limits to the IRS, so it's becoming more likely to be caught. Your friend should consult with a tax professional about their specific situation as there might be some remediation options depending on their circumstances.

This is actually incorrect advice that could cause more problems. You can't simply "redesignate" excess 401k contributions as after-tax contributions. The 401k contribution limit applies to the total of traditional and Roth contributions combined. After-tax contributions (non-Roth) are different and subject to the overall annual addition limit, not the employee deferral limit. What you might be thinking of is excess IRA contributions, which can sometimes be recharacterized, but 401k excess deferrals must be distributed with earnings.

You're right and I misspoke. I was confusing 401k with IRA recharacterization options. For 401ks, distribution of the excess is generally the only option. Thanks for the correction! What I should have mentioned is that some 401k plans do have after-tax contribution options (separate from Roth) which have different limits, but that wouldn't help with excess contributions to the regular pre-tax/Roth portion that's subject to the $23,000 limit for 2025.

What if I already filed my taxes but didn't include these losses? Can I file an amended return to claim them or would that increase my audit risk?

You can absolutely file an amended return to claim losses you forgot to include. Use Form 1040-X for the amendment along with a corrected Schedule D showing the capital losses. The general time limit for filing amendments to claim a refund is within 3 years from the date you filed your original return or within 2 years from when you paid the tax, whichever is later. As for audit risk, claiming legitimate losses you're entitled to shouldn't significantly increase your risk if you have the documentation to support them. Just make sure you keep records showing your basis in the shares and evidence of when they became worthless.

In TurboTax, you need to go to the Investments & Rental Properties section, then select Stocks, Mutual Funds, Bonds, Other. It will ask for the sale information and your cost basis. Make sure to enter your actual sales (even if pennies) rather than just marking it as worthless. It does track carryforward losses automatically for future years.