Thank you for this perspective. Could you clarify about the FMLA part? I thought that only applied to companies with 50+ employees, and we only have 9 total. Are there similar protections for smaller businesses?

You're absolutely right about FMLA - it only applies to companies with 50+ employees, so your company is too small to be required to provide that protection. I should have been more clear. However, many states have enacted their own family leave laws that extend to smaller businesses. Depending on where you live, there might be state-specific protections even though you're not covered by federal FMLA. For example, some states require even small employers to provide job protection and/or paid leave. That's definitely worth looking into based on your specific location.

The fraud part is the intentional misrepresentation. If they're specifically timing a "layoff" to coincide with maternity leave and have already promised to bring her back at a specific date, that's not a true layoff - it's a planned temporary absence that they're trying to disguise as a layoff to shift costs to the state. A legitimate layoff would be based solely on business needs, not timed specifically to coincide with a planned medical event, and wouldn't come with a guaranteed rehire date.

Thank you, I hadn't even thought about all those other tax benefits that would be affected. We do have some student loan interest and education credits that would be impacted. Looks like filing jointly and taking the premium tax credit hit is even more clearly the right move than I initially thought.

Happy to help! Yeah, the MFS status really limits a lot of tax benefits, which is why it's rarely the optimal choice unless there are very specific circumstances. The premium tax credit "marriage penalty" is frustrating, but thankfully it's just a one-time adjustment you're dealing with. Next year you'll be able to plan your insurance coverage for the full year as a married couple and avoid this issue completely.

This is really smart. I did this exact thing last year. Was going to owe $2,400 in premium tax credits after getting married, but maxed out my HSA ($3,850) and put another $2,000 in my traditional IRA. Dropped our MAGI just enough to reduce the repayment to only $800. Definitely worth looking into!

I hadn't thought about this angle! We do have some room to make additional retirement contributions. I'll need to check exactly how close we are to the next MAGI threshold for the premium tax credits. Even if it just reduces the amount a bit, that's still a win since we'd be putting money into our retirement rather than just paying it to the IRS. Thanks for the suggestion!

That's a great idea! I hadn't even thought about retirement accounts. Would we need to wait until after we file taxes to open the Roth IRA, or can we do it now based on the 1099 amount?

You can open and fund the Roth IRA anytime between January 1, 2025 and the tax filing deadline (usually April 15, 2026) for the 2025 tax year. You don't need to wait until after filing taxes. Remember that the contribution limit is based on earned income after business expenses. So if your teen's net self-employment income ends up being $550 after deducting the computer and software expenses, their maximum Roth contribution would be $550 for the year, not the full $1,400 from the 1099-NEC.

I think there's a safe harbor exception for dependents with small amounts of income? My accountant told me my daughter didn't need to worry about quarterly payments for her babysitting income until it was more substantial.

Thanks for this insight. The discretionary nature is really appealing since her income can vary quite a bit. Do you know if there's a deadline for deciding whether to make a profit sharing contribution for the current tax year? Like could we wait until March 2025 to decide about 2024 contributions?

You can actually wait until your S Corp's tax filing deadline including extensions to make the profit sharing contribution for the prior year. So for 2024 contributions, if your S Corp files for an extension, you could have until September 15, 2025, to make the decision and the actual contribution. This flexibility is one of the biggest advantages of profit sharing plans for professionals with variable income. Just make sure the plan documents are amended before the end of the plan year in which you first want to make profit sharing contributions. The plan has to allow for profit sharing before you can actually make those contributions.

Not necessarily a compliance issue. In many medical groups, the LLC sponsors the 401k plan but the participating doctors are technically employed by their own S Corps. The plan documents just need to specifically allow for this arrangement. It's super common in group practices.

Is there a dollar threshold for when something should be depreciated vs just expensed? Like if my desk was only $300, do I still need to depreciate it or can I just deduct it all at once under supplies/furniture?

There's actually a "de minimis safe harbor election" that lets you expense (rather than depreciate) items that cost less than $2,500 per item or invoice. So for your $300 desk, you could absolutely deduct it all at once instead of depreciating it over several years. Many small business owners don't know about this and end up creating unnecessary complexity by depreciating smaller items. For slightly larger purchases, Section 179 expensing is another great option that lets you deduct the full cost of qualifying equipment in the year you put it into service, rather than depreciating it. The limits are quite generous for small businesses (up to $1,160,000 for 2023).

Simplified method is WAY easier but usually results in a smaller deduction in my experience. I tracked both methods for two years and regular method gave me about $1,200 more in deductions. Depends on your situation though.