That's a really good point I hadn't considered! He is a full-time college student, so I think I'm still eligible to claim him. He works part-time at the campus bookstore, but I'm definitely providing well over half his support (tuition, housing, food, car insurance, phone, etc.). Do you know if there's any form or documentation I should get from his college to prove he's enrolled full-time? I want to make sure I have everything in order before this becomes an issue with the IRS.

You'll want to get a transcript or enrollment verification from his college showing his full-time status for the tax year. Most schools can provide this through their registrar's office or student portal. This is important documentation to have on hand. For the support test, keep records of all those expenses you mentioned. Create a spreadsheet showing what you pay versus what he earns from his job to clearly demonstrate you provide more than half his support. Also, make sure you understand the difference between the Qualifying Child and Qualifying Relative tests for dependents - at 19, he's only a Qualifying Child if he's a full-time student, otherwise you'd need to see if he meets the tests for a Qualifying Relative.

This is what I was thinking too. At 19, why isn't the son just providing his own SSN to his parent? Something seems off about this whole situation. Maybe there's more to the story?

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.

1 I was thinking about that! Did they help with identifying deductions throughout the year or was it more just for the filing part? And did you work with the same person each time or get random preparers?

17 They absolutely helped with deductions throughout the year. I had an initial consultation where they set me up with a tracking system for business expenses and explained what to save receipts for. You can request the same preparer each time, which I definitely recommend. I worked with the same woman for all my quarterly stuff and my annual return, which was great because she remembered my business details and could spot trends in my expenses. Just make sure to ask for their small business specialist specifically - the regular preparers might not have the same level of expertise with self-employment taxes.

13 That's actually brilliant. Do they offer other business services too? Might be worth joining for multiple benefits.

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.