Thanks for sharing your experience! What specific types of grants did your spouse have that were affected by filing status? My wife mentioned something about a state grant but I'm not sure which one exactly.

My wife had a combination of a federal Pell Grant and a state grant that was specifically for lower-income students returning to education. Both had income limits that would have been exceeded if we filed jointly. The state grant (in California) was particularly sensitive to income changes. If your wife has a state grant, that's a huge flag to investigate further because many state grants have strict income requirements that can disappear entirely once you cross a threshold - unlike federal aid which often gradually phases out. I'd recommend having her contact her school's financial aid office directly to ask how joint filing would impact her specific grants. They usually have better information than the general FAFSA helpline.

Yes! The new FAFSA has increased the income protection allowance, meaning more of your income is shielded from aid calculations. For married couples, you get a higher protection amount than single filers. This actually makes filing jointly slightly LESS harmful to aid eligibility than before.

Can you explain more about this S-Corp election thing? At what income level does it actually start making sense from a tax perspective?

The S-Corp election starts making financial sense when your business profit is high enough that the tax savings exceed the additional costs of maintaining an S-Corp. For most small businesses, that's typically around $60,000-$80,000 in annual profit. The primary tax advantage comes from splitting your income between a reasonable salary (which still gets hit with self-employment tax) and distributions (which avoid self-employment tax). But there are additional costs - you'll need payroll processing, more complex tax filings, and possibly higher accountant fees. It's definitely not worth it for businesses with modest profits.

Which state are you in? Some states have crazy high annual LLC fees! California is brutal at $800/year minimum.

11 Do you need to be a student at the college to attend these workshops? I've never thought about checking community colleges for this type of resource.

21 Nope! The small business workshops are open to the community, not just students. That's what makes them such a great resource. They're funded through the college's community education program and some small business grants. Check your local college's "Community Education" or "Continuing Education" section on their website. If they don't have anything listed, also try your local Small Business Development Center (SBDC) which offers similar free workshops.

13 This is such good advice! I used to just toss receipts in a shoebox and it was a disaster come tax time. Is there a specific app you recommend for tracking all this stuff?

Does this work for accounts that hold REITs? Those distributions are especially complicated with return of capital, etc. I'm struggling with exactly this issue right now for an estate I'm administering.

Yes, it actually works quite well for REITs, which are one of the most complicated assets for estate fiscal year accounting. The brokerage's tax center will typically show the breakdown of REIT distributions into ordinary income, qualified dividends, capital gain distributions, and return of capital. For the fiscal portion where you don't yet have the official breakdown, many brokerages will let you see the preliminary classification based on what the REIT has announced. REITs are required to announce their dividend tax classifications, even though the official 1099 comes later. If you can't find this in your brokerage's system, you can often go directly to the investor relations section of the REIT's website and find their dividend tax classification announcements.

Is that really true? I thought you always use the form for the year in which the fiscal year ends. So for a Aug 2022-July 2023 fiscal year, wouldn't you use the 2023 forms since that's when the fiscal year ends?

How do you determine what percentage is "reasonable"? Is there a specific formula the IRS uses or is it more of a judgment call?

There's no specific formula or percentage the IRS mandates - it's more of a facts and circumstances test. The IRS looks at factors like your qualifications, duties, time spent in the business, what comparable positions pay in your industry and region, and the financial performance of your business. For some businesses, a 50/50 split might be perfectly reasonable, while in others (especially service businesses where the owner's expertise is the primary value), the salary portion should be higher. I recommend researching salary data for your position in your area using resources like the Bureau of Labor Statistics or industry compensation surveys to support whatever split you choose.

I've used both. Gusto is MUCH more user-friendly for S-Corp payroll specifically. They have an owner setup wizard that walks you through things like reasonable compensation documentation. QuickBooks is more robust for overall accounting but their payroll can be confusing for S-Corp owner-employees. Gusto also automatically handles all the special forms for paying yourself as an S-Corp owner.