What deductions should I look for as a single-member S-Corp owner in 2025?

14 Great question! The S-Corp structure can definitely provide tax benefits, but it's important to understand how deductions work differently than with a Sole Prop. For QBI (Qualified Business Income Deduction), yes, you can still claim this with an S-Corp. The business income that passes through to your personal return can qualify for the 20% QBI deduction, subject to income limitations. You'll absolutely still get your standard personal deduction on your individual tax return - that doesn't change. The S-Corp itself doesn't take a standard deduction, but you as an individual still do. Business deductions work a bit differently. The S-Corp itself takes most business deductions (supplies, travel, etc.) directly on the business return. For home office, you generally need to have the S-Corp pay you rent or reimburse you through an accountable plan to get that benefit. For retirement options, S-Corps actually open up some nice opportunities. You can establish a Solo 401(k) where both you as employee and the S-Corp as employer can contribute. The employer contribution can be a great tax advantage.

11 I went through this exact transition last year and was totally confused about deductions. I spent hours researching before I found https://taxr.ai which literally saved me thousands. It analyzes your specific business details and shows you all eligible deductions for S-Corps. I uploaded my previous Schedule C and answered some questions about my planned S-Corp setup, and it generated a complete list of deductions I qualified for. It even showed me how much I'd save by using different retirement contribution strategies.

22 Just wanted to update on my experience with taxr.ai after I posted that skeptical comment. I decided to try it since I was really stuck on this whole S-Corp transition. The documentation it provides is actually pretty impressive. It doesn't just list deductions but explains WHY you qualify and HOW to properly document them. It helped me identify several deductions I'd never have thought about, especially around depreciation and business travel. For the price, it definitely saved me more than it cost, and I feel much more confident about my tax strategy now.

19 If you need to call the IRS with S-Corp questions (which I definitely did when I made the switch), use https://claimyr.com instead of waiting on hold forever. You can watch how it works at https://youtu.be/_kiP6q8DX5c - basically it waits on hold with the IRS for you and calls you when an agent picks up. I spent 3 HOURS on hold before I found this service, but with Claimyr I got through in about 30 minutes without having to listen to that awful hold music. The IRS agent I talked to cleared up my questions about reasonable compensation requirements and home office deductions for S-Corps.

13 I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it since I had some complicated S-Corp questions that required talking to the IRS. The service works exactly as advertised - they waited on hold for me (over 2 hours!) and then called me when an agent was on the line. I got all my S-Corp deduction questions answered without wasting my entire afternoon. It was actually pretty amazing to pick up the phone and have an IRS agent already there instead of that awful hold music. Definitely using this again during tax season.

5 Don't forget health insurance as a potential deduction! As an S-Corp owner, you can have the company pay for your health insurance premiums. This is reported as wages on your W-2 (which sounds bad), BUT you can then deduct 100% of those premiums on your personal 1040 return (Line 16 of Schedule 1). It's an above-the-line deduction which means you get it even if you don't itemize. This was a major savings I didn't know about when I first started my S-Corp.

3 Has anyone used a SEP IRA instead of a Solo 401k for their S-Corp? I've heard mixed things about which is better for single-member S-Corps.

One thing I wish someone had told me before making the S-Corp switch - make sure you set up proper payroll from day one. The IRS expects you to pay yourself a reasonable salary through actual payroll (with W-2s, quarterly payroll taxes, etc.), not just estimate it at year-end. I made the mistake of trying to handle this myself initially and ended up with penalties for late payroll tax deposits. Consider using a payroll service like Gusto or ADP - it's usually worth the monthly cost to avoid compliance headaches. They'll handle all the quarterly filings, W-2s, and tax deposits automatically. Plus having proper payroll records makes it much easier to justify your salary vs distribution split if the IRS ever questions it. Also, don't forget about state requirements - some states have additional S-Corp taxes or filing requirements beyond the federal ones. Make sure you research what your state requires before making the election.

Another important consideration for S-Corp owners is the home office deduction - it works differently than when you were a sole proprietor. As an S-Corp, you can't just take the home office deduction directly on your personal return like you did with Schedule C. Instead, you have a couple of options: 1. Have the S-Corp pay you rent for the home office space (you'd report this as rental income on your personal return, but can deduct related expenses) 2. Set up an accountable plan where the S-Corp reimburses you for home office expenses The accountable plan route is usually simpler. You calculate your home office expenses (percentage of mortgage interest, utilities, insurance, etc.), submit an expense report to your S-Corp, and the corporation reimburses you. This reimbursement isn't taxable income to you, and the S-Corp gets to deduct it as a business expense. Just make sure to document everything properly - keep records of the square footage calculation, utility bills, and formal expense reports. The IRS is pretty strict about home office deductions, especially for S-Corps, so good documentation is essential. Also consider timing your S-Corp election carefully. If you're doing this for 2025, you generally need to make the election by March 15, 2025 (2 months and 15 days after January 1st) for it to be effective for the entire tax year.