I dealt with this exact situation when I closed my failed e-commerce LLC two years ago. You can definitely deduct those business losses against your personal income - the key is making sure you have proper documentation for every expense. One thing I learned the hard way is that the IRS pays extra attention to business loss deductions from dissolved entities, so organization is crucial. Beyond bank statements, you'll want receipts, invoices, contracts, and anything that proves the business purpose of each expense. Also consider the timing of your dissolution carefully. If you dissolve before filing taxes, you might face additional scrutiny and documentation requirements. I'd recommend keeping the LLC active until after you file your return for this tax year. The good news is that legitimate business losses can significantly reduce your tax liability. My $11k in losses from my failed venture ended up saving me about $3k in taxes when applied against my W-2 income. Just make sure your tax professional reviews everything thoroughly - it's worth the extra cost to avoid potential issues down the road.

I've been through this exact scenario with my marketing consultancy LLC that I dissolved last year after accumulating about $12k in losses. The good news is you can absolutely deduct those business losses against your W-2 income even after dissolving the LLC. A few key points from my experience: **Documentation is critical** - Bank statements alone won't cut it. The IRS will want to see receipts, invoices, contracts, and clear business justification for each expense. I recommend categorizing everything by expense type (office supplies, software subscriptions, marketing costs, etc.) to make your CPA's job easier. **Timing matters** - Consider keeping your LLC active until after you file your tax return. I dissolved mine too early and it triggered additional IRS questions that delayed my refund by several months. The extra few months of minimal state fees were worth avoiding the headache. **The tax savings are real** - My $12k in losses reduced my taxable income dollar-for-dollar, saving me about $3,200 in federal taxes (I'm in the 26% bracket). Since you're well under the $289k excess business loss threshold, your full $13k should be deductible. Work with a qualified tax professional who has experience with business dissolutions - they'll know exactly what documentation the IRS expects and can help you avoid common pitfalls that trigger audits.

Did you check your loan agreement? Should tell you exactly where that other 1500 went

This is exactly why I always tell people to be super careful with these advance loan places. They make it sound like easy money but the fees and interest can eat up a huge chunk of what you're expecting. For future reference, you can actually check the status of your real IRS refund for free on the IRS website using "Where's My Refund" - no need to pay these companies hundreds in fees just to get your own money a few weeks early.

This is such a helpful discussion! As someone new to S-Corp taxation, I'm realizing I've been overcomplicating this in my head. Amy, your original question really resonates with me because I had the exact same confusion about the timing of taxation vs. distributions. What finally helped me understand was thinking of it in two separate buckets: **Bucket 1: Tax obligations** - You owe taxes on S-Corp profits when the company earns them, regardless of when (or if) you take distributions. This is why you make quarterly estimated payments. **Bucket 2: Basis tracking** - This just ensures you don't get double-taxed when you eventually do take distributions of money you've already paid taxes on. I've been using a simple monthly tracker where I log: starting basis + monthly profit - monthly distribution = ending basis. It's helped me see that as long as I don't distribute more than my accumulated basis, I'm not creating any tax issues. The key insight from this thread is that S-Corp profits are always taxable when earned, but basis determines whether future distributions trigger additional taxes. Once you separate those two concepts, everything else falls into place!

This has been an incredibly enlightening discussion! As someone who's been hesitant to elect S-Corp status for my LLC, reading through Amy's question and all the responses has really helped me understand the mechanics. What I find most valuable is how everyone broke down the distinction between when you owe taxes (when the S-Corp earns profit) versus when you can take tax-free distributions (based on your accumulated basis). I was under the mistaken impression that S-Corp distributions were always tax-free, but now I understand they're only tax-free to the extent of your basis in previously-taxed income. The monthly tracking approach that several people mentioned seems like a smart way to stay on top of this. I'm particularly interested in the tools that were mentioned - it sounds like having proper tracking from day one could save a lot of headaches down the road. One question I still have: if you're just starting an S-Corp election with minimal initial capital (like Amy's $125), does it make sense to make an additional capital contribution early on to create more basis cushion? Or is it fine to just let basis build naturally through retained earnings?

One thing nobody's mentioned - don't forget about state filings for your S-corp! Depending on your state, you might need to file separate state returns for both your S-corp and personal taxes. TurboTax Business handles most state S-corp returns, but the process can be even more confusing than federal. Also, if you do business in multiple states or have nexus issues, self-filing gets complicated real quick. My S-corp operates in two states and I tried doing it myself last year... ended up giving up and hiring an accountant midway through.

I successfully filed both my 1120-S and 1040 myself using TurboTax for the past two years. As a single-member S-corp, it's definitely manageable, but here are some key things that helped me: The biggest challenge isn't the software - TurboTax does a good job with the guided questions. The real work is in preparation. Make sure you have your books reconciled properly before you start. I use QuickBooks and export my P&L and Balance Sheet directly, which saves tons of time. One mistake I made my first year was not keeping proper documentation for business expenses. The IRS wants to see business purpose for everything, especially for home office deductions and travel expenses. Now I keep a simple spreadsheet with receipts and business justification throughout the year. The reasonable compensation issue is real - I research industry salary surveys for my role and document my reasoning. Better to err on the side of paying yourself a bit more in salary than dealing with IRS scrutiny later. Overall, I save about $1,000 annually doing it myself, and I feel much more in control of my tax situation. Just budget extra time your first year and don't wait until the last minute!

Don't forget you can deduct expenses even for those small gigs! I did face painting at birthday parties last year - all under $600 per client - and was able to deduct all my supplies, travel costs to events, and even a portion of my phone bill for taking bookings. It actually made a big difference and almost cancelled out the taxes I would have owed on that income!

The $600 threshold is actually just an administrative rule for businesses - it determines when they have to send YOU a 1099 and report the payment to the IRS. But you're absolutely correct that you still need to report ALL income regardless of whether you get a form or not. Here's what I do to stay organized: I created a simple spreadsheet with columns for date, client/company name, description of work, and amount paid. I also keep screenshots of payment confirmations (Venmo, PayPal, Zelle, etc.) and any invoices I send. This creates a paper trail that satisfies the IRS if they ever ask questions. The key thing to remember is that unreported income can come back to bite you later. Even though the company didn't send you a 1099, they might still deduct that payment as a business expense on their taxes, which could create a mismatch if you don't report it as income on yours. Also, once your total self-employment income hits $400 (from all sources combined), you'll need to pay self-employment tax on it, so it's worth tracking everything carefully even if individual payments seem small.