This is a great question that trips up a lot of people working on corporate returns! The key insight is that deferred tax liabilities (including the state portion) are purely financial accounting entries - they never appear as deductible expenses on your actual tax returns. When you calculate that deferred tax liability using your 24.5% effective rate, you're creating a balance sheet entry that tracks future tax obligations due to timing differences. But the IRS doesn't recognize "deferred tax expense" as a legitimate deduction because it's not an actual cash payment or legal obligation in the current year. For your specific situation with equipment depreciation differences, here's what's actually happening tax-wise: You're taking higher depreciation deductions now on your federal return (reducing current taxes), and the state portion of future taxes will be deductible on federal returns when those taxes are actually paid in future years - but only as they're paid, not as deferred amounts now. The M-3 reconciliation you mentioned is the right track - you'll report the temporary difference between book and tax depreciation there, but the deferred tax liability calculation itself stays in the financial statement world and doesn't flow through to your tax return at all.

This thread has been incredibly helpful! As someone who's relatively new to corporate tax work, I was making the same mistake of trying to treat deferred tax liabilities as actual deductible expenses. What really clicked for me reading through these responses is the distinction between financial reporting (GAAP) and tax reporting. The deferred tax calculation with your 24.5% rate is purely for your financial statements - it's telling you what your future tax obligation will be when those timing differences reverse. But from a tax perspective, you're just taking the depreciation deduction that's allowed under the tax code right now. The fact that it's different from book depreciation creates the deferred tax liability on your balance sheet, but that liability itself isn't a tax-deductible item. I had a similar case last month where I almost made this error. Thankfully my supervisor caught it during review, but now I understand the mechanics much better. The key is remembering that deferred taxes are an accounting concept, not a tax concept - they don't cross over into your actual tax calculations.

Just want to add that if you're still within the first quarter of withholding, you might be able to avoid penalties even with the delay. The IRS has safe harbor provisions for first-time withholding situations, especially for small nonprofits. When you do get your EFTPS set up and make the deposit, include a brief explanation letter about this being your organization's first gambling withholding situation and the administrative delays you encountered. Also, double-check that your nonprofit's EIN is properly linked to all the forms. I've seen cases where the W2G was filed under the organization's EIN but the Form 945 was accidentally filed under someone's personal SSN, which created a nightmare to untangle. Make sure everything matches your nonprofit's tax ID number. Good luck with getting this sorted out! The fact that you withheld properly and are trying to do the right thing will work in your favor if the IRS has any questions.

Hey Lim! I went through almost the exact same situation last year with our church's silent auction. A few key things that saved us: First, definitely get that EFTPS registration started ASAP - the 2-3 week wait is real. While you're waiting, you can actually call the IRS business line at 1-800-829-4933 and explain your situation. They might allow you to make the deposit via phone using a debit from your bank account, especially since this is your first time dealing with gambling withholdings. Second, yes you absolutely need to correct that 1099-MISC to a W2G. The IRS computers will eventually flag the mismatch between the form type and the withholding you're trying to deposit. Issue a corrected W2G showing the $6,800 winnings and your 24% withholding, then send a voided/corrected 1099-MISC to both the winner and the IRS. For Form 945, you'll file that by January 31st of next year, but you need to deposit the withheld funds much sooner. Since you withheld about $1,632 (24% of $6,800), you're under the $2,500 threshold, so technically you could wait until you file the 945. BUT - I'd strongly recommend depositing within the next week to show good faith effort. Don't panic - the IRS is generally reasonable with small nonprofits who are clearly trying to comply!

Theres another angle to consider - if ur trading in both taxable and IRA accounts and do these transactions across accounts, the wash sale rules still apply but ur broker might not track them correctly. Made this mistake last yr and got hit with an unexpected tax bill 😩

Great question about cross-account wash sales! You're absolutely right that brokers often miss these. The IRS considers SPY and VOO to be substantially different securities even though they track similar indexes. SPY tracks the S&P 500 while VOO is Vanguard's S&P 500 ETF - they're different enough that selling SPY options at a loss and buying VOO shares wouldn't trigger the wash sale rule. However, if you sold SPY options and bought SPY shares (or other SPY options) across accounts, that would definitely be a wash sale that you'd need to track manually since your broker won't catch it.

Something nobody mentioned yet - if you're performing outside your "tax home" area and need to stay overnight, meals and lodging become travel expenses and different rules apply. In that case, you can definitely deduct transportation, hotel, and meals (100% for 2022 tax year).

As someone who's been working as a session musician for over a decade, I can add some perspective on the "regular vs. temporary" venue distinction that's been discussed here. The IRS actually looks at this more nuancefully than just "same venue = regular workplace." What matters is the nature and expected duration of your work arrangement. For example, if you have a 6-month contract to play at a specific restaurant every Friday night, that's still considered temporary work since it has a defined end date of less than a year. However, if you've been playing at the same jazz club every Tuesday for 3 years with no end date in sight, that would likely be considered a regular work location, making transportation there non-deductible commuting. The gray area comes with ongoing but irregular bookings - like when a venue calls you sporadically for fill-in gigs. In my experience, I treat these as temporary locations since there's no regular schedule or long-term commitment, just individual contracts for specific dates. Also worth noting: if you travel from one temporary work location to another on the same day (say, from a recording session to a performance venue), that transportation between work locations is definitely deductible regardless of whether either location is "regular" for you. Documentation is everything - I keep a simple spreadsheet noting the venue, date, nature of the gig (one-off vs. ongoing contract), and business purpose for each trip.

As someone who prepares taxes, I wanted to add one thing - keep track of any days you work from home! If you're hybrid and don't go to the office every day, make sure you're not paying for parking on days you don't use it. Some parking garages

Another option to consider is carpooling or ride-sharing with coworkers if any live near you! I was in a similar situation and found two colleagues who were also struggling with downtown parking costs. We rotate driving duties and split parking expenses three ways, which brings my monthly cost down from $240 to around $80. Plus we can use the HOV lanes during rush hour which saves time too. It took some coordination at first but now it's routine and we've all become good friends. Might be worth posting on your company's internal message board or asking around to see if anyone else is interested in sharing the cost burden.