11 Quick question - what about my car? I use it for business sometimes but also personal. Is that 50% deductible or based on actual business use?

Great question! The basic rule is that business expenses are generally 100% deductible if they're "ordinary and necessary" for your business. The IRS specifically carved out exceptions for certain categories: **100% Deductible:** - Office supplies, software, equipment - Contractor payments (yes, what you pay freelancers is fully deductible!) - Advertising and marketing - Professional services (legal, accounting, etc.) - Business travel (flights, hotels, car rentals) **50% Deductible:** - Business meals and entertainment - This limitation exists because the IRS assumes there's always some personal benefit to eating For your freelancer question - absolutely deductible at 100%! Just remember to get their W-9 form upfront and issue 1099-NECs if you pay them $600+ in a year. The key is keeping good records. For mixed-use items (like a laptop used for both business and personal), you deduct based on the business percentage. There's no "magic rule book" but IRS Publication 535 (Business Expenses) is your best friend for the details!

I'm dealing with a very similar situation right now! My LLC partner and I paid around $3,200 in startup costs personally while waiting for our business bank account to get set up. From what I've researched and learned from our CPA, the LLC can absolutely deduct these expenses as long as they're legitimate business costs and properly documented. The fact that you paid personally first doesn't disqualify them - it's actually pretty common for new LLCs. Here's what our accountant told us to do: - Create expense reports with receipts showing business purpose for each expense - Have both LLC members formally approve the reimbursements (we just did this via email and kept records) - Process the reimbursements through proper business accounting (not just casual transfers) - Make sure to get reimbursed before year-end if you want the deductions this year The reimbursements aren't taxable income to you since you're just getting back money you spent for the business. And the LLC gets to deduct the full business expenses. Your loan idea could work too, but honestly the reimbursement route is simpler and achieves the same tax result. Just make sure everything is well-documented in case of an audit!

I went through this exact same situation with my LLC last year! You're absolutely right that the LLC can still deduct these expenses even though you paid them personally first. The key is proper documentation and treating them as legitimate business expense reimbursements, not distributions. Here's what I learned from my experience: 1. **Documentation is everything** - Create detailed expense reports showing the business purpose, date, vendor, and amount for each expense. Keep all receipts. 2. **Formal approval process** - Have both LLC members formally approve the reimbursements (email documentation works fine for a 2-member LLC). 3. **Proper accounting treatment** - Record the expenses and reimbursements as separate transactions in your books. The LLC takes the deduction, and the reimbursements to you aren't taxable income since you're just getting back money you spent for the business. 4. **Timing matters** - Try to process reimbursements within a reasonable timeframe (ideally same tax year, but definitely within 60-120 days) to avoid any appearance of disguised distributions. Your loan idea could work too, but the reimbursement approach is simpler and achieves the same tax result. The main advantage of documenting as loans would be if you need to show increased member basis or if the amounts are very large. Either way, make sure your operating agreement addresses expense reimbursement procedures - this gives you solid legal backing. Your accountant will definitely confirm this when they return, but you're on the right track!

Question about the actual filing - I'm in a similar situation with late original 941s for 2021. Are you guys paper filing these late originals or using e-file? My software won't let me e-file anything from 2021 anymore.

As someone who works in tax compliance, I want to emphasize that while you can still claim ERC on late original 941 filings before the April 2025 deadline, you should be extra careful about your qualification documentation given the increased IRS scrutiny on ERC claims. Since you mentioned the business didn't make tax deposits that quarter because they were counting on ERC eligibility, make absolutely sure you have bulletproof documentation for whichever qualification test you're using (government orders or significant decline in gross receipts). The IRS has been particularly aggressive in auditing situations where businesses relied heavily on ERC to offset their tax liability. Also, consider filing Form 7200 (Advance Payment of Employer Credits) documentation if you haven't already, as this can help establish the timeline of your ERC claim intentions. Given that this is a boutique business, you'll likely qualify under the government closure/restriction test rather than the gross receipts test, so focus your documentation there. One last tip: include a cover letter with your filing explaining the circumstances of the late submission and your reasonable cause for the delay (USPS delivery issues). This proactive approach can sometimes help with penalty abatement requests down the line.

Has anyone dealt with Canadian RRSP accounts when making the first-year choice? I've heard there's a special form you need to file to avoid the US taxing these accounts as regular investment income.

I went through this exact same situation when I moved from Toronto to Austin in September 2024! The first-year choice election was definitely the way to go - it saved us thousands compared to filing as non-residents. A few things to keep in mind that I learned the hard way: Make sure you calculate the 31 consecutive days and 75% presence test carefully. Since you arrived in August, you should easily meet this. Also, don't forget that making this election means you'll be considered US residents from January 1, 2024 forward for tax purposes, so you'll need to report ALL worldwide income including your Canadian employment from early in the year. The foreign tax credit on Form 1116 will help offset the Canadian taxes you already paid, but gather all your Canadian tax documents (T4s, Notice of Assessment, etc.) because you'll need them. One tip: if you had any Canadian investment accounts (TFSAs, RRSPs, etc.), there are additional forms and elections to consider. The US-Canada tax treaty has some helpful provisions but you need to be proactive about making the right elections. Filing jointly with the full standard deduction made a huge difference for us compared to the non-resident alternative. Definitely worth consulting with someone who knows cross-border tax if you have a complex situation, but the first-year choice sounds perfect for your circumstances.

Had the exact same thing happen to me last year! Turns out there was a glitch in their system that delayed processing e-filed returns. Even though I had confirmation, it took them 3 extra weeks to actually process it. The non-filing letter was automatically generated before they caught up. I'd definitely call the practitioner priority line if you can get through - they were way more helpful than the regular customer service line.

This is super frustrating but unfortunately pretty common during busy filing seasons. Since you e-filed and have confirmation, your return is almost certainly in their system - it's just a timing/processing issue. The non-filing letters are often generated automatically before their systems sync up. I'd recommend calling the IRS directly with your confirmation number to get them to update your account status. Also keep all your filing documentation just in case you need to prove you submitted on time. Usually resolves within a few weeks once they catch up on processing.