Quick question - does anyone know if selling equipment/fixtures when closing a business is handled the same way as inventory? I'm about to close my soap making business and will be selling my equipment along with remaining inventory.

As someone who just went through closing my small consulting business last month, I wanted to add that timing can be really important here. Since you mentioned you're down to the wire with filing, make sure you don't miss any quarterly estimated tax payments that might be due if you had other income during the year. Also, when you report the $8,400 from scrapping on Schedule C, double-check that you're not forgetting any other business expenses from the year - things like storage costs for the inventory, shipping to the refiner, or any professional fees you paid for advice on closing the business. These can all be legitimate deductions that might help offset some of that inventory loss. One last thing - keep really good documentation of the scrapping transaction (receipts from the refiner, weights, metal content analysis, etc.) in case the IRS ever questions how you arrived at the $8,400 figure or the original $12,000 cost basis.

Don't forget that even though you filed an extension, you still need to submit your return by October 15th to avoid late filing penalties! Extension season always goes by faster than people expect.

Just wanted to chime in with my experience - I switched from TurboTax to FreeTaxUSA after filing an extension and it worked perfectly! The key thing to remember is that your extension (Form 4868) is completely separate from your actual tax return filing method. I was in a similar boat with TurboTax trying to charge me $89 for federal plus state fees. FreeTaxUSA ended up costing me only $15 for state filing (federal was completely free) and walked me through everything step by step. The interface isn't as fancy as TurboTax but it gets the job done and their support was actually more helpful when I had questions. One tip: make sure you have all your documents organized before you start with any new service since you'll be entering everything fresh. Also double-check that any estimated tax payments you made with your extension are properly reflected in the payments section of your return. Good luck!

Has anyone noticed that TurboTax sometimes calculates the underpayment penalty incorrectly? Last year I had a similar situation and when I checked the actual Form 2210 calculations, TurboTax had made an error in how it was applying my estimated payments. It wasn't considering my January 15th payment properly because of how I had entered the date. When I fixed that, the penalty disappeared. Might be worth double-checking the actual calculations for your specific situation.

There's one more thing to check that might help explain your situation - make sure TurboTax is correctly applying your November 2023 estimated payment to the right tax year. Since you made that payment in November 2023, it should be applied to your 2023 tax return, not 2024. Sometimes people get confused about this timing - estimated payments made in January through December of a given year apply to that year's tax return, even if you're filing the return the following year. So your November 2023 payment should help with your 2023 taxes (the return you're filing now). If TurboTax is somehow applying that payment to 2024 instead, that could explain why you're still seeing an underpayment penalty for 2023. Double-check which tax year that payment is associated with in the software. Also, just to confirm - when you received the inheritance in February 2023, was any of it taxable income? Inheritances themselves are generally not taxable income to the recipient, though any income generated by inherited assets (like interest or dividends) would be taxable.

This is a fascinating discussion on tax reform! As someone who's dealt with the complexity of our current system, I really appreciate the elegance of your flat tax proposal. One aspect I haven't seen discussed much is how this would affect small business owners and self-employed individuals. Currently, we have a lot of business deductions that help offset the higher effective tax rates we face due to self-employment taxes. Under your system, would business expenses still be deductible? Things like equipment, office supplies, travel, etc.? If we eliminate most deductions for simplicity but keep business expenses, that creates an interesting dynamic where business owners might have significantly different effective rates than W-2 employees at the same income level. Also, I'm curious about how this would interact with retirement savings. Would contributions to 401(k)s and IRAs still be deductible, or would those be eliminated too? The current tax-advantaged retirement accounts are a major way people reduce their current tax burden while saving for the future. The more I think about it, the more I realize how many policy goals our current tax system tries to achieve beyond just raising revenue - encouraging retirement savings, homeownership, charitable giving, business investment, etc. Your proposal would essentially be saying we should achieve those goals through other means rather than the tax code.

As a tax professional who's worked with clients across all income levels, I think your proposal has merit but would need some refinements to be practical. The biggest issue I see is that eliminating most deductions could create unintended hardships. For example, medical expenses can be catastrophic - a family facing a serious illness shouldn't lose the ability to deduct extraordinary medical costs just for the sake of simplicity. However, I do like the core concept of high standard deductions paired with a flat rate. It would dramatically reduce compliance costs and make tax preparation accessible to almost everyone without professional help. One modification to consider: instead of eliminating ALL deductions, maybe keep a very short list of the most essential ones - medical expenses above a threshold, state and local taxes (capped), and business expenses. This preserves some fairness while maintaining most of the simplicity benefits. Regarding revenue, you could implement this gradually. Start with your proposed structure but adjust the rate and deduction levels based on actual revenue data from the first few years. This would let you fine-tune the system without the political impossibility of getting everything perfect from day one. The administrative savings alone would be enormous - both for taxpayers and the IRS. That has real economic value beyond just the tax rates themselves.

I went through this exact same situation two years ago! You definitely need to pay quarterly taxes on that income even without the LLC formed yet. The IRS doesn't care about your business structure - they care about the income you're earning. With $3,500 so far this year, you're likely looking at owing around $500-700 in self-employment tax alone (that's the Social Security/Medicare tax at 15.3%), plus regular income tax on top of that. If you expect to make more throughout the year, you could easily hit that $1,000 threshold that triggers the quarterly payment requirement. My advice: don't wait until you form the LLC. Calculate your estimated taxes now using Form 1040-ES and make the payment. You can always adjust future quarters once your LLC is formed. The penalties for underpayment can be way more expensive than just paying a bit extra now to be safe. Also, keep those spreadsheets organized! You'll need them for Schedule C when you file, whether you're still a sole proprietor or have formed the LLC by then.

Great question! As someone who's helped many clients through this transition, I want to clarify a few key points that might save you some headaches. First, regarding the $500-700 self-employment tax estimate - that would be roughly what you'd owe for the full year if you only made $3,500 total. But since you're asking about quarterly payments, you need to project your full-year income. If you think you'll make $10,000+ this year, you're looking at significantly higher tax obligations. For quarterly payments, you should estimate your total annual business income, then pay 25% of your expected annual tax liability each quarter. Don't just base it on what you've earned so far - the IRS wants you to pay as you earn throughout the year. Regarding the LLC transition mid-year: it's actually pretty seamless for tax purposes. You'll report all your business income for the entire year on Schedule C, whether it was earned as a sole proprietor or after LLC formation. The LLC formation date doesn't create a tax filing break - it's all one continuous business year on your personal return. One tip: if you're unsure about your projections, it's often safer to pay a bit more in estimated taxes rather than underpay. You'll get any overpayment back as a refund, but underpayment penalties can be costly and annoying to deal with.