I've been looking at services like that. What's the approximate monthly cost for a one-person S-corp? And do they handle all the state filings too, or just federal?

For a single-employee S-corp, most payroll services run between $45-60 per month. This typically includes all federal filings (940, 941, W-2, etc.) plus state unemployment and withholding filings. Many services also offer direct deposit, tax payment scheduling, and year-end tax form preparation. Some even have additional features like time tracking or benefits administration if you ever expand. For me, eliminating the quarterly stress of handling these forms myself has been completely worth the cost.

That's reassuring! So even if there's some delay with the paper forms, as long as the money gets there through EFTPS, they generally don't send nasty letters about missing payments?

Exactly! The IRS payment systems are pretty sophisticated at matching payments to accounts. As long as your EFTPS payment includes the correct EIN, tax period, and form type, they can usually reconcile it even if the paper form arrives a few days later or gets delayed in processing. I've had situations where my 941 got held up in mail processing for over a week, but since the payment was already in their system through EFTPS, there were no penalties or late notices. The electronic payment system is really their primary concern - they want the money on time more than they need the paper immediately. Just make sure you're entering all the details correctly in EFTPS, especially the tax period dates and form number. That's what allows their system to automatically match everything up.

Thank you for mentioning this! My grandmother does have a valid SSN, so that's not an issue. But I'm curious about the fair rental value part - how do you determine that? Do you just estimate what it would cost to rent a room in the same house or apartment?

You've got it right! To determine fair rental value, you estimate what it would cost to rent a similar room or living space in your area. If she has her own bedroom in your house, you'd look at what it costs to rent a bedroom in a shared house in your neighborhood. If she has her own bathroom or private space too, you can include that in the calculation. You can check local listings for room rentals or shared housing to get an idea. Don't forget to include a fair share of utilities, food, and other household expenses too. Keep documentation of how you calculated this amount in case of questions from the IRS. This fair rental value often makes a significant difference in meeting the "more than half support" test.

Wait, that doesn't sound right. I thought if someone doesn't qualify as your dependent due to the gross income test, you can't claim Head of Household based on them? Can someone clarify this?

You're absolutely right to question this! There's actually a distinction between qualifying for the ODC and qualifying as a dependent for Head of Household filing status. For the ODC, your dependent must meet the gross income test (under $4,700 for 2023). But for Head of Household qualification, you can have a qualifying person who is your parent even if they exceed the gross income limit, as long as you provide more than half their support and they are your qualifying relative. So @Gianna Scott is correct - her mother can qualify her for Head of Household filing status even though the mother's $16,400 Social Security income disqualifies her from the ODC. The key is that she provided more than half her mother's support and her mother lived with her all year. It's one of those confusing tax situations where different rules apply to different benefits, even when dealing with the same person as your dependent!

There actually is something called the "separately identifiable space" exception that might help. It doesn't have to be an entire room - it can be a portion of a room as long as there's a clear delineation. Think: a specific corner with a desk that's clearly set up as an office area, even if it's in your living room. However, if you're literally just using your kitchen table sometimes for work and sometimes for eating, that wouldn't qualify. The space still needs to be used exclusively for business, even if it's not a separate room.

This right here! I got hit with unexpected capital gains because I forgot that my S corp loan repayments were reducing my basis. Get a good CPA who specializes in S corps, it's worth every penny.

Can you explain more about this $2,500 thing? Is that a hard rule? What if the tool is like $2,600 - do I really have to spread that out over years?

The $2,500 threshold is what's called the "de minimis safe harbor" election. It's not actually a hard rule, but rather a simplified option the IRS provides. If you have tools under this amount, you can generally deduct them immediately rather than depreciating them. For items over $2,500, like your $2,600 example, you technically should depreciate them over their useful life. However, there's also Section 179 expensing which allows businesses to deduct the full purchase price of qualifying equipment in the year it's put into service, up to certain limits ($1,080,000 for 2023). So there are options to potentially still write off the full amount in one year, but it depends on your specific situation and total business purchases for the year.

How do you handle the multiple state thing? I drive through like 30 states a year but technically live in Texas. Do I need to file taxes in every state I drive through??

No, you don't need to file in every state you drive through! As a trucker, you generally only need to file in your home state (Texas in your case) and any states where you might have other income sources or meet specific filing requirements. The key is understanding resident vs. non-resident status. Since you're a Texas resident, that's your primary filing state. Most states don't require non-residents to file just for driving through or making deliveries - they're more concerned with where you actually earn income as a resident. However, some states do have specific rules for truckers, so it's worth checking with a tax professional who specializes in transportation if you're earning significant income. But for most over-the-road drivers, it's just your home state return. The multi-state complexity usually comes into play more with things like fuel tax credits and IFTA reporting rather than income tax filings.