This is really helpful! So there's a regular Child Tax Credit AND an Additional Child Tax Credit? My disability is SSDI if that matters. Would I still file a tax return even though my SSDI isn't taxable based on my total income amount?

Yes, there are two parts to the credit. The regular Child Tax Credit is non-refundable (only helps if you owe taxes), while the Additional Child Tax Credit is refundable (you can get it even without owing taxes). You should absolutely file a tax return even if your SSDI isn't taxable! That's the only way to claim the refundable credits you're eligible for. Many people on disability don't file because they don't have taxable income, and they miss out on these refundable credits. For 2022, you could get up to $1,500 per qualifying child through the ACTC.

For 2023, the rules are similar to 2022. The expanded 2021 version (which was fully refundable) has expired. You'll still be able to claim up to $1,500 per qualifying child as a refundable credit through the ACTC, even with only disability income. The total Child Tax Credit remains $2,000 per qualifying child for 2023, with up to $1,500 being refundable through the ACTC.

That's really helpful info! I definitely use my car for personal stuff too. Is there a percentage that's considered "safe" by the IRS, or does it just need to be honest and accurate? And do you recommend any simple ways to track the personal vs business split?

There's no "safe" percentage - it just needs to be honest and reflect your actual usage. The IRS knows different professions have different typical business use percentages. A real estate agent might legitimately have 75-80% business use, while someone who occasionally meets clients might be 20-30%. For tracking, the simplest method is recording your odometer reading on January 1 and December 31, then keeping a log of all business miles. Subtract business miles from total annual miles to get personal miles. Some clients just take a photo of their odometer on the first and last day of the year as documentation. Phone apps like MileIQ or Everlance can also automatically track trips if you want something more automated.

Oof, that sounds rough. Did you have to pay back taxes and penalties too, or just the accounting fees to deal with it?

Is that true even if the S-corp doesn't have any physical presence in California? Just getting a K-1 from a partnership that does business there is enough to trigger the franchise tax?

Yes, unfortunately. California considers having income sourced to the state (even through a partnership) as creating nexus. So if your S corp is a partner in a partnership doing business in California, the S corp generally has to pay the $800 minimum franchise tax, even without physical presence there. It's particularly painful if your client is a small S corp that only invested a small amount in a larger partnership. Some states are more aggressive than others about this, but California is definitely one of the strictest.

We did this last year for a similar situation in NY, CT and CA - all three have PTE elections that worked well. Big benefit was getting around the $10k SALT deduction limit on the owner's 1040. But you have to be careful about timing - some states require you to make the election before the tax year ends.

Thanks for the price info! Did you find the local CPA was more knowledgeable about this specific issue than H&R Block would have been? I'm torn between convenience and expertise.

Definitely yes - the local CPA had handled several backdoor Roth situations before and immediately knew why my 8606 was rejected. He mentioned that national chains like H&R Block often use preparers who don't specialize in more complex retirement account transactions. The main issue with backdoor Roth conversions involving same-day recharacterizations is that there are specific reporting requirements for the timing and basis calculations. My CPA showed me exactly what went wrong on my original form and how to fix it. Well worth the slightly lower price for someone who dealt with this specific issue regularly.

This is great advice! I'd recommend keeping these records for at least 7 years, particularly for retirement account transactions. I'd even go further and suggest scanning all the documents and storing them digitally as well as in paper form.

What's the ballpark cost for having a CPA handle an 1120S for a small business? My biggest concern with hiring someone is cost since we're pretty straightforward (just retail sales, no crazy deductions or situations).

For my business, which is similar in size to yours (about $280K in revenue), I pay around $1,200 for the 1120S preparation and filing. That includes quarterly check-ins and some basic tax planning. I know that might seem expensive compared to software that costs $150-200, but the CPA found enough legitimate deductions to more than cover her fee. The peace of mind is the biggest benefit though. No stress about making mistakes or missing deadlines. Plus, if there's ever an audit or question from the IRS, she handles all communication. For me, the cost is just another business expense that actually provides real value.

Great point! I use Drake Software for my small business and it handles all the business forms including 1120S. It's less known among casual users but very popular with tax professionals. The interface isn't as pretty as TurboTax but it gets the job done at a reasonable price.

Thanks for the Drake recommendation! I'll check that out for next year. I ended up using TaxAct Business which worked fine but was a bit more expensive than I expected. The e-file went through without issues though, and I got my acknowledgment from the IRS within a day.