I've had my LLC for 3 years now and here's something important I learned - track EVERYTHING and be ready to justify the business purpose. The IRS doesn't just look at whether expenses exceed income; they look at whether your expenses are "ordinary and necessary" for your type of business. A $65k vehicle might raise flags depending on your industry. If you're in luxury real estate, probably fine. If you're doing web design, they might question it. I'd recommend talking to an actual CPA before making big purchases like vehicles. The CPA fee is way cheaper than messing this up.

Great question! Yes, you can absolutely deduct business expenses that exceed your LLC's income - this creates what's called a "net operating loss" that can actually benefit you tax-wise. Since you mentioned this is a side business alongside your day job, those business losses will typically flow through to your personal tax return (assuming your LLC is taxed as a sole proprietorship, which is the default for single-member LLCs). This means your business losses can potentially offset your W-2 income, reducing your overall tax liability. However, regarding that $65k vehicle - you generally can't deduct the full amount in year one. Vehicles are considered capital assets that must be depreciated over several years. That said, there are accelerated depreciation options like Section 179 deduction or bonus depreciation that might allow you to deduct a larger portion upfront, depending on the vehicle's weight and your business use percentage. A few important things to keep in mind: - Document everything meticulously - business purpose, mileage logs, receipts - Make sure expenses are "ordinary and necessary" for your specific type of business - Be prepared to demonstrate legitimate profit motive to avoid hobby loss rule issues - Consider consulting a CPA before making major purchases to ensure you're maximizing benefits while staying compliant The key is maintaining excellent records that clearly show business intent and proper expense documentation.

This thread has been absolutely amazing to read through! As someone who's been working for about 6 months now, I had the exact same confusion when I first looked at my paystub. Mine shows "FICA-SS" and "FICA-HI" which I now realize means Social Security and Health Insurance (Medicare), but at first I thought there were multiple different FICA taxes I was paying! The "container" analogy that someone mentioned earlier really helps - thinking of FICA as the box that contains both Social Security (6.2%) and Medicare (1.45%) makes it so much clearer. And wow, learning that employers match our contributions is like discovering free money that was always there but invisible! What really gets me is how this basic financial literacy just isn't taught anywhere systematically. I spent four years in college learning tons of theoretical stuff but never once learned how to properly read a paystub or understand payroll taxes. Thank goodness for communities like this where people are willing to share their knowledge and help others navigate these important but confusing topics. I'm definitely going to check that my percentages add up to 7.65% like everyone mentioned, and I might even ask HR for a total compensation breakdown now that I know about all these hidden employer contributions. Thanks to everyone who turned what could have been a boring tax question into such an educational discussion!

This has been such an enlightening discussion! As someone who's been working for about two years and always just trusted that my payroll deductions were correct without really understanding them, this thread has been like getting a crash course in adult finances that I definitely should have had earlier. The FICA labeling confusion is so real - my paystub shows "Social Security Tax" and "Medicare Tax" separately, which I now realize is actually one of the clearer ways to display it after hearing about all the creative abbreviations everyone else deals with. No wonder there's so much confusion when every employer seems to label these differently! But the absolute game-changer for me has been learning about employer matching. I genuinely had no idea that my employer has been contributing an additional 7.65% this entire time! That's literally thousands of dollars in contributions I never even knew about. It makes me want to calculate exactly how much they've contributed on my behalf since I started and also makes me think very differently about my total compensation package. This conversation really highlights how much basic financial literacy we're all missing. The fact that fundamental concepts like understanding your paystub aren't systematically taught anywhere is pretty concerning when you think about how this affects everyone who works. At least we have communities like this where people are generous enough to share their knowledge and help others feel more confident about their finances. Thanks to everyone who contributed here - you've made payroll taxes actually interesting and understandable!

This is such a common concern that I see every tax season! You're absolutely right to use your current address on your tax return, not the old address from your W2. The IRS actually expects this - millions of people move each year and their W2s don't always reflect their current address. What matters for IRS matching purposes is the financial data on your W2 (wages, withholdings, SSN), not where it was mailed. Using your current address is not only allowed but required since that's where you actually live. Regarding the county tax savings - this is completely legitimate! Since you moved in August 2023, you'll want to prorate your local taxes based on the time spent at each address. You can calculate this by days: roughly 7 months at your old address (Jan-July) and 5 months at your new address (Aug-Dec). Many tax software programs can help with this calculation. Just make sure to keep documentation of your move (lease agreement, utility bills, etc.) in case you ever need to verify the timing, though the IRS rarely asks for this during normal processing. The savings you'll get from the lower county tax rate is money you're legitimately entitled to based on where you actually lived during 2023.

I went through this exact same situation a few years back! I was so stressed about the address mismatch, but it turned out to be much simpler than I thought. You definitely should use your current address on your tax return - that's where you actually live and where the IRS needs to send any correspondence. The W2 address is just where your employer mailed the form, and the IRS knows that people move all the time. What they care about matching is your SSN, wages, and tax withholdings - not the mailing address. Since you moved in August, you'll want to calculate your county taxes proportionally. I'd suggest keeping records of your move date and any supporting documents (lease agreement, utility setup, etc.) just in case, but you probably won't need them. The county tax savings you mentioned are completely legitimate - you're entitled to pay the tax rate for where you actually lived during each part of the year. I ended up saving quite a bit on local taxes too, and never had any issues with the IRS. Don't overthink it - just use your current address and enjoy those tax savings!

Just wanted to add some additional context about the $5,000 startup expense limit that Keith mentioned earlier. While you can deduct up to $5,000 in startup costs in your first year, this limit phases out if your total startup expenses exceed $50,000. Since you're talking about a $1,200 software purchase, you're well within the safe zone. Also, don't forget about organizational costs! These are separate from startup expenses and include things like LLC filing fees, attorney fees for drafting your operating agreement, etc. You can also deduct up to $5,000 of these in your first year. One tip: when you do form your LLC, make sure your operating agreement includes language about contributing pre-formation assets to the business. This creates a clean paper trail showing that the software you bought before formation is now officially a business asset. Your attorney can help with this language, but it's pretty standard stuff. Go ahead and buy that software - you're making a smart business decision and the tax treatment will work out just fine!

I'm a tax preparer and wanted to jump in to confirm what everyone's saying - you absolutely can deduct that software purchase as a startup expense! Your dad might be thinking about it from a bookkeeping perspective (where you can't record it under the LLC name until it exists), but for tax purposes, the IRS is very clear that legitimate business expenses incurred before formation are deductible. A couple of practical tips: First, pay for it with a dedicated account if possible (even a personal account you use only for business) rather than mixing it with personal purchases. Second, write a brief memo to yourself documenting why you bought it and how it relates to your planned business - this creates contemporaneous evidence of business purpose. The software will likely qualify for immediate expensing under Section 179, meaning you can deduct the full $1,200 in the year you start your business rather than having to spread it out. Don't let this sale slip away - it's a legitimate business expense regardless of when your paperwork gets filed!

Has anyone used the R&D credit module in TurboTax Business? I'm wondering if it provides enough guidance for a smaller claim.

I've been wrestling with the same decision for my tech startup. After reading through everyone's experiences here, I'm leaning toward a hybrid approach - using one of the AI tools like taxr.ai to help structure the documentation properly, but then having a CPA review it before submission. The key insight from this thread seems to be that it's not just about having a template, but understanding how to connect your specific technical work to the IRS requirements. @Ravi Choudhury's point about contemporaneous records is crucial - I realized I have tons of Slack conversations, GitHub commits, and design documents that could serve as supporting evidence. For anyone else considering the DIY route, I'd recommend starting by documenting your current development process before diving into the credit calculation. If you can't clearly articulate the technical uncertainties you're solving and the systematic approach you're taking, the credit probably isn't worth pursuing without professional help.