This has been such an educational thread! I'm dealing with a similar S-Corp NOL situation and had no idea about the complexity of basis tracking until reading everyone's experiences. One thing I'm still unclear on - when you're calculating your NOL carryforward amount, do you use the business loss amount from the K-1 directly, or do you have to use the amount that actually made it through to your 1040 after all the limitations? For example, if my S-Corp shows a $30K loss on the K-1, but I only have $20K in basis so I can only deduct $20K this year, does my NOL calculation use the $20K or the full $30K? And what happens to that suspended $10K loss - does it just sit there until I increase my basis in future years? Also, I'm curious about the timing of when to elect NOL carryforward vs. carryback. I know the TCJA eliminated most carrybacks, but I want to make sure I'm not missing any options that might be more beneficial than carrying forward. Thanks again to everyone who shared their experiences - this is exactly the kind of real-world guidance you can't find in the IRS publications!

This thread has been incredibly helpful! I've been dealing with S-Corp losses for the past two years and finally feel like I understand the process. One thing I want to add that might help others - make sure you're also considering the Section 1244 ordinary loss election if you qualify. If your S-Corp stock qualifies as Section 1244 stock (which many small business S-Corps do), you can treat up to $50K ($100K if married filing jointly) of stock basis losses as ordinary losses rather than capital losses when you dispose of the stock or it becomes worthless. This is different from the annual pass-through losses we've been discussing, but it's another layer of tax planning that S-Corp owners should be aware of. The ordinary loss treatment can be much more valuable than capital loss treatment since capital losses are limited to $3K per year against ordinary income. Also, I've learned from my CPA that keeping a running basis schedule in a simple spreadsheet has been a lifesaver. I update it every year when I get my K-1, and it makes tax prep so much smoother. After reading about everyone's audit experiences, I'm definitely going to be more diligent about keeping supporting documentation for every entry. Thanks to everyone who shared their experiences - this is exactly the kind of practical advice that makes a real difference!

I can relate to this so much! I moved here from Canada a few years ago and the whole tipping culture plus tax implications were completely foreign to me. That Box 12 AA code threw me for a loop my first year too. One thing that helped me understand the system better is that in the US, tips are treated as regular income for tax purposes, but the collection process is different than regular wages. Your employer has to report all the tips you received (both cash and credit card), but they can only withhold taxes from your actual paycheck. If your paycheck isn't big enough to cover all the taxes owed on your tips, that's when you get that "uncollected" amount showing up. It's actually designed to be fair to you - imagine if they tried to withhold all the taxes from a small paycheck and you ended up with nothing to take home! This way you at least get your regular wages, and then settle up with the government at tax time. The adjustment from getting a refund to owing money is jarring, but it's just because last year all your taxes were properly withheld from regular W-2 income, while this year you have this additional tip income that wasn't fully taxed throughout the year. You're not doing anything wrong - this is just how the system works for tipped employees.

As someone who works in tax preparation, I wanted to add some clarity about the Box 12 AA code situation. You're absolutely right to be concerned about understanding this - it's one of the most common questions we see from people working in tipped positions for the first time. The AA code specifically represents uncollected Social Security tax on tips, which is 6.2% of your reported tip income. What likely happened is that your employer reported all your tips (as they're required to do), but your regular wages weren't sufficient to cover the full Social Security tax obligation on those tips through normal payroll withholding. This is completely legal and very common in the service industry. Your employer didn't make a mistake - they're actually required by law to report it this way when they can't collect the full amount through regular payroll deductions. For next year, I'd strongly recommend asking your employer if you can make additional tax withholdings from your paychecks to avoid this situation, or as others mentioned, set aside a portion of your tips throughout the year. The general rule of thumb is to save about 25-30% of your tip income for taxes. Don't feel bad about being confused by this - even people who've been filing taxes for years get thrown off by Box 12 codes! You're asking the right questions and being proactive about understanding your tax obligations.

Has anyone tried MileIQ for retroactively creating logs? My accountant mentioned it but I'm not sure if it can help with past years or just going forward.

One thing that really helped me when I had to reconstruct my 2017 mileage logs was creating a "typical week" template first. I looked at my calendar patterns and identified my regular business destinations, then calculated standard routes between them. For example, if I went to Client A every Monday and Client B every Wednesday, I could establish those as baseline trips and then look for variations. This approach helped me avoid over-estimating miles while still capturing the bulk of my business travel. Also, don't forget to check your car insurance records - sometimes they have annual mileage estimates that can help validate your totals. And if you had any major car repairs or oil changes, those service records often include odometer readings that can serve as checkpoints for your reconstruction. The IRS generally accepts reasonable reconstructions as long as you can show you made a good faith effort using available evidence. Document your methodology clearly - explain what sources you used and how you calculated the mileage. This transparency actually helps your case if you're ever questioned about it.

I messed this up last year and got a letter from the IRS. Make sure the health insurance plan is actually in YOUR name or your business name. My wife had purchased our family plan under her name only (even though she's not self-employed), and I tried to take the self-employed health insurance deduction. The IRS disallowed it and I had to pay back taxes plus a small penalty.

This is such a helpful thread! I'm in a similar boat with W-2 income from my day job and Schedule C income from freelance consulting. One thing I learned the hard way is to keep really detailed records of your health insurance payments throughout the year. The IRS wants to see that you actually paid the premiums (not just that you were supposed to pay them), so keep all your bank statements, credit card statements, or cancelled checks showing the monthly payments. Also, if you have any gaps in coverage during the year, you can only deduct premiums for the months you were actually covered. Since you mentioned your Schedule C business is profitable and generates most of your income, you should be in great shape to take the full deduction. Just make sure you don't deduct more than your net self-employment income - that's the cap on how much you can claim.

My sister got hers in 3 weeks but shes only getting like $100 back. Maybe bigger refunds take longer to process?

Same situation here - filed Feb 3rd electronically and still waiting. The lack of updates on the Where's My Refund tool is frustrating. At least it's good to know others are experiencing delays too. Hopefully we'll see movement soon!