Quick tip: make sure you're correctly classifying people as contractors vs employees. This is my biggest nightmare as a business owner. If you're telling them WHEN, WHERE and HOW to do the work, the IRS might consider them employees, not contractors. The difference matters ALOT because for employees you need to withhold taxes, pay unemployment insurance, etc. For contractors you just send a 1099. Getting this wrong can result in huge penalties and back taxes!

Great advice from everyone here! I'm actually dealing with a similar situation right now where I have about 6 subcontractors for a large project. One thing I learned the hard way is to get those W-9 forms BEFORE you make any payments, not after. I made the mistake of paying two contractors first and then asking for their W-9s later - one of them completely ghosted me and the other took weeks to respond. Now I'm scrambling to get the paperwork sorted before year-end. Also, keep detailed records of exactly what services each contractor provided and when. The IRS can ask for this documentation if there are any questions about your 1099 filings. I use a simple project tracking spreadsheet that includes dates, amounts, and description of work performed for each contractor. Makes tax time so much easier!

Some additional info that might help you - the Annual Lease Value recalculation is also important if you're close to any income-based thresholds. When my ALV was finally recalculated after 5 years, it dropped my MAGI enough that I qualified for a partial Roth IRA contribution that I wasn't eligible for before. Make sure your employer understands they need to use a legitimate valuation method for determining the car's current FMV. Our company initially tried to use an arbitrary "50% of original value" which wasn't accurate for our specific vehicle. Kelley Blue Book or NADA guides are what the IRS expects them to use. Also, if they've been calculating it wrong for a while, you might want to consider if an amended return for last year makes sense depending on how much the value changed.

An important detail that nobody has mentioned yet - when your company recalculates the Annual Lease Value, make sure they use the REDUCED value for the ENTIRE calendar year, not just from the point they make the correction. My company initially only applied the new lower value from July onward (when I brought it to their attention) but the IRS rules clearly state the redetermination applies for the whole year. Had to have another conversation with payroll to get them to apply it retroactively to January. Also worth noting - if you're still with the same employer and using the same car in 4 more years, you'll get ANOTHER recalculation at the 8-year mark. The value keeps stepping down as the car ages.

What software are you using to prepare your taxes? I had a similar situation and TurboTax couldn't handle it properly. I had to switch to a more advanced program (I used ProSeries through my new accountant) to correctly report my LLC loss.

I went through almost the exact same nightmare with a failed real estate syndication LLC about 3 years ago. The key thing I learned is that you need to establish this as an "abandonment loss" rather than just a regular partnership loss, which gives you much better tax treatment. Here's what worked for me: I gathered every piece of documentation I could find - original investment agreements, bank transfers, any correspondence with the managing partners, even screenshots of their website before it went dark. Then I wrote a detailed letter explaining the timeline of events and why I considered the investment completely worthless. The most important part was proving I had made reasonable efforts to recover something from the investment but it was truly hopeless. I included copies of unanswered emails to the managers, evidence that their business addresses were vacant, and anything else showing the company was completely defunct. My accountant filed amended returns going back 3 years using Form 4797 to report it as an ordinary loss from the abandonment of a business asset. This was way better than capital loss treatment because I could deduct the full amount against my regular income instead of being limited to $3,000 per year. The IRS never questioned it, probably because I had such thorough documentation. Definitely worth getting a second opinion from an accountant who's familiar with these situations - sounds like your current one dropped the ball big time.

OP, I'm in a similar situation (W2 income married to sole prop business) and we found that filing jointly saved us about $4,800 compared to filing separately. The biggest factors were: - Higher income thresholds for child tax credit - Being able to offset business losses against W2 income - Lower overall tax brackets - Full retirement account options My wife's business actually had a rough year and showed a small loss, which directly reduced our taxable W2 income. That wouldn't have helped if we filed separately.

Congratulations on your new baby girl! As a tax professional, I can tell you that filing jointly is almost certainly your best option given your situation. Here's why: With $145k combined income and a new baby, you'll benefit significantly from the Child Tax Credit ($2,000), which has much higher income phase-out limits for joint filers ($400k vs $200k for separate). Your wife's photography business income will also work better on a joint return because: - Any business losses can offset your W2 income directly - She may qualify for the 20% Qualified Business Income deduction, which phases out at higher income levels for separate filers - Self-employment tax stays the same regardless of filing status The main scenarios where separate filing helps are: - Large medical expenses (3% AGI threshold is easier to meet with lower individual income) - Student loan income-based repayments - One spouse has significant miscellaneous deductions Given your income levels and new child, I'd estimate joint filing will save you $2,000-4,000 compared to separate filing. The standard advice is always to calculate both ways, but joint filing has significant advantages for most married couples with children. Make sure your wife is tracking all business expenses and considering quarterly estimated payments for 2025!

I can definitely relate to this confusion! I went through something very similar when I returned my company Volkswagen earlier this year. The tax code changes seemed to make no sense at first. What really helped me understand was realizing that HMRC doesn't just calculate your tax on what's happening right now - they're trying to make sure your total tax for the entire year is correct. So when you return the car mid-year, they have to do some complex calculations to balance everything out. In my case, the remaining reduction in my tax code after returning the car was due to: - Private medical insurance (which I'd forgotten was a taxable benefit) - A small amount of underpaid tax from the previous year - Dental insurance through work I'd definitely recommend checking your Personal Tax Account online first - it's much quicker than calling HMRC and gives you a good overview. If you need more detail, you can always call them later with specific questions. The good news is that even if the monthly amounts seem confusing now, it should all balance out correctly by the end of the tax year. HMRC's system is actually quite good at ensuring you pay exactly the right amount of tax overall, even if the month-to-month calculations aren't immediately obvious.

I've been dealing with a very similar situation! Just went through this exact scenario when I returned my company car in February. The tax code confusion is absolutely maddening when you're trying to figure out where your money is going. What really helped me was understanding that HMRC operates on a "cumulative" basis throughout the tax year. So when you return the car mid-year, they don't just adjust going forward - they recalculate your entire tax position from April 6th onwards to make sure you end up paying exactly the right amount for the full year. In your case, that £80 monthly reduction is likely a combination of: - Remaining taxable benefits (health insurance, life insurance, etc.) - Any previous year tax adjustments being collected - Possibly some year-to-date catch-up calculations I'd definitely recommend logging into your Personal Tax Account on GOV.UK first - it gives you a much clearer breakdown than trying to reverse-engineer the numbers from your payslip. You can see exactly what adjustments are being made and why. If you're still confused after checking online, calling HMRC directly is worth it. I know their phone lines are terrible, but once you get through, they can explain your specific tax code calculation line by line. In my case, they spotted that my employer had failed to notify them that my fuel benefit had ended with the car, so I was being overtaxed by about £30 per month. The good news is that even if there are timing issues or small errors, it all gets reconciled by the end of the tax year. You'll either get a refund or further adjustments to make sure you've paid exactly what you owe - no more, no less.