I've been following this discussion with great interest as I'm in a very similar situation with our family S-Corp. The advice about increasing salary to market rates really resonates - I think many family businesses struggle with this because they focus so much on minimizing payroll taxes that they don't consider how proper compensation can actually solve distribution issues. One additional angle I'd suggest exploring: look into whether your S-Corp election is even still the best structure for your situation. With such unequal ownership but more equal contribution, you might benefit from converting to a partnership (LLC with partnership taxation) where you can have much more flexibility in profit allocations through the operating agreement. Partnerships allow for "special allocations" that can distribute profits based on contribution rather than ownership percentage, as long as they have substantial economic effect. This could eliminate the whole basis/gift tax issue you're dealing with. Obviously this is a major decision that would require professional guidance, but it's worth exploring whether the S-Corp structure is still serving your needs. Sometimes we get so focused on working within existing constraints that we don't step back and ask if those constraints are necessary. The conversion process has tax implications, but given the ongoing complexity you're facing, it might be worth running the numbers to see if a different entity structure would better match your economic arrangement.

As someone who went through a very similar situation with our family S-Corp, I want to emphasize something that hasn't been mentioned enough: the importance of getting this straightened out BEFORE you file your 2024 return. The good news is you still have time to make salary adjustments for 2024 that could significantly help your situation. Since you mentioned you haven't finalized your company return yet, consider this approach: 1) **Immediate salary adjustment**: Calculate what reasonable market compensation should be for your actual role and responsibilities in 2024. If you can justify a higher salary based on work performed, you can still process additional payroll for 2024 (with proper payroll taxes) before year-end filing. 2) **Start tracking basis NOW**: Even if you have to estimate your historical basis, start with what you know and track going forward. Your 2024 K-1 will increase your basis, and any distributions reduce it. 3) **Document everything**: Whatever approach you take, make sure you have solid documentation for your reasoning. The IRS loves family S-Corps because they're often handled casually, but proper documentation protects you. The reality is that taking $15K in distributions on a $2,400 K-1 allocation puts you in capital gains territory once your basis is exceeded. But if you can restructure some of that as salary (assuming you can justify the work performed), you solve the problem at the source. Don't try to get too creative with the accounting - stick to legitimate business purposes and reasonable compensation standards. Your accountant should be able to help you model different scenarios before you file.

Can someone explain how the 6% penalty actually works? If OP contributed like $3000 to their HSA without being eligible, is the penalty just 6% of that amount ($180)? Might be easier to just pay that than go through all the hassle of corrective distributions especially if they already used the money.

I went through this exact situation two years ago and it's definitely stressful! A few things to keep in mind that might help: First, time is critical - you have until your tax filing deadline (including extensions) to remove the excess contributions and avoid the penalty entirely. Since you mentioned you're filing now, you still have time if you act quickly. Second, even though you spent the HSA money, you can still do a corrective distribution. You'll need to deposit funds back into the HSA first (equal to your excess contributions), then immediately request the corrective distribution from your HSA administrator. Yes, it's a bit of a hassle, but it's way better than paying 6% annually. Your HSA administrator should be able to help with the paperwork - most have dealt with this before. They'll need to calculate any earnings on the excess contributions too, which also need to be withdrawn. The key thing to remember is that using the money for qualified medical expenses doesn't fix the eligibility issue. The IRS is strict about who can contribute to HSAs, but they do give you options to correct mistakes if you act within the deadline. Don't panic - this is fixable! Just contact your HSA administrator ASAP to start the corrective distribution process.

I'm in a very similar situation - filed on March 5th, accepted March 6th, and now it's been over two weeks with just "Your tax return is being processed" showing up. I also claimed EITC this year which I hadn't in previous years, so that's definitely adding to the processing time. What's been helpful for me is setting up IRS account online so I can access my tax transcripts. Even though the transcript codes are confusing, at least I can see that my return is in the system and there's some activity happening behind the scenes. The "Where's My Refund" tool is pretty basic and doesn't show the full picture of what's going on. I've also learned from this thread that checking daily doesn't help since it only updates weekly. I'm trying to be patient and give it the full 21+ days that seems to be normal for returns with credits this year. The waiting is definitely stressful when you're counting on that money though - I totally get that feeling!

I'm dealing with the exact same frustrating situation! Filed on March 1st, accepted March 3rd, and it's been 3 weeks of that same "Your tax return is being processed" message with absolutely no progress indicators. I also claimed EITC this year since my income qualified me for it for the first time. Reading through all these comments has been really helpful though - I had no idea that EITC claims automatically add extra processing time for verification. That explains why my coworker who filed the same day already got her refund last week while I'm still waiting. The daily checking obsession is so real! I've probably refreshed that "Where's My Refund" page 50+ times even knowing it only updates weekly. I'm going to try limiting myself to checking just on Sundays from now on to preserve my sanity. It's reassuring to know that 21-25 days seems to be the normal timeframe this year for returns with credits, even though it feels like forever when you're counting on that money. I was starting to worry something was wrong with my return, but sounds like this is just the reality of claiming refundable credits during peak season. Thanks everyone for sharing your experiences - makes the wait feel less scary!

I just went through this exact situation last month! The IRS will definitely send your verification letter to the address on your 2023 tax return (the one you filed February 3rd), not what's currently showing on their website. Their online portal can take 4-6 weeks to update after processing, so don't worry about the address mismatch you're seeing there. Since you filed over two months ago, your return should be fully processed and the letter will go to your filing address. I waited about 8 days for mine to arrive. If you need faster access, you could try the ID.me verification route through their website - it's instant and bypasses the mail entirely. Just make sure someone can check the mailbox at your filing address if you're not there regularly. The letter comes in a standard white Treasury envelope, so it's pretty easy to spot.

I dealt with this same issue about 6 months ago when I moved mid-tax season. The good news is that the IRS will send your verification letter to the address on your most recently filed return - so in your case, it should go to whatever address you used when you e-filed on February 3rd. The website showing your old address is totally normal; their online systems are notoriously slow to update and can lag behind their actual processing systems by weeks or even months. Since you filed over 2 months ago, your return should definitely be processed by now. I'd also suggest trying the ID.me verification option if you need immediate access - it's much faster than waiting for mail and doesn't depend on which address they have on file. The whole process took me about 20 minutes and I was able to access my account right away. Just make sure you have a current photo ID handy for the verification process.

Another option to look into if commuting costs are high - check if your employer offers any commuter benefits! My company lets us use pre-tax dollars for parking and public transit through our benefits program. It's not as good as a tax deduction but it does reduce my taxable income a bit.

I totally feel your frustration with the commuting costs! As everyone has confirmed, those daily miles to your regular office unfortunately aren't deductible. But since you mentioned you've been doing this 3-year commute, you might want to explore some alternatives to help with those costs. One thing that helped me was calculating whether it would actually be cheaper to move closer to work or find a job closer to home. With 64 miles daily (32 each way) at current gas prices plus wear and tear, you're probably spending $4,000+ annually just on commuting costs. That's a significant chunk of money that could go toward rent in a closer location or justify negotiating remote work days. Also, keep detailed records of ANY business travel you do beyond your regular commute - even small trips to pick up office supplies or attend off-site meetings. Those miles at 67 cents each can add up to real deductions. And definitely ask HR about commuter benefits or flexible work arrangements if those are options at your company!