Has anyone successfully had the IRS accept retroactive loan documentation? My accountant says its too late for me since my business has already made several "repayments" over the last 2 years without proper documentation. Now she wants me to pay capital gains on all of it!

I went through this exact same nightmare last year! My LLC (S-Corp election) had been "repaying" my initial capital injection for two years before I realized I never created proper loan documentation. My CPA initially wanted to treat everything as taxable distributions. Here's what saved me: I worked with a tax attorney to create a formal loan agreement that matched what had actually been happening (reasonable 4% interest rate, quarterly payments). We filed Form 8275 with my amended return explaining the documentation was being formalized to properly reflect the original intent of the transactions. The IRS accepted it without issue. The key was showing that the loan terms were reasonable and consistent with actual business practice. I had to pay tax on the interest portion going forward, but the principal repayments were correctly treated as non-taxable return of my loan. Don't let your CPA take the easy way out by just calling everything capital gains. If you genuinely loaned money to your business with the intent to be repaid, you can usually fix the documentation issue. Just make sure any loan terms you create are commercially reasonable and match what you've actually been doing.

This is exactly what I'm dealing with right now! I switched to a new payment processor mid-year and they're treating my direct bank transfers as "card transactions" on the 1099-K even though no cards were involved. It's so frustrating. One thing I learned from my accountant is that you should definitely NOT contact your clients to "fix" the 1099-NECs they already sent. Those are correct - they paid you for services and properly reported it. The issue is with the payment processor's classification, but trying to get them to change it now will likely just create more confusion. The reconciliation approach mentioned above is spot on. I'm creating a simple spreadsheet that shows: Date | Client Name | Amount | Reported on 1099-NEC | Also Reported on 1099-K. This way if the IRS ever questions it, I can clearly show that Payment A from Client X appears on both forms for the same transaction. Has anyone successfully gotten a payment processor to reclassify ACH transfers after the fact? I'm wondering if it's even worth the hassle or if I should just focus on proper documentation.

I'm dealing with a very similar situation and wanted to share what my CPA told me that might help others here. The most important thing is to NOT panic about this - the IRS systems are designed to handle overlapping 1099s, especially with the new expanded 1099-K reporting. Here's what I learned: When you file Schedule C, you'll report your total business income on Line 1 (gross receipts). This should be the actual amount you received, not the sum of all your 1099s. So if you received $50,000 in client payments that show up on both 1099-NECs and a 1099-K, you still only report $50,000 in income. My CPA also mentioned that the IRS has specific matching algorithms that can identify when the same income appears on multiple forms from related entities (like a client and their payment processor). They're not going to automatically assume you made twice the money. That said, definitely keep detailed records showing the relationship between the forms. I created a simple table showing each payment, which client it came from, and which forms reported it. This documentation stays in my files - I don't submit it unless specifically requested. One more tip: if you use tax software, make sure you enter the 1099s correctly. Most software will ask if any income was reported on multiple forms and help you avoid double-counting.

Here's a systematic approach to determine if you need to amend: 1. Check if you received Premium Tax Credits (Form 8962) 2. If yes, verify if the 1095-C shows you were eligible for employer coverage 3. If you were eligible for employer coverage AND received tax credits, you need to amend 4. If you didn't claim tax credits, no amendment needed 5. Keep the 1095-C with your tax records for at least 3 years Alternatively, you could file Form 8275 (Disclosure Statement) with your next year's return explaining the situation, though this is usually unnecessary for 1095-C issues.

I went through this exact scenario two years ago and can share what I learned. The key thing to understand is that the 1095-C serves as documentation for the IRS to verify that you had minimum essential coverage, but it's not something you typically need to include with your return unless you're claiming Premium Tax Credits. What I'd recommend doing is comparing the information on your 1095-C with how you answered the health insurance questions on your tax return. If you indicated you had employer coverage for the months shown on the form, and you didn't claim any Premium Tax Credits, then you're likely fine. The IRS already receives this information directly from your employer anyway. However, if there's a discrepancy - like the form shows you were offered coverage during months you claimed you didn't have access to employer insurance - then you might need to consider an amendment. But based on what you've described, it sounds like you're probably in the clear. Just keep the form with your tax records in case the IRS ever has questions later.

Has anybody calculated whether it's still worth adding your partner to your insurance after all these extra taxes? I'm doing the math and it seems like separate marketplace insurance might be cheaper once you factor in the tax hit.

Great breakdown from everyone! Just want to add that timing matters too - if you're adding your partner mid-year, the imputed income will be prorated for the months they're covered. So if you add them in July, you'd only have 6 months of imputed income added to your W-2. Also, don't forget that the imputed income affects more than just your federal taxes. It also increases your Social Security and Medicare tax liability since those are calculated on your total taxable income. In the original example with $630/month extra employer contribution, that's an additional $580 per year in FICA taxes (7.65% of $7,560). One last tip - if your company offers an HSA with your health plan, the increased coverage cost might make you eligible for higher HSA contribution limits since you'd be switching from self-only to family coverage. The extra tax-deductible HSA contributions could help offset some of the tax impact from the imputed income.

I wouldn't rely solely on the transcript date... Sometimes there can be banking delays or processing issues that aren't reflected in the IRS system. Maybe check your bank's pending deposits section? That's usually more reliable than the IRS estimates. I've seen people get disappointed when expecting it on the exact date.

I can relate to your frustration with the amended return process - it's been a nightmare for so many people this year! The good news is that code 846 is basically the IRS saying "we're cutting you a check." I've been through this exact scenario twice now, and both times the transcript date was spot on. My refund hit my account at exactly 5:32am on the date shown. The WMR tool is honestly pretty useless - I think they keep it running just to give people something to check, but the transcript is where the real action is. Since you mentioned this is an amended return, that 846 code is even more meaningful because it means they've finished reviewing all your changes and approved everything. You should definitely get your money on 4/10!