Another option worth considering is filing Form 8832 first to elect to be taxed as a C Corporation, then immediately filing Form 2553 for S Corp status. Sometimes this two-step approach can work outside the normal S Corp election deadline. Talk to your accountant about this strategy - it's worked for some clients at our firm.

Don't forget that even if you successfully convert to an S Corp, you need to run payroll and pay yourself a "reasonable salary" before taking any distributions. Many people miss this and end up with IRS problems. My brother tried taking mostly distributions with a tiny salary and got hit with penalties for avoiding payroll taxes.

Does anyone know which tax software is best for doing multiple years of back taxes? I tried using TurboTax but it seems like they charge separately for each tax year, which gets expensive fast.

Being abroad definitely complicates things, but it shouldn't prevent you from getting caught up. One important thing to keep in mind - if you have any foreign bank accounts with aggregate balances over $10,000 at any point during those years, you'll also need to file FBARs (Foreign Bank Account Reports) for each year. These have separate penalties that can be pretty steep. Also, since you mentioned you've been abroad for work for 8 months, make sure to look into the Foreign Earned Income Exclusion and Foreign Tax Credit options. Depending on how long you've been there and whether you meet the bona fide residence or physical presence tests, you might be able to exclude a significant portion of your foreign earnings from U.S. taxation. The key is to tackle this systematically - gather all your documents first, then file the oldest year first and work your way forward. Don't let the overwhelm paralyze you - you're already taking the hardest step by deciding to address it.

Congratulations on the pregnancy! You're absolutely right that you can update your W4 in January for a baby expected in June. The IRS looks at your tax situation as of December 31st, so as long as your child is born in 2025, you'll qualify for the full child tax credit. One thing I'd suggest is using the IRS W4 calculator on their website to help you figure out the exact adjustment. It's free and walks you through all the scenarios. Just make sure to account for any unpaid parental leave you might take - that reduced income could affect your overall tax situation. Also, don't forget you'll need to get a Social Security number for your baby pretty quickly after birth to claim them on your taxes. The hospital usually provides the paperwork, but it can take a few weeks to process. Good luck with everything!

This is great advice everyone has shared! I'm in a similar boat - expecting in August and trying to optimize our withholding. One thing I'd add from my research is to also consider if either parent's employer offers dependent care FSA (flexible spending account) benefits. You can typically elect this during open enrollment or after a qualifying life event like having a baby. If you're planning to use childcare after your parental leave, you can set aside up to $5,000 pre-tax annually for dependent care expenses. This won't affect your W4 directly, but it's another way to reduce your overall tax burden for the year. Also, for those mentioning unpaid leave - some states have paid family leave programs that might affect your income calculations differently than unpaid FMLA. Worth checking what your state offers since that could impact how much you want to adjust your withholding. Henry, sounds like you've got a solid plan! Just make sure to revisit your withholding after the baby arrives and you have a better sense of your actual childcare costs and any other changes to your financial situation.

Just went thru this! That taxr.ai tool someone mentioned above is actually legit - told me exactly when my 420 would clear and it was spot on. Way better than waiting on hold with IRS for hours

Code 420 can be frustrating but hang in there! I'd recommend calling the Practitioner Priority Service line if you have a tax pro helping you, or try calling early morning (7-8am) for shorter wait times. Also keep checking your transcript weekly - sometimes the codes update before you get any mail. The fact that you only had W2 and child tax credit makes it likely just a routine verification that should clear up relatively quickly.

I'm still confused about this. Can I claim exempt just for December when I'm working all that overtime, then switch it back in January? Or is exempt an all-year thing?

I see a lot of confusion here about withholding vs. exemptions. Let me try to clear this up from a practical standpoint. The "exempt" checkbox on your W-4 is NOT a tool for managing cash flow during busy seasons. It's a very specific declaration that you expect ZERO federal tax liability for the entire year. This typically only applies to people earning very little (below the standard deduction threshold). If you're working overtime during the holidays and expect to owe taxes for the year, here are your legitimate options: 1. Adjust your withholding allowances on your W-4 to have less tax taken out (but still some) 2. Use the IRS withholding calculator or tools like those mentioned above to find the right balance 3. Accept that you'll get a larger refund when you file, but have less take-home pay now The key is being honest about your expected annual income. If you'll owe taxes for the year, claiming exempt is tax fraud, even if it's just for December. The IRS doesn't care that you need more cash for the holidays - they care about accurate withholding based on your actual tax situation. Better to adjust your withholding legally than risk penalties and a massive tax bill later.