I've seen this exact scenario with multiple clients. One client worked for a large retail chain that changed ownership mid-year. Both the old and new companies issued W-2s, but they covered overlapping periods. The IRS computer just added them together and sent a notice saying she underreported by $22,000. We had to get statements from both companies showing the actual dates worked and earnings for each. Did your employer undergo any ownership changes or major restructuring last year?

This exact situation happened to my sister two years ago! Her employer went through a payroll system migration and ended up issuing two W-2s - one from the old system and one from the new system with overlapping pay periods. The IRS computer flagged it as unreported income of about $15,000. Here's what worked for her: 1. She immediately called her employer's HR/payroll department and asked for a written explanation of why two W-2s were issued 2. The employer provided a letter stating that only the second (corrected) W-2 should be used for tax purposes 3. She responded to the CP2000 notice with both W-2s, the employer's letter, and her own explanation showing the math 4. She sent everything certified mail to create a paper trail The whole process took about 2 months, but the IRS eventually agreed with her position and dropped the proposed assessment. The key was having that official letter from the employer - don't rely on just a phone conversation. Get everything in writing! Also, make sure to respond within the timeframe given in the notice (usually 30 days) to avoid automatic acceptance of the proposed changes. You've got this! 💪

Has anyone dealt with a situation where they made extra escrow payments? My mortgage company said my escrow was short last year so I had to make additional payments that weren't part of my regular mortgage payment. Are those extra escrow payments deductible anywhere?

Great question! I went through this exact same confusion when I bought my first home two years ago. The key thing to understand is that your escrow balance of $4650 is just money sitting in an account - it's not a deduction until those funds are actually used to pay property taxes to your local government. Since your 1098 shows $0 for real estate taxes paid, it means your mortgage servicer didn't actually pay any property taxes from your escrow account during the 2024 tax year. This could happen if you bought the house late in the year and the tax payments haven't come due yet, or if the previous owner had already paid the annual taxes before closing. However, don't give up! Check these things: 1. Your closing documents - you may have reimbursed the seller for prepaid property taxes 2. Your monthly mortgage statements - sometimes lenders make mistakes on the 1098 3. Contact your mortgage servicer to verify what taxes were actually paid For the first-time homebuyer credit question - unfortunately the federal credit expired years ago, but definitely check if your state offers any programs. Some states still have credits or deductions available for first-time buyers. The most important thing is to only deduct taxes that were actually paid to the taxing authority during 2024, not money just sitting in escrow waiting to be paid out.

This thread has been incredibly helpful! I'm in a similar situation with my consulting S corp and was nervous about taking my first distribution. The consensus seems clear that the transfer itself is straightforward, but the documentation and basis tracking are crucial. One thing I'd add based on my research: make sure your corporate resolutions or operating agreement address distributions if you haven't already. My attorney mentioned this could be important if you ever face an audit, as it shows the distributions were properly authorized corporate actions rather than informal money movements. Also, for anyone using multiple business bank accounts, I learned it's cleaner to always distribute from your main operating account rather than transferring between various business accounts first. Keeps the paper trail simpler for tax purposes. Thanks to everyone who shared their experiences - this gave me the confidence to move forward with my first distribution!

Even as a sole shareholder, documenting distributions through corporate resolutions is a smart practice. It demonstrates to the IRS that you're maintaining proper corporate formalities and treating the S corp as a separate legal entity, which helps protect your limited liability status. The language doesn't need to be complex - something like "RESOLVED, that the corporation is authorized to make a distribution of $X to the shareholder on [date] from retained earnings" is typically sufficient. You can find templates online or create a simple format and reuse it. I keep a corporate resolution book (just a simple binder) where I document major decisions like distributions, salary changes, and significant expenditures. Takes maybe 5 minutes per resolution, but it shows you're running things properly if you ever face scrutiny. Your attorney can provide templates if you want to be extra careful, but for routine distributions, basic language should be fine. The key is consistency - if you start documenting this way, keep doing it for all distributions. And yes, definitely stick with the main operating account for distributions. Makes year-end reconciliation so much easier!

I was charged $580 last year for something similar, but my situation included rental property, multiple state filings, and cryptocurrency transactions. For just a Schedule C with a few 1099s, that's much steeper than what I'd expect compared to other tax scenarios I've encountered. My sister-in-law has a nearly identical tax situation to yours and pays around $350 in the Midwest. Even accounting for potential regional differences, $626 seems about $200 too high unless there are complicating factors you haven't mentioned.

I'd definitely get a second opinion on that pricing. I'm an EA and typically charge $385-425 for a 1040 with Schedule C and multiple 1099-NECs, depending on complexity. The $626 quote seems high unless there are additional factors like depreciation calculations, complex inventory accounting, or multi-state issues. A few questions that might affect pricing: Do you have significant business asset purchases requiring depreciation? Any employee-related forms like 941s? Home office deduction calculations? These can add time and complexity. But for straightforward freelance/contractor income with basic business expenses, you should be looking at $350-450 range max. I'd recommend calling 2-3 other preparers for quotes - most will give you a ballpark over the phone once you describe your situation.

Anyone know if there's a de minimis exception for small gifts throughout the year from the same foreign person? My parents send me like $500-$1000 every month from their accounts in Korea for help with my kids' expenses, and it'll add up to more than $100k for the year. Do I seriously need to file this special form for what's basically just family support?

I'm dealing with a similar situation and wanted to share what I learned from my research. Carmen, you definitely need to file Form 3520 since you received $130,000 from foreign persons (your parents) in 2024. The $100,000 threshold applies to the total amount received from ALL foreign persons combined in a single tax year. A few important points to keep in mind: - Form 3520 is due by April 15, 2025 (same as your tax return deadline) - It must be mailed separately - you cannot e-file it with your regular return - The penalties for not filing are severe (starting at $10,000), so definitely don't skip this - While you need to report the gift, you won't owe income tax on it since gifts from foreign individuals are generally not taxable to the recipient I'd recommend getting professional help with this form if you're unsure about any details, especially since the penalties are so high. Better to spend money on proper preparation than face potential penalties later!