This is such a helpful thread! I've been dealing with a similar situation with my C corp consulting business. One thing I'd add is that beyond just the IRS considerations, banks and lenders also look at your salary when evaluating business loans or lines of credit. I learned this the hard way when I tried to get a business loan last year with a very low salary relative to my company's profits. The underwriter questioned whether my low salary indicated that the business wasn't actually generating sustainable income or if I was manipulating compensation for tax reasons. They wanted to see a more "normal" salary-to-profit ratio before approving the loan. So while you might be able to legally minimize your salary from a tax perspective, it could impact your ability to get business financing down the road. Something to consider in your overall compensation strategy, especially if you're planning to expand or need working capital in the future. For what it's worth, your current $125k salary on $430k in business income seems like a reasonable balance that shows both tax efficiency and business legitimacy to potential lenders or investors.

As a tax professional who's worked with hundreds of C corp clients over the past decade, I can confirm what several others have mentioned - the "reasonable compensation" rules are indeed applied very differently for C corps versus S corps. The key distinction is that with S corps, the IRS aggressively pursues cases where owner-employees pay themselves too little salary (to avoid SE taxes), while with C corps, they're generally more concerned with excessive compensation that reduces corporate taxable income. For your situation with $430k in business income and a $125k salary, you're actually in a very defensible position. That's roughly a 29% salary-to-revenue ratio, which aligns well with industry standards for professional services businesses. A few practical considerations for your decision: 1) Maintaining adequate salary protects your Social Security benefits calculation 2) Higher salary allows for better retirement plan contributions (401k, etc.) 3) Consistent salary structure helps establish business legitimacy for potential audits While you technically could reduce your salary significantly without violating specific C corp rules, your current structure provides good balance between tax efficiency and business credibility. I'd recommend documenting your salary determination with industry compensation surveys to support your position if ever questioned.

I completely understand your frustration! The W4 Multiple Jobs Worksheet is notoriously conservative and often results in excessive withholding, especially for part-time second jobs like yours. Here's what I'd recommend: For your main full-time job, fill out the W4 completely with all your filing status, dependents, and deductions. This should be your "anchor" W4 that does most of the heavy lifting for your tax situation. For your part-time job, try this simpler approach: Just check the box in Step 2(c) "There are only two jobs total" and leave everything else standard. This will withhold at higher single rates but should be much more reasonable than the $95 the worksheet calculated. If you want to be more precise, you can also use the IRS Tax Withholding Estimator online (it's the official IRS tool) which handles multiple jobs much better than the paper worksheet. It'll give you specific dollar amounts to enter in Step 4(c) of each W4. The key thing to remember is that the worksheet assumes worst-case scenarios. With only 15 hours per week, you're probably looking at maybe $20-40 per paycheck in additional withholding, not half your pay! Don't let the intimidating worksheet discourage you from earning that extra income.

I was in the exact same boat last year with my weekend retail job! The Multiple Jobs Worksheet had me withholding like $80 per paycheck from a job that only paid $150. It was ridiculous. Here's what actually worked for me: I ignored the worksheet completely and used a much simpler approach. For my main job, I filled out the W4 normally with all my standard deductions and credits. For the part-time job, I just put "Single" as filing status and left everything else blank - no extra withholding calculations. At the end of the year, I ended up owing about $200 in taxes, which was totally manageable compared to having hundreds of dollars over-withheld throughout the year. The key is that your combined withholding from both jobs just needs to cover your total tax liability - it doesn't have to be perfectly calculated from each individual paycheck. If you're worried about owing too much, you could always add like $20-30 per paycheck to your main job's W4 in Step 4(c) instead of letting the part-time job take half your pay. Way more reasonable and you still get to actually benefit from the extra work you're putting in!

Is anyone else annoyed that there's no clear instructions about this on Form 8889?? Like nowhere does it explicitly say "if your contributions were made through payroll, you don't get a deduction on line 13 because you already got the benefit." I've been doing this wrong for 3 YEARS!

I completely understand your confusion - this is one of the most common HSA tax issues! Let me break this down clearly: **Issue #1:** You're absolutely RIGHT that your taxable income should be $60,400 if you contributed $4,600 through payroll. The key is that you've ALREADY received this benefit! When HSA contributions are made through payroll deduction, they're excluded from your gross wages before your W-2 is even created. So your W-2 Box 1 should show $60,400, not $65,000. The zero on line 13 is correct because you don't need an additional deduction - you already got the tax benefit upfront. **Issue #2:** Lines 3 and 5 should show YOUR individual contribution limit of $4,600, not the combined $9,200. Each spouse fills out their own Form 8889 with their own limits. You're correct that line 6 should be $4,600. **The TaxSlayer mystery:** That $14,398 is definitely wrong! Sounds like the software may have incorrectly included health insurance premiums or other amounts that don't belong on Form 8889. The 2021 limit for individual coverage was only $3,600, so there's no way it should be that high unless there were catch-up contributions or rollovers involved. Double-check your W-2 Box 1 - I bet you'll find it's already reduced by your HSA contributions!

One more thing to consider - if either of you have student loans, filing jointly might affect income-based repayment plans since they'll look at your combined income. Something to think about if she's got loans and is on an IBR plan.

Just wanted to add something that might help with your decision-making process. Since you mentioned using TurboTax before, you'll find that most tax software (including TurboTax) will actually run calculations for both filing jointly and separately, then recommend whichever saves you more money. In your case, with your $58k income and her $9.2k income, filing jointly will almost certainly be better because: 1. You'll get the higher standard deduction ($29,200 vs $14,600 each if filing separately) 2. Your combined income will likely keep you in lower tax brackets overall 3. You'll have access to more credits and deductions that phase out for separate filers The "dependent" confusion is totally understandable - it's one of the most common misconceptions for newlyweds. The tax code treats marriage as creating a partnership, not a dependency relationship. You're both equal partners in the return, even if one person earns significantly more. Good luck with your first married filing! The software will walk you through everything step by step.

I'm a tax professional and see situations like this regularly. The key issue isn't whether your sister opened a separate trust account - it's proper documentation and tax reporting. What you should focus on is ensuring the trust files Form 1041 using its own EIN, and that your K-1 accurately reflects your share of trust income. The house sale proceeds should be reported on the trust return, not on anyone's personal return. Even though the money flowed through your sister's personal account, the trust is still the legal entity that owned and sold the property. Request a copy of the trust's tax return before it's filed so you can verify everything looks correct. Also ask to see the calculation showing how your distribution was determined - this protects both of you if there are ever questions later. While your sister's approach creates more paperwork complications, as long as she maintains proper records and reports everything correctly, you should be fine tax-wise. Just make sure you report exactly what's on your K-1 when you file your personal return.

I'm a CPA who specializes in trust and estate taxation, and I want to address your EIN question directly since it's critical for proper reporting. If your sister has been using her SSN instead of the trust's EIN, that's a significant problem that needs immediate correction. Trusts are required to have their own EIN for tax reporting purposes - using the trustee's SSN essentially means the trust income is being reported as the trustee's personal income, which is completely incorrect. The good news is it's not too late to fix this. She can apply for an EIN online at the IRS website (it takes about 15 minutes), and then contact the entities that issued tax documents to request corrected forms with the proper EIN. For the 1099-S specifically, she should contact the closing company/title company to request a corrected form showing the trust as the seller with the trust's new EIN. Most will cooperate since they want their records to be accurate too. This correction is essential because without it, the IRS will expect to see this income on her personal tax return, creating a massive tax liability she doesn't actually owe. Meanwhile, the trust won't be filing its required return, which can trigger penalties and interest. Don't let her brush this off as "unnecessary paperwork" - proper entity separation is fundamental to trust administration and tax compliance.