This has been such a helpful thread! I'm dealing with a similar situation at our accounting firm and was also questioning whether our software was handling the health insurance deduction correctly for partnerships. What really helped me understand this was realizing that the "double reduction" isn't actually double-dipping - it's two separate regulatory requirements working together. The guaranteed payment reduces QBI at the partnership level because it reduces ordinary business income before QBI is even calculated. Then the self-employed health insurance deduction on the individual return is separately excluded from QBI because the regulations specifically carve it out. I think the confusion comes from comparing it to the S-corp treatment, but as others have pointed out, the fundamental tax structures are different even when the economic result looks the same. Guaranteed payments have a specific definition and treatment under the partnership rules that's distinct from how S-corp health insurance reimbursements work. Thanks to everyone who shared the regulation citations and explanations - it's given me confidence to trust our software rather than trying to override what initially seemed like an error. Sometimes tax law really is more complex than the underlying business transaction!

As someone who's been wrestling with partnership QBI calculations for years, this thread perfectly captures the frustration so many of us feel with these rules! The distinction between economic substance and tax treatment is something that trips up even seasoned practitioners. What I've found helpful is explaining it to clients this way: think of guaranteed payments as the partnership "buying" services from you (including health insurance coverage), which reduces the partnership's income before QBI is even in the picture. Then on your personal return, you're getting a separate deduction for self-employed health insurance that has its own QBI exclusion rules. The S-corp comparison that started this discussion is really insightful - it shows how Congress created different rules for economically similar transactions depending on entity type. The S-corp health insurance fix was correcting an actual error in how software interpreted the regs, while the partnership treatment is working as (unfortunately) intended. One thing I'd add for anyone still struggling with this: consider running the calculation both ways on a test return to see the actual dollar impact. Often the "double reduction" feeling is worse than the actual tax difference, which can help you feel more confident about following the regs as written.

anybody know if u need to update all ur payment providers (paypal, venmo etc) if u switch from SSN to EIN? dealing with this headache right now

As someone who just went through this exact situation, I'd recommend sticking with your EIN. The identity protection benefit alone is worth it - you're not giving your SSN to every client you work with. The maiden name/married name issue is actually pretty straightforward. When you file your taxes, you'll use your married name on your 1040 form, but on Schedule C (where you report your business income), you'll list your business name as "Jane Smith DBA Jane Doe" (using your actual names obviously). The IRS sees this connection all the time. Since you already have the EIN set up and submitted one W-9 with it, I'd just continue using it consistently. It's actually more professional looking than an SSN on business forms. The only thing I'd suggest is making sure you update all your payment processors (PayPal, Stripe, etc.) to use the EIN instead of your SSN if you haven't already - learned that lesson the hard way! Don't overthink it - both are valid options, but the EIN gives you better privacy protection for your contracting work.

I'm 99% certain your accountant meant 100.00000% (with decimal places) and there was a miscommunication. S-corps often use multiple decimal places for precision with ownership percentages, especially with complex ownership structures. Ask your accountant if they meant 100% with several decimal places of precision, not 10,000,000%.

This is absolutely incorrect and you need to address this immediately before filing. Schedule K-1 allocation percentages represent your ownership stake and literally cannot exceed 100% - it's mathematically impossible. Even if you owned every single share of the company, you'd show 100%, not 10,000,000%. I suspect there's been a major miscommunication somewhere. Your 100,000,000 shares is just the number of shares you own, not a percentage. The percentage should be calculated as (your shares ÷ total outstanding shares) × 100. If you're the sole owner, that's 100%. If there are other shareholders, it would be some fraction of 100%. Please sit down with your accountant and ask them to walk through exactly how they calculated 10,000,000%. There's either a serious misunderstanding about what the form is asking for, or perhaps they meant something entirely different (like 100.000000% with decimal precision). Filing with 10,000,000% would almost certainly trigger an immediate audit flag since it's mathematically impossible. Don't sign anything until this gets cleared up properly.

Just be super careful about claiming 100% business use. The IRS scrutinizes this heavily, especially with vans that could potentially be used personally. Keep a detailed mileage log with the purpose of each trip. There's apps that can track this automatically. If you slip up and use it even once for personal purposes, you technically need to reduce your deduction by that percentage of personal use.

For a videographer using a Transit 100% for business, I'd lean toward purchasing if you plan to keep it long-term. Here's why: Transit cargo vans typically have a GVWR over 6,000 lbs, qualifying them as "heavy vehicles" with better depreciation rules. You can potentially deduct $30,200 in year one through Section 179, plus bonus depreciation on the remaining amount. The cash flow consideration is important though - leasing gives you lower monthly payments which might be better when you're building your client base. But if you have steady income and plan to keep the van 5+ years, the total tax savings from purchasing usually outweigh leasing. One practical tip: Get the exact GVWR specs for any Transit model you're considering. The base Transit-150 might be under 6,000 lbs, but the Transit-250/350 cargo vans are definitely over, which makes a huge difference for your deductions. Also factor in that cargo vans hold their value well in the current market, so you'll have equity if you buy versus nothing if you lease.

Tax preparer here (but not yours!) - one thing no one has mentioned yet is that you might want to look into filing amended returns BEFORE the IRS comes after you. If you voluntarily correct errors before being audited, it can sometimes reduce penalties. This does mean you'll need to figure out what's wrong with your returns though. Common issues with fraudulent preparers include fake Schedule C businesses, inflated charitable donations, and bogus education credits. The preparer was probably getting you larger refunds by making up these deductions.

I'm going through something very similar right now and wanted to share what I've learned so far. Got the same type of letter about my preparer being under investigation about 3 weeks ago. The first thing I did was immediately request my IRS account transcripts online (irs.gov/individuals/get-transcript) to see exactly what was filed under my SSN. What I found was shocking - there were business expenses totaling over $8,000 that I never discussed with the preparer, plus charitable donations I never made. I've already contacted the IRS agent mentioned in the letter and scheduled my interview. She was actually pretty helpful and explained that they're mainly trying to build a case against the preparer, not go after us individually (unless there's evidence we knowingly participated in fraud). My advice: Don't wait. Get your transcripts now, document any discrepancies between what was filed and your actual financial situation, and be proactive about contacting the IRS. The agent told me that cooperation and transparency usually work in your favor when it comes to penalty assessments. Also, keep records of any communications you had with this preparer - texts, emails, receipts for their services, etc. This can help show your good faith efforts and lack of knowledge about any fraudulent activity. The stress is real, but from what I've been told, most people in our situation end up having to pay back taxes and interest but avoid the worst penalties if they cooperate fully.