Don't make this more complicated than it needs to be. Your 401k contributions are correctly showing in boxes 12-D and 12-AA, which is what actually matters for tax calculations. The Box 13 checkbox is primarily used to determine eligibility for deducting traditional IRA contributions. If you're not contributing to a traditional IRA, this has zero impact on your taxes. Even if you are, the IRS can see your 401k participation from the Box 12 entries. I've had this happen twice and just filed my taxes normally - never heard a peep from the IRS about it.

I had almost the exact same situation happen to me two years ago - all my 401k contribution amounts were correct in the various Box 12 codes, but Box 13 was left unchecked. I ended up contacting my employer's payroll department, and they told me it was a "system glitch" that affected about 200 employees that year. They issued corrected W-2s pretty quickly once they realized the scope of the problem. The corrected W-2 arrived about 10 days later with Box 13 properly checked. While it probably wouldn't have caused major issues to file with the incorrect version (since all the actual contribution amounts were right), I felt much better having the proper documentation. I'd definitely recommend reaching out to your payroll department - they might already be aware of the issue and working on corrections for multiple employees. In my experience, this type of error is often systematic rather than isolated to just one person's W-2.

This is a great discussion thread! I'm in a very similar situation - household income around $380K and considering a side business. One angle I haven't seen mentioned much is the state-level implications. I'm in Texas (no state income tax), but for those in high-tax states like California or New York, the state treatment of S-Corps vs LLCs can significantly impact the overall analysis. Some states don't recognize S-Corp elections and will tax the entity at the corporate level regardless. Also, regarding the ownership question - even if your spouse isn't actively involved, there could be estate planning benefits to joint ownership, especially if the business becomes successful. If something happens to you, having your spouse as a co-owner can simplify business continuity compared to having to transfer a sole proprietorship through probate. Has anyone factored in the potential exit strategy implications? If you plan to eventually sell the business or bring in outside investors, the corporate structure (even if taxed as S-Corp) might be more attractive to buyers than an LLC structure.

As someone who went through this exact decision process two years ago with a similar income profile ($420K household W2), I'd strongly recommend getting a comprehensive tax projection done before making the entity choice. The interplay between SE tax savings, QBI limitations, state taxes, and administrative costs is complex enough that generic advice often misses important nuances. One thing I learned the hard way: if you're planning to reinvest most of the business profits back into growth (which it sounds like you might with that $130K initial investment), the S-Corp salary requirements can create cash flow issues. You're required to pay reasonable compensation via payroll even if you want to keep cash in the business for inventory, equipment, or expansion. Also, consider your timeline for profitability. If you expect losses in year one due to startup costs and that initial investment, an LLC might be better initially since you can deduct those losses against your high W2 income without the limitations that S-Corp losses face. You can always convert to S-Corp taxation later once you're consistently profitable. The spouse ownership question is interesting - if you're in a community property state, the income allocation might happen automatically regardless of whose name is on the paperwork. But in common law states, joint ownership could provide some income splitting opportunities, especially if your spouse handles any administrative tasks for the business.

idk why they make this stuff so complicated smh. good luck op

Just went through this same process! One thing to add - if you go the online route through IRS.gov, make sure you have your prior year tax info handy for identity verification even if you didn't file. They might ask for things like SSN, DOB, and address from that year. Also double check with your financial aid office about the exact format they need - some schools want the actual IRS letter while others accept the transcript printout. Better to confirm now than have to redo it later!

This is such a comprehensive discussion! As someone who works in benefits administration, I wanted to add a few practical tips that might help: 1) **Document everything now**: Start keeping a spreadsheet of both your medical expenses, even if they're paid through different accounts. This will be crucial for tax planning and if you decide to consolidate plans later. 2) **Check your plan's "last month rule"**: If you're HSA-eligible in December, you can contribute the full annual amount even if you weren't eligible all year. But there's a testing period - you have to remain HSA-eligible through December of the following year or you'll owe penalties and interest. 3) **Consider the long-term**: HSAs are essentially retirement accounts in disguise after age 65. You can withdraw for any reason (with regular income tax, like a traditional IRA). FSAs don't have this benefit. 4) **Open enrollment strategy**: Use this year to track your actual medical spending patterns as a married couple. Many people overestimate or underestimate their needs. This data will help you make better decisions next year. The complexity of these rules is exactly why so many couples get tripped up. When in doubt, getting professional advice for your first year of filing jointly is often worth the cost to avoid costly mistakes down the road!

This thread has been incredibly helpful! As someone who just went through their first tax season as a married couple with the HSA/FSA situation, I wanted to share what we learned the hard way. We made the mistake of not addressing the FSA disqualification issue until after we'd already maxed out my HSA contributions for the year. When we realized the problem in December, we had to do an "excess contribution distribution" which was a paperwork nightmare. The HSA administrator required forms, our tax preparer had to file additional documentation, and we ended up paying penalties anyway because some of the funds had already earned interest. What I wish we had done from the beginning: 1) **Talked to both HR departments in January** about the specific language in our FSA plan regarding spousal coverage 2) **Set up a joint spreadsheet** to track all medical expenses from day one - this became crucial when calculating whether we should itemize deductions 3) **Started with conservative HSA contributions** until we were 100% sure about our eligibility, rather than front-loading contributions early in the year The silver lining is that going through this process taught us a lot about tax-advantaged accounts, and we're much better prepared for this year's planning. Sometimes the expensive lessons are the ones that stick! For anyone in a similar situation - definitely get professional help for your first year filing jointly if you have multiple tax-advantaged accounts. The peace of mind is worth every penny.

This is really helpful information from everyone. I'm dealing with a similar situation but with an added complication - my mother's trust has both traditional investments and a small business (sole proprietorship) that she was running before she passed. The business is still generating some income while I'm trying to wind it down. Does anyone know how the Sec 645 election affects business income taxation? I'm wondering if treating the trust as part of the estate would give me more flexibility in handling the business dissolution and any potential losses from closing it down. The business assets are probably worth about $75k but the timing of selling everything could really impact the tax consequences.

I went through this exact situation with my grandmother's trust earlier this year. With $450k in assets like yours, I'd strongly recommend making the Sec 645 election. Here's why it worked out well for us: The biggest benefit was the extended administration period - you get up to 2.5 years (until the second anniversary of death) versus the typical trust timeline. With investments and real estate, this extra time was crucial for making strategic decisions about when to sell assets for the best tax outcomes. For the vacation property specifically, the election gave us flexibility to time the sale in a way that minimized capital gains impact on beneficiaries. We were able to coordinate the timing with beneficiaries' other income to keep them in lower tax brackets. One thing to consider: make sure you understand the filing requirements. You'll need to file Form 8855 to make the election, and it must be filed by the due date (including extensions) of the estate's first Form 1041. Don't miss this deadline - it's irrevocable once the time passes. Given your asset level and mix of investments plus real property, the administrative flexibility alone probably makes the election worthwhile. The potential tax planning benefits are just a bonus.