One thing no one's mentioned yet is that if you convert your LLC to a C-corp, you're looking at completely different tax filings. C-corps file Form 1120 and have their own tax rates and rules. It's WAY more complex than Schedule C with your personal return. Also, if you want to get money back out of the C-corp later as actual income, you'll pay taxes TWICE - once at the corporate level and again as personal income. That's the famous "double taxation" of C-corps that everyone tries to avoid.

I own a small engineering firm and tried a similar approach back in 2023. Here's what happened: I borrowed $45k from my S-corp with all the proper documentation, interest at AFR, and a 3-year repayment plan. Everything was fine until I got audited for an unrelated reason. The IRS agent immediately focused on this loan. Because I had missed two payments (even though I caught up later), they reclassified $30k as a constructive dividend. I ended up paying taxes plus a 20% accuracy-related penalty. Lesson: if you do this, you MUST treat it like a real loan with a third party. Any deviation from normal lending practices will be used against you. These YouTube gurus don't tell you about the risks because they're selling courses, not giving complete advice.

The IRS determination is a huge victory - congratulations! I went through this exact process about two years ago and can share some practical advice. Beyond the forms others have mentioned (8919 and 1040-X), make sure you keep detailed records of everything. Document all your communications with the IRS, keep copies of your determination letter, and organize all your 1099s and payment records from that employer. One thing I wish I'd known earlier: the IRS has specific time limits for processing these amended returns, but it can still take 16-20 weeks to get your refund. Don't panic if it takes longer than a regular amended return - worker classification cases require additional review. Also, if your former employer tries to challenge the determination or refuses to cooperate, don't engage with them directly. The IRS will handle enforcement on their end. Your job is just to file the correct paperwork to get your refund. You're looking at recovering roughly half of those self-employment taxes plus potential adjustments to your income tax calculations. Keep us posted on how it goes!

This is such great news! Getting a favorable SS8 determination is really significant - the IRS typically only rules in favor of workers when there's clear evidence of misclassification. I went through this process about three years ago and want to add a few things to the excellent advice already given. First, when you file Form 8919 with Code G, make sure to attach not just your determination letter but also any documentation that shows the employment relationship (emails about schedules, equipment assignments, etc.). This creates a stronger paper trail. One thing I learned the hard way: if your former employer provided any benefits during your time there (even something small like paid holidays or use of company equipment), make sure to factor that into your amended returns. These benefits further support the employee classification and can sometimes result in additional tax adjustments in your favor. Also, keep in mind that this determination could potentially help other workers at that company who might be in similar situations. The IRS often uses SS8 determinations as precedent for auditing other worker relationships at the same employer. The timeline for getting your refund can vary, but in my case it was about 18 weeks. The wait was worth it though - I recovered about $6,400 in overpaid self-employment taxes. Hang in there and definitely keep us updated on your progress!

One warning about transferable credits - make absolutely sure you understand the recapture provisions! I sold some historic rehabilitation credits and then the project hit compliance issues in year 3. Even though I'd already sold the credits, I was still legally responsible for the recapture tax. Cost me over $200K that I wasn't expecting. Get everything in writing about who bears responsibility for future compliance issues and potential recapture. The safest approach is to build recapture insurance or indemnification into your sales agreement.

This is exactly the kind of comprehensive advice I was hoping for! Thank you everyone for sharing your experiences - both the successes and the costly mistakes. The recapture liability issue that Ethan mentioned is particularly eye-opening and definitely something I need to discuss with my attorney before moving forward. Based on what I'm reading here, it sounds like I have a few viable paths: specialized brokers like the ones Omar mentioned, platforms like taxr.ai that several people had success with, or checking if my state has an official exchange program. I'm leaning toward trying the platform approach first since the verification process seems like it could catch issues I might not be aware of. One follow-up question - for those who used brokers or platforms, did you get multiple offers to compare, or did you typically just go with the first reasonable offer? I want to make sure I'm not leaving money on the table, but I also don't want to drag out the process if the differences are minimal.

has anyone claimed medical deductions while also claiming the earned income credit? im in a similar situation with income around $26k and about $6k in medical expnses but worried about how this affects my EIC

I went through something similar last year and wanted to share what I learned about the timing aspect. Since you had income from three different sources (employment, unemployment, then employment again), make sure you're including ALL of it in your AGI calculation for the 7.5% threshold. One thing that caught me off guard - if any of your medical expenses were reimbursed by insurance AFTER you paid them, you'll need to subtract those reimbursements from your deductible amount. This includes any HSA or FSA reimbursements you might have received. Also, keep really good records of everything. The IRS tends to scrutinize medical deductions more closely, especially larger amounts like yours. I kept a spreadsheet with dates, providers, amounts, and what each expense was for. Made tax prep much smoother and gave me peace of mind in case of questions later. Given your income level and the amount of medical expenses, you might also want to look into whether you qualify for any healthcare-related tax credits in addition to the deduction question.

They can absolutely change from no withholding to withholding if they want. Its all reported as income anyways. Id be more concerned about whether this should be taxable at all. Some job training isnt imputed income if its required for your current position (not future advancement).

I'd strongly recommend getting this resolved in writing with HR before they make the withholding. The fact that your contract explicitly states "no withholding will be taken from your paycheck" creates a legal issue if they proceed without your agreement to modify the terms. When you meet with HR, ask them to explain: 1) Why they're changing the tax reporting method from 1099-MISC to what sounds like W-2 treatment, 2) Whether your company has a Section 127 educational assistance program that might make this training tax-free, and 3) How they plan to handle the contract discrepancy. If the training was truly mandatory for your current role and doesn't provide portable credentials for other jobs, there's a good chance it shouldn't be taxable imputed income at all. The IRS generally considers employer-provided training non-taxable when it's primarily for the employer's benefit and required for the employee's current duties. Document everything from this meeting and get their responses in writing. If they insist on proceeding with withholding despite the contract language, you may want to consult with an employment attorney about whether they're breaching your agreement.