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Has anyone dealt with the "reasonable compensation" issue with an S-Corp? I'm getting conflicting advice from different accountants about how much I need to pay myself vs take as distributions.
That's because there's no hard and fast rule. I went through an audit last year for my S-Corp and the IRS looked at industry standards for my profession. They compared my salary to what others in my field typically make with similar experience. My advice: document WHY you chose your salary amount based on research you've done on comparable positions. That documentation saved me during my audit.
For graphic design specifically, I'd recommend checking the Bureau of Labor Statistics Occupational Employment and Wages data for "Graphic Designers" in your geographic area. The IRS often references BLS data during audits as it's considered authoritative government data. I also used Glassdoor and PayScale to document salary ranges, but made sure to filter by experience level and location. The key is showing you did your homework - I created a simple spreadsheet with 5-10 comparable positions and their salary ranges, then documented why I chose a specific amount within that range based on my experience and responsibilities. One thing that helped during my audit was showing that my total compensation (salary + distributions) wasn't unreasonably low compared to what an independent contractor in my field would charge for the same work. The IRS wants to see that you're not just minimizing salary to avoid employment taxes, but that there's genuine business reasoning behind your compensation structure.
the irs deposited my refund at exactly 12:01 am on february 5th last year. the year before it was 3:17 am. i checked my transaction history this morning. so its definetly overnight/early morning deposits with my bank (wells fargo
Based on my experience and what I've seen with friends and family, the IRS typically sends direct deposit batches to banks overnight, and most people see their refunds hit their accounts in the early morning hours - usually between midnight and 6am. The exact timing really depends on your specific bank's processing schedule. Since your Where's My Refund tool shows "approved," that's a great sign! You're likely looking at seeing that deposit within the next 1-2 business days. I'd recommend checking your account first thing in the morning rather than staying up late refreshing - that's when most banks post the overnight ACH transfers from the IRS. Also worth noting that if you have direct deposit set up for other things (like payroll), your refund will likely post around the same time those usually appear. Good luck with your refund!
This is really helpful advice! I'm in the same boat as the original poster - filed about a week ago and just got the approved status yesterday. I've been checking my account obsessively too but sounds like I should just check once in the morning instead of every few hours. My bank usually posts my paycheck around 3am so I'll probably see the refund around then if it comes overnight. Thanks for the reassurance that "approved" means it's coming soon!
I went through this exact same situation two years ago as a digital nomad with German citizenship but no tax residency anywhere. After a lot of research and consultation with a tax professional, here's what worked for me: I listed Germany (my citizenship country) on Schedule OI and included a brief statement in Part I explaining that while I'm a German citizen, I don't meet Germany's tax residency requirements due to spending less than 183 days there annually and maintaining no permanent address. The key is being able to demonstrate that you genuinely don't qualify as a tax resident anywhere under each country's specific rules. I kept detailed records of my travel dates and locations, plus documentation showing I didn't maintain a permanent home anywhere. My return was processed without any issues, and I never received any follow-up questions from the IRS. The important thing is to be honest and accurate - if you truly don't have tax residency anywhere, the IRS understands this is a legitimate situation for modern digital nomads.
This is really helpful! I'm in a similar situation with U.S. citizenship but living nomadically. Quick question - did you have to provide any specific documentation to prove you didn't meet Germany's 183-day rule, or was your statement sufficient? Also, did you face any complications with German tax authorities by listing Germany on your U.S. forms?
I didn't need to provide specific documentation with my initial filing - my statement was sufficient. I basically wrote something like "German citizen but do not meet Germany's tax residency requirements due to spending fewer than 183 days annually in Germany and maintaining no permanent German address." As for German tax authorities, listing Germany on my U.S. forms didn't cause any issues. The two systems don't automatically share this information in a way that would trigger German tax obligations. However, I did separately confirm with a German tax advisor that I was properly non-resident under their rules to avoid any future complications. The key is making sure you're genuinely compliant with the residency rules of your citizenship country. If you're truly spending most of your time outside the U.S. and don't maintain a permanent U.S. address, you should be fine using the same approach.
I've been dealing with this exact issue as a U.S. citizen living abroad without a clear tax residency. After consulting with an international tax attorney, here's what I learned: The IRS is primarily concerned with ensuring you're not trying to avoid reporting income or claiming false treaty benefits. For Schedule OI, if you genuinely don't qualify as a tax resident anywhere, you should: 1. List your country of citizenship in the residence field 2. In the additional information section, clearly state your situation: "U.S. citizen with no current tax residency in any country due to continuous international travel" 3. Be prepared to substantiate this claim with travel records if requested The attorney emphasized that this is becoming increasingly common with remote work trends, and the IRS has guidance for handling these "stateless for tax purposes" situations. What matters most is that you can demonstrate you're not artificially avoiding tax obligations in any country. One important note: even if you're not a tax resident anywhere, you still need to comply with U.S. tax obligations as a citizen, including FBAR and FATCA reporting if applicable. The Foreign Earned Income Exclusion might also apply to reduce your U.S. tax liability on foreign-sourced income.
I ran into this exact same issue last year with TaxAct and found a solution that might work for H&R Block too. Have you checked if there's a "Data Entry Worksheets" or "Forms View" option in your software? In my case, I discovered that while I couldn't copy from the main input screens, there was a separate worksheet view that displayed all my transactions in a more basic format that actually allowed copying. It was buried in the Forms menu under something like "Schedule D Worksheet" or "Capital Gains Detail." Also, if you're using the desktop version, try running it as an administrator (right-click the program icon and select "Run as administrator"). Sometimes copy restrictions are bypassed when the software has elevated permissions. Worth a shot before going the screenshot/OCR route!
This is a great suggestion! I just checked and found there IS a "Forms View" option in H&R Block - I never would have thought to look there. It's under View > Forms and then I could navigate to the Schedule D form which showed all my transactions in a much simpler layout. While I still can't copy directly from there, it's at least easier to screenshot since everything is laid out in neat rows and columns. The "run as administrator" tip didn't work for me, but the Forms View is definitely going to make the OCR approach much more accurate. Thanks for pointing this out!
Another approach that worked for me last tax season - check if H&R Block has a "Review" or "Summary" section before you file. Many tax software programs generate a comprehensive review document that includes all your entries in a more accessible format. In H&R Block, look for something like "Review Your Return" or "Tax Summary" - this often creates a consolidated view of all your forms and schedules. Sometimes this review format is more copy-friendly than the individual input screens. Also, if you're comfortable with it, you might try using browser developer tools if you're using the online version of H&R Block. Press F12, go to the Console tab, and sometimes you can access the underlying data that way. It's a bit technical but I've seen people extract form data this way when normal copy functions are blocked. The combination of these suggestions from everyone should definitely save you from having to manually type all 51 transactions!
The Review/Summary section is brilliant advice! I wish I had known about this earlier. Just found it in my H&R Block - it's under "File" then "Print/Save Returns" and there's an option for "Tax Return Summary" that shows everything in a much cleaner format. Still testing if I can copy from there, but even if not, it's definitely going to be way easier to work with for screenshots or OCR than the cluttered input screens. You've potentially saved me hours of formatting headaches!
Isaac Wright
I had a similar situation with a coworker and it turned out we had completely different health insurance plans! Are you on the company health plan? The premiums might be taken pre-tax, which affects your taxable income and therefore your refund.
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Lucy Taylor
ā¢This was exactly my situation too! My coworker was on her husband's insurance while I was paying $240/month pre-tax for our company plan. That difference in taxable income caused her to owe and me to get a refund.
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Emma Thompson
Another factor that could explain the difference is if you have student loan interest deductions. If you're paying student loans and she isn't, you can deduct up to $2,500 in student loan interest, which would reduce your taxable income and potentially explain part of that $1,350 refund difference. Also worth checking if either of you contributed to a traditional IRA during the tax year - that's another above-the-line deduction that reduces taxable income. Even a $1,000 IRA contribution could create a meaningful difference in your final tax liability compared to someone who didn't contribute.
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Jamal Thompson
ā¢That's a great point about student loans! I do pay about $180/month in student loan interest, so that deduction probably helps. I hadn't thought about IRA contributions either - I should look into that for next year. It's interesting how all these little differences add up to create such a big gap in our refunds even though our base salaries are so similar.
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