One thing that might help clarify the SEP IRA vs Solo 401k question - you can actually convert your existing SEP IRA to a Solo 401k if your Solo 401k plan allows for rollovers. This could be beneficial since you'd get the employee contribution option ($22,500) that you don't have with the SEP IRA. However, be careful about the timing if you've already made SEP IRA contributions for this tax year. You can't make employer contributions to both plans for the same tax year from the same business, even if you do a rollover partway through. Also worth noting - with your S Corp structure and $145k salary, your total contribution space to a Solo 401k would be around $58,750 ($22,500 employee + ~$36,250 employer at 25% of compensation). This might actually be less than the $66k you were planning for the SEP IRA, so run the numbers carefully before switching.

One additional consideration that hasn't been mentioned - if you're planning to hire employees in the future (beyond just your wife), a SEP IRA requires you to contribute equally for all eligible employees as a percentage of their compensation. With a Solo 401k, you lose eligibility once you have employees who aren't your spouse. Given your business growth trajectory ($850k-$1.2M revenue), you might want to think about whether you'll need to hire W-2 employees down the road. If so, you might want to consider other options like a traditional 401k plan that can accommodate employees, or carefully structure any future hires as contractors rather than employees. Also, make sure you're considering state tax implications. Some states don't follow federal rules exactly for retirement plan deductions, so the optimal choice might vary depending on where your S Corp is based. The timing issue others mentioned is crucial - if you're already late in 2023, the SEP IRA's flexibility to be established until your filing deadline might outweigh the Solo 401k's higher contribution potential, especially if you can't increase your salary before year-end.

If you're buying clothes that aren't your size and specifically for professional use, those ARE deductible! I'm a theatrical costume designer and face similar issues. The key difference is that you're not buying these as "clothing" but as "professional supplies" or "production costs" for creating your portfolio. Make sure you're categorizing them correctly on your Schedule C. Also, don't forget you can deduct: - Transportation costs to/from shoots - Equipment (steamer, styling kits, etc) - Software for managing your portfolio - Reference materials (fashion magazines, books) - Portion of your home used exclusively for inventory storage Get a good accountant who understands creative fields ASAP!

Great thread! As someone who's been through multiple IRS audits for my creative business, I want to emphasize the importance of the "business purpose" test. The IRS will look at whether your clothing purchases have a genuine business purpose beyond personal use. For fashion stylists, you're in luck because your profession inherently requires purchasing clothing as "raw materials" for your creative work - similar to how a painter buys paint or a photographer buys lighting equipment. The fact that these items happen to be clothing doesn't automatically disqualify them. Key documentation tips from my audit experience: - Keep a business journal noting the creative concept/theme for each shoot - Photo evidence showing the items being used professionally - Client emails or contracts referencing specific styling requirements - Inventory tracking showing items stored separately from personal wardrobe The IRS auditor actually commended my documentation approach because it clearly demonstrated business intent rather than personal shopping disguised as deductions. Don't let the general "clothing isn't deductible" rule scare you away from legitimate business expenses!

I went through something very similar last year and totally understand your confusion! Getting a 1099-NEC when you expected a W-2 is jarring, especially when your work situation sounds like a traditional employee setup. A few things to keep in mind as you navigate this: 1. **File correctly for now**: Even if you suspect misclassification, you'll need to report the 1099-NEC income on your tax return this year. Use Schedule C and don't forget Schedule SE for self-employment taxes. 2. **Track everything going forward**: Since others mentioned documentation - start keeping records of your work arrangements now. Things like email instructions, schedule requirements, use of company equipment, etc. 3. **Consider the bigger picture**: While the extra self-employment tax (around 15.3%) is frustrating, remember you can also deduct legitimate business expenses that employees can't. Keep receipts for anything work-related. 4. **You have time to decide**: You don't have to rush into filing Form SS-8 right now. You can file your taxes correctly based on the 1099-NEC you received, then evaluate your options for challenging the classification later if you decide it's worth pursuing. The most important thing right now is meeting your tax obligations while you figure out the classification issue. Don't let the stress of the bigger question prevent you from filing on time!

I really feel for you - this exact situation happened to me last year and it was so confusing! The good news is that you're not alone in dealing with this, and there are definitely steps you can take to figure it out. First, yes - receiving a 1099-NEC does mean the IRS will treat you as self-employed for tax purposes. You'll need to file Schedule C to report the income and Schedule SE for self-employment taxes (which is the extra ~15.3% others mentioned). But based on your description (set hours, using their equipment, being told exactly what to do), it really does sound like you might be misclassified. Here's what I wish someone had told me: you can file your taxes correctly with the 1099-NEC you received AND still challenge the classification later. Don't let the classification question prevent you from meeting your tax deadline - that's the most important thing right now. Start documenting everything about your work relationship immediately - emails about schedules, instructions about how to do your job, what equipment you're required to use, etc. This will be valuable whether you decide to file Form SS-8 or just want to have a conversation with your employer about the situation. Also, don't forget that being classified as self-employed does have one silver lining - you can deduct business expenses that regular employees can't. Keep track of anything work-related you pay for out of pocket. You've got this! Take it one step at a time and don't let the overwhelm paralyze you.

The actual stats on audit rates might make you feel better. For small Schedule C filers (under $100k), the audit rate is around 0.9%. Even with multiple years of losses, unless you have other major red flags, your chances remain relatively low. Make sure you can document that your expenses were legitimate business costs, not personal expenses, and you should be okay.

Has anyone here actually been audited for a small business with losses? I'd love to hear a firsthand experience about what happened and how it went.

I'm in the exact same situation with Wells Fargo! DDD was 3/15 and it's now day 5 with nothing. Called Wells yesterday and they said no pending deposits either. This is also my first year using this account for tax refunds. What's really frustrating is that I see some people saying Wells usually posts refunds just 1 day after DDD, but clearly that's not happening for all of us. I'm wondering if there's something specific going on with Wells Fargo's system or if the IRS is having broader issues this year. I checked my transcript last night and the DDD is still showing as 3/15 with no error codes, so at least that part looks normal. Going to try calling the IRS first thing tomorrow morning when they open - fingers crossed I can actually get through to someone who can tell me what's happening with the deposit. Really hoping we all see our refunds soon! This limbo is killing me when I've got bills due next week.

I'm dealing with the exact same issue! DDD of 3/15 with Wells Fargo and still nothing in my account as of today. This is also my first year using Wells Fargo for my refund, so I'm wondering if that's causing extra delays. I called Wells Fargo yesterday and they confirmed no pending deposits on their end, which is concerning since most people are saying Wells usually posts refunds within 1-2 days of the DDD. The rep mentioned they sometimes put holds on large deposits for accounts that haven't received IRS refunds before, but couldn't give me a definitive timeline. My transcript still shows the 3/15 DDD with no error codes, so at least the IRS side looks normal. Planning to try calling the IRS early tomorrow morning when they open - hoping to actually get through to someone who can explain what's happening. It's really stressful when you're counting on that money for upcoming bills! Glad to see I'm not the only Wells Fargo customer dealing with this delay. Will definitely update here if I hear anything useful from the IRS or if my deposit finally shows up.