22 Has anyone here actually been audited over the self-employed health insurance deduction? I'm worried about claiming it wrong and getting in trouble.

I went through this same situation last year and can confirm what others have said - you can absolutely deduct the portion you pay out of pocket after the premium tax credit. The key is keeping good records. What helped me was creating a simple spreadsheet tracking my monthly premiums, the advance premium tax credit amounts, and what I actually paid each month. When tax time came, I had clear documentation showing exactly what portion was deductible. One additional tip - if you have any months where you didn't receive the advance credit (maybe due to income changes), those full premium amounts are deductible for those months. The IRS allows you to deduct any premiums you actually paid, regardless of whether you were eligible for credits you didn't receive. Make sure to reconcile everything on Form 8962 when you file - this ensures your actual income aligns with the premium tax credit you received throughout the year.

As a tax professional who's worked with hundreds of C corp clients over the past decade, I can confirm what several others have mentioned - the "reasonable compensation" rules are indeed applied very differently for C corps versus S corps. The key distinction is that with S corps, the IRS aggressively pursues cases where owner-employees pay themselves too little salary (to avoid SE taxes), while with C corps, they're generally more concerned with excessive compensation that reduces corporate taxable income. For your situation with $430k in business income and a $125k salary, you're actually in a very defensible position. That's roughly a 29% salary-to-revenue ratio, which aligns well with industry standards for professional services businesses. A few practical considerations for your decision: 1) Maintaining adequate salary protects your Social Security benefits calculation 2) Higher salary allows for better retirement plan contributions (401k, etc.) 3) Consistent salary structure helps establish business legitimacy for potential audits While you technically could reduce your salary significantly without violating specific C corp rules, your current structure provides good balance between tax efficiency and business credibility. I'd recommend documenting your salary determination with industry compensation surveys to support your position if ever questioned.

This has been such an enlightening discussion! As someone who's been wrestling with C corp compensation strategy for my own business, I really appreciate everyone sharing their experiences and expertise. What strikes me most is how different the practical reality is from what you find in generic online advice. The distinction between S corp and C corp reasonable compensation rules is so much clearer now - S corps need to worry about paying too little (to avoid SE taxes), while C corps generally need to worry about paying too much (to avoid reducing corporate income). Dylan, your current $125k salary on $430k revenue actually seems really well-balanced based on all the insights shared here. You're hitting that sweet spot of tax efficiency while maintaining business credibility for potential audits, loans, and long-term financial planning. The state tax considerations that Alexis brought up are particularly important - it really shows how federal tax optimization advice might not be optimal when you factor in state-specific rules. And Malik's point about lending implications is something I never would have considered but makes total sense. For anyone else dealing with similar C corp compensation questions, it seems like the key takeaways are: document your reasoning with industry surveys, maintain enough salary for retirement planning and Social Security benefits, and remember that overly aggressive salary minimization can create problems beyond just tax issues. Thanks to everyone who shared their real-world experiences - this kind of practical insight is so much more valuable than theoretical tax advice!

Something nobody's mentioned yet is that if you make under $73,000, you can use the IRS Free File program to access premium tax software for FREE. The software companies hide this option but are required to offer it. Go through the IRS website directly (https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free) instead of the tax software sites. I used to pay $89 for TurboTax Deluxe plus $49 for state filing, but now I get the exact same software completely free through this program. The income limit increases slightly each year too.

I switched from TurboTax to FreeTaxUSA two years ago and haven't looked back. The interface took a little getting used to at first, but it handles everything I need including my rental property income and business expenses. What really sold me was the price - I went from paying around $150 total (federal + state) with TurboTax to about $25 with FreeTaxUSA. One thing I'd recommend is starting your return early with whatever software you choose so you have time to compare. Most platforms let you input all your info and see the results before you actually pay and file. That way you can test drive a few options and see which interface you prefer and if the refund amounts are comparable. For your side business, make sure whichever software you pick has good guidance on Schedule C deductions. That's where you can really save money if you're tracking business expenses properly - things like mileage, supplies, equipment, even a portion of your phone bill if you use it for business.

Don't forget that for some assets like real estate, you can often get historical appraisals done retroactively. We had a commercial property in my parents' trust, and we hired an appraiser who specialized in retrospective valuations to determine what it was worth when my dad died 9 years ago.

One thing that hasn't been mentioned yet is the importance of getting a Form 706 (United States Estate Tax Return) if one was filed for either parent. Even if the estate wasn't large enough to require filing, many attorneys recommend filing anyway specifically to establish the stepped-up basis values for inherited assets. If a Form 706 was filed for your father in 2016, it would contain the fair market valuations of all his assets as of his date of death - this becomes your stepped-up basis documentation. The same applies for your mother's estate in 2023. These forms are incredibly valuable for exactly the situation you're describing. If no Form 706 was filed, you might still be able to file a protective election or late-filed return in some circumstances. This is definitely something to discuss with a tax professional, as the rules can be complex and there are time limitations involved.

I can't imagine how stressful this must be for you right now. The silver lining is that everyone here is absolutely right - your Friday paycheck should be protected from this specific levy since bank levies are typically one-time seizures, not continuous drains on your account. Here's my advice based on what I've seen work for others in similar situations: Call the IRS collections line (800-829-3903) as early as possible tomorrow morning - ideally right at 8 AM when they open. Have your previous installment agreement details, SSN, and current financial information ready. Most importantly, be prepared to make at least a partial payment during the call if you can swing it - this demonstrates good faith and often helps expedite the reinstatement process. Since you had a previous installment agreement and your default was due to a legitimate life change (job transition), you're in a relatively good position to get this resolved quickly. Be upfront about the job change causing you to miss the payments - IRS representatives deal with life circumstances all the time and are often more understanding than people expect. One thing I'd add that others haven't mentioned: ask the representative to confirm over the phone that any future levy actions will be suspended once your agreement is reinstated, and request written confirmation of your new payment arrangement. This gives you documentation to reference if any issues arise. This situation is definitely fixable - try to get some rest tonight so you can tackle this with a clear head tomorrow morning. You've got this!

I've been in your exact situation and know how terrifying it is to see your account wiped out overnight. The good news is that your Friday paycheck should be safe - bank levies are typically one-time grabs, not continuous drains. Here's what worked for me: Call 800-829-3903 tomorrow at exactly 8 AM (shortest wait times). Have your previous installment agreement details, SSN, and be ready to make a payment during the call if possible - even $50 shows good faith. Ask specifically to "reinstate" your existing agreement rather than start fresh, which is much faster if your default was recent. Be honest about the job change causing missed payments - I was surprised how understanding the IRS rep was about life circumstances. Get the rep's name and badge number, and ask for written confirmation of your reinstated agreement. One tip that saved me: Ask to speak with a Revenue Officer if the first person can't help - they have more authority to make immediate decisions on levy releases and payment plan reinstatements. Also call your bank today if you can - they can't reverse the levy but they can flag your account to alert you if additional levy notices come in. This is absolutely fixable. Take a deep breath and tackle it step by step tomorrow morning. You've got this!