Has anyone used the "safe harbor" rule to avoid this whole issue? I think if you withhold 100% of your previous year's tax liability (or 110% if your AGI was over $150k), you don't have to worry about penalties regardless of bonuses, right?

Great advice in this thread! I want to add one more consideration - timing matters a lot when you receive your bonus. If you got it late in the year (like Q4), the allocation method on Form 2210 Schedule AI becomes even more beneficial because it shows the IRS that you couldn't have reasonably withheld enough earlier in the year when you hadn't received that income yet. I had a similar situation with a December bonus that pushed me into underpayment territory. The standard calculation assumed I should have been withholding for that income all year long, but the allocation method properly showed that the income (and corresponding tax liability) only existed in Q4. One tip: keep really good records of your pay dates and withholding amounts by pay period. You'll need this info whether you're using tax software or tools like the ones mentioned above. Having everything organized makes the whole process much smoother.

Has anyone used TurboTax to amend their return when they had these weird codes? I'm in a similar situation with code 290 and need to submit an amendment but worried it'll mess things up more.

I went through almost the exact same situation last year! The 290 code combined with your audit being reversed is actually really good news. Here's what likely happened: When you filed your amended return right around the time of the audit, it created a processing conflict in the IRS system. The 290 code you're seeing is the IRS making an adjustment to reconcile your original return with the audit findings (which were then reversed) and your amendment. The fact that you now see code 846 (as you mentioned in your follow-up) means your refund has been approved and is being issued. That date is when the Treasury will send the payment - usually takes 1-3 business days to hit your bank account if you have direct deposit set up. For your stimulus payments, definitely claim the Recovery Rebate Credit on your 2022 return. Since your 2021 return was tied up in processing, you likely didn't receive the payments that were based on that return. The IRS will cross-reference what you've already received and give you credit for any missing amounts. One tip: keep checking your transcript weekly because sometimes additional codes appear that give you more details about processing timelines. After dealing with this mess for over a year, seeing that 846 code must feel amazing!

I took a different approach that might be worth considering - I use UltraTax CS which is definitely more expensive than Drake or ATX, but I was able to get started with their "pay-per-return" model which let me grow gradually without a huge upfront cost. Now that I'm bigger I switched to the unlimited package. The software is top notch and feels much more polished than some of the budget options.

Great question! I went through this exact transition about 4 years ago. Started with TaxSlayer Pro when I was around your client count and it served me well for the first couple seasons. The pricing was really reasonable and the client portal worked fine for basic document collection. However, as I grew past 75 clients, I ended up switching to Drake because the workflow features are much better for higher volume. The batch processing and bulk e-filing capabilities became essential when I hit busy season with 100+ returns. One thing I'd suggest is don't just look at the software cost - factor in your time savings too. Even if something costs a few hundred more per year, if it saves you 2-3 hours per week during tax season, that pays for itself quickly when you're charging $200+ per return. Also, whatever you choose, make sure it has good technical support during filing season. Nothing worse than being stuck with a software issue when you have 20 returns due the next day!

One thing nobody's mentioned yet is that your basis in S corp stock can also be affected by the company's debts. If the S corp takes on debt that you personally guarantee, that can increase your basis, which might allow you to take more tax-free distributions or deduct more losses. But be careful with this - the IRS looks closely at debt basis, and you need proper documentation showing you're genuinely at risk. I learned this the hard way during an audit!

Does anyone know if taking a lower salary and higher distributions from my S corp is still a valid tax strategy? I've heard mixed things about the IRS cracking down on this.

Has anyone had their amended return check get lost in the mail? I'm in the same situation with a 1040X, got the 846 code, but it's been over 3 weeks and no check. The IRS told me they mailed it but I'm getting worried.

I went through this exact same situation last year! The frustration is real when you're expecting direct deposit but get told a paper check is coming instead. What everyone else has said is absolutely correct - the IRS has a blanket policy of issuing paper checks for ALL amended return refunds, regardless of whether you provided direct deposit information or how you filed the 1040X. It's just how their amended return processing system works. The 846 code with the 3/24 date is actually great news - that means your refund was officially issued on that date. Paper checks typically arrive 7-10 business days after the 846 date, so you should be seeing it very soon if you haven't already. Don't worry about your IPPIN affecting anything - that's completely separate from refund processing and wouldn't cause the "Where's My Amended Return" tool issues. That tool often stops showing information once the refund is issued because the IRS considers your case "complete" at that point. If more than 2 weeks pass from your 846 date without receiving the check, definitely call the IRS to start a payment trace. But based on your timeline, it should arrive any day now!