This entire discussion has been a game-changer for my understanding of S-Corp vehicle taxation! I'm a new business owner with a small IT consulting firm, and I was stuck in the exact same mental loop as the original poster. What really helped me grasp the concept was the repeated emphasis that there's no "circular" accounting happening. The S-Corp spends real money on vehicle expenses and gets a legitimate business deduction for those actual expenditures. The personal use portion being added to my W-2 isn't creating a new wage expense deduction - it's simply ensuring I pay personal income tax on the benefit I received from the company's spending. I was getting confused because I kept thinking of the W-2 addition as somehow reducing the business deduction, but now I see they're completely separate tax treatments. The company deducts what it spent, and I pay tax on what I benefited from - no double counting either direction. Thank you to everyone who shared their experiences and explanations. This is exactly the kind of practical, real-world guidance that makes complex tax concepts finally make sense. I feel much more confident about handling this correctly going forward!

I'm a newcomer to S-Corp taxation and this thread has been incredibly helpful! I was struggling with the exact same PUCC confusion for my small landscaping business. The breakthrough moment for me was understanding that the S-Corp's vehicle expense deduction and the personal income reporting are two completely separate tax issues. My company spent actual money on gas, insurance, and repairs - that's a legitimate $100 business expense that gets fully deducted. The fact that I used the vehicle for a weekend trip worth $20 doesn't change the business deduction. It just means I need to pay personal income tax on that $20 benefit. I was overthinking it by trying to somehow "net out" the personal portion from the business expenses. But there's no netting involved - the business keeps its full deduction for what it actually spent, and I separately report the personal benefit I received. One question for the group - I've been tracking my mileage manually in a notebook. Are there any apps or digital tools that make this easier while still meeting IRS requirements for contemporaneous records? I want to make sure I'm documenting everything properly but also streamline the process as much as possible. Thanks to everyone for sharing their knowledge - this is exactly what I needed to understand this properly!

I'm going through this exact same frustration with my small business! Been trying to get through to the IRS for weeks about my EIN application with zero success. Reading through all these experiences has been incredibly eye-opening - it's clear the system is completely overwhelmed but there are definitely some proven strategies that work. The early morning calls to 800-829-4933 seem to be the most reliable approach, and I love how specific everyone's gotten with timing (7:01 AM, 7:02 AM to avoid the initial rush). What strikes me most is how many people had issues that required manual review - wrong business classifications, address mismatches, etc. Makes me wonder if the online system needs better validation to catch these issues upfront instead of creating weeks of delays. I'm definitely going to try the early morning call strategy with all my details organized, plus prepare a fax backup. It's ridiculous that we need multiple strategies just to follow up on a basic government service, but I'm grateful for this community sharing real solutions instead of just venting frustration. For anyone else still struggling - don't give up! These success stories prove there's light at the end of the tunnel if you persist with the right approach.

I just wanted to add one more alternative that worked for me after trying everything else mentioned in this thread! I was in the same boat - applied for my EIN for my freelance graphic design business 4 weeks ago and couldn't get through on any of the phone lines despite trying the early morning strategy multiple times. What finally worked was contacting my local IRS Taxpayer Assistance Center (TAC) in person. I know it sounds old-school, but I found my local office using the IRS website's office locator tool, made an appointment online, and brought all my EIN application documents with me. The in-person service was night and day compared to the phone experience. The representative looked up my application immediately, found that there was a technical glitch that had flagged it for manual review (something about the electronic signature not processing correctly), and resolved it on the spot. I walked out with my EIN printed on official letterhead! Most TAC offices require appointments now, but the wait time for an appointment was only about a week in my area - much better than the endless phone loop. Might be worth checking if you have a local office and you're continuing to strike out with phone calls. Just another option to consider if the early morning calling strategy doesn't work out for you!

I'm going through something very similar right now and this thread has been incredibly helpful! My company laid me off after 4 months and is demanding repayment of my $5,000 signing bonus. Like others have mentioned, they initially wanted the full gross amount even though it's the same tax year. One thing I'd add is to check if your state has any additional protections. I'm in California and discovered that there are some state-specific rules about wage deductions that can provide extra leverage when negotiating with employers. It might be worth doing a quick search for "[your state] wage repayment laws" or consulting with an employment attorney if the amount is significant enough. Also, for anyone dealing with this situation - don't be afraid to push back professionally. These companies often rely on employees not understanding their rights or being too intimidated to question the repayment terms. You're already dealing with the stress of a layoff; don't let them take advantage of you financially on top of that. The advice about getting everything in writing and involving payroll/accounting (not just HR) is spot on. HR departments sometimes don't fully understand the tax implications, but payroll people usually do.

I went through this exact situation about 8 months ago and wanted to share what worked for me. Got laid off 4 months into a new job with a $7,500 signing bonus that had to be repaid. The key breakthrough came when I found my original employment agreement and realized it didn't specifically state whether repayment should be gross or net. I then printed out my pay stub showing the bonus payment with all the tax withholdings clearly itemized ($1,875 in federal taxes, $450 state, plus FICA). I scheduled a meeting with HR and brought both documents. I explained that since I received the bonus in February and was being laid off in June (same tax year), standard payroll practices require that I only repay what I actually received after taxes. I pointed out that asking me to repay $7,500 when I only got $5,175 after withholdings would mean I'm paying $1,875 in federal taxes on money I'm giving back to them. The HR person initially resisted, but when I asked them to check with their payroll department, they came back the next day confirming I only needed to repay the net amount. Make sure you stay calm but persistent - you're not asking for a favor, you're asking for the correct calculation based on tax law. Document everything and don't let them rush you into paying the wrong amount just to meet their arbitrary deadline.

I went through this exact same thing last year with my vacation payout! That 48.5% withholding rate is brutal but totally normal - it's what happens when employers use the aggregate method for supplemental wages. Basically their payroll system freaks out and thinks you're suddenly making that lump sum every single paycheck for the whole year. The silver lining is that this is just withholding, not your actual tax liability. When I filed my taxes, I got back about $2,800 of the $3,600 they over-withheld from my vacation payout. The actual tax rate on that income ended up being much closer to my normal bracket. One thing that really helped me was immediately scanning and saving multiple copies of that pay stub - you'll definitely need those withholding details when you file. Also, I adjusted my W-4 at my new job to reduce regular withholding by about $150 per paycheck, which helped with cash flow while waiting for tax season. Just make sure to be conservative with any W-4 adjustments so you don't accidentally underwithhold for the year. It's frustrating having so much of your money tied up until you file, but you should get most of it back!

I'm dealing with the exact same situation right now! Just left my company with about 520 hours of banked vacation time (I know, I know - should have used more of it during COVID). They hit me with 47% withholding and I was convinced there was some kind of error. Reading through everyone's explanations about the aggregate method has been such a huge relief. I had no idea that payroll systems could be so dramatic - treating my one-time vacation payout like I'm suddenly earning that amount every two weeks for the entire year seems completely ridiculous, but at least now I understand what's happening. I'm definitely going to follow the advice here about keeping multiple copies of my pay stub and being conservative with any W-4 adjustments at my new job. It's frustrating having thousands of dollars tied up until tax season, but knowing that most of you got back 75-85% of the over-withheld amount gives me hope. Thanks to everyone who shared their actual numbers and experiences - this community has been way more helpful than trying to navigate the IRS website or sitting on hold for hours!

As a newcomer to this community, I'm amazed by the depth of knowledge shared here about partnership taxation! Reading through this discussion has been incredibly educational, especially since I'm considering a similar transition from employee to partner at my workplace. The consensus seems clear that dual W-2/K-1 income from the same partnership is absolutely legal and common, despite some preparers' misconceptions. What strikes me most is how many experienced professionals have faced identical resistance from tax preparers who seem to be operating on outdated or incomplete information. I'm particularly grateful for all the specific IRS references mentioned - Revenue Ruling 69-184, Publication 541, Treasury Regulation 1.707-1(c), and Form 1065 Instructions. Having these authoritative sources compiled in one thread is invaluable for anyone needing to educate their preparer about legitimate partnership structures. For Mateo's original question, it sounds like your arrangement is not only legal but actually well-structured from a tax perspective. The key seems to be having clear documentation in your partnership agreement that separates your employee duties from your ownership interests, plus ensuring your W-2 compensation is reasonable for the actual work you perform. If your current preparer continues to resist after being shown the actual IRS guidance, it might indeed be time to find someone with more partnership taxation experience. Partnership tax law is complex, and you need a preparer who's willing to research and learn rather than rely on assumptions.

As someone new to this community, I want to echo what others have said - your arrangement is absolutely legitimate and your tax preparer is misinformed. I recently went through partnership training for my CPA continuing education, and dual W-2/K-1 compensation was covered extensively as a standard practice. What might help is explaining to your preparer that this isn't about "being an employee of your own partnership" in the traditional sense. You're providing services to the partnership entity in a capacity that's separate from your ownership interest. Think of it like a partner in a law firm who also serves as the managing partner - they get compensated for those additional management duties beyond their ownership distributions. The IRS specifically recognizes this distinction in multiple publications. Revenue Ruling 69-184 addresses the employee status question, but it's focused on specific benefits and employment tax issues, not on whether compensation can be paid via W-2. If showing her the IRS guidance doesn't work, you might ask your partnership attorney to provide a brief letter explaining the structure. Sometimes hearing it from a legal professional who specializes in partnership law carries more weight than client explanations. Your business structure makes perfect sense and is designed to properly separate compensation for work from returns on investment. Don't let an uninformed preparer force you into a less advantageous tax arrangement.