


Ask the community...
Whatever software you choose, don't forget that you'll need clients to sign Form 8879 (e-file authorization) for each return you submit. Some of the professional software packages include client portal options that make this easier, but it's something to consider in your workflow.
One thing I haven't seen mentioned yet is liability protection. Since you're charging for tax prep services, you might want to consider getting some basic professional liability insurance. Even for simple returns, mistakes can happen and the IRS can impose penalties on both you and your clients. Also, make sure you understand the difference between being a "tax preparer" vs just "helping friends." Once you start charging, you're officially in business territory and need to follow all the rules - PTIN registration, proper record keeping, continuing education requirements if you do more than a few returns, etc. The IRS has pretty clear guidelines on their website about when you cross from casual help to professional services. I'd recommend starting small this year to get a feel for the workload and responsibilities before taking on more clients next season.
For what it's worth, I've been running a single-member LLC for 5 years and always get a mix of 1099s - some with my SSN, some with my EIN. I just enter all of them in the business section of TurboTax and have never had an issue. The clients who've known me longer tend to use my SSN, while newer ones use the EIN. I've been audited once (for an unrelated reason) and they didn't care about this discrepancy at all.
Do you think there's any tax advantage to having them use one over the other? Like does it affect how much self-employment tax you pay or anything like that?
There's absolutely no tax advantage either way. Whether your 1099s have your SSN or EIN, you'll pay exactly the same amount of self-employment tax and income tax. The income flows to the same place on your tax return no matter which identifier is used. The main benefit of using your EIN instead of SSN is privacy and identity protection - fewer people and companies have your SSN floating around on documents. But from a pure tax calculation perspective, there's zero difference.
Another thing to consider - if you're planning to build business credit for your LLC, you should definitely have clients use your EIN on future 1099s. It helps establish your business as a separate entity for credit purposes even though it's a disregarded entity for taxes. But for this year's filing with TurboTax, just put everything in the business section regardless of whether the 1099s have your SSN or EIN.
Thats a really good point about building business credit! My LLC is still new and I hadn't thought about that angle. Is it hard to get clients to switch from using your SSN to EIN once they've already got you in their system one way?
It's usually not too difficult to get clients to switch, but it does require some proactive communication. I send out an email to all my clients around January explaining that I'd prefer they use my EIN and business name for the upcoming year's 1099s. Most clients are pretty accommodating since it's just updating their vendor information. The key is to give them your EIN and exact business name in writing so they don't have to guess. Some larger companies have more rigid systems and might need you to resubmit a W-9 form, but even that's pretty straightforward. I'd say about 80% of my clients switched over without any issues when I asked.
Worth noting that if you DID check the box for agricultural employees rather than regular employees, you might be required to file Form 943 instead of 941. Make sure to specifically mention which forms you're getting notices about when you contact the IRS!
I went through this exact same situation with my freelance business EIN last year! The mistake is super common - the IRS application can be confusing about employee intentions. I'd recommend calling the IRS Business & Specialty Tax Line first (800-829-4933) as others mentioned, but if you can't get through after a few tries, the written request route works great too. I sent a simple letter explaining the error and got it resolved in about 4 weeks. The key thing is to act on this soon - don't let it sit like some people do. The IRS is actually pretty reasonable about fixing these application errors, especially when you're proactive about it. Once it's corrected, you'll get peace of mind knowing you won't have to deal with those quarterly employment forms you don't need.
where do u even find these codes on the transcript? im looking at mine rn and im lost af
Should be on the account transcript, not the return transcript. Look for the section with all the codes and dates
found it! thx fam ๐
Andrew Pinnock
Has anyone ever had to report a daycare on their taxes WITHOUT the EIN? My kids went to a small home daycare last year and the lady claims she doesn't have an EIN because she's "too small" or something? She gave me a handwritten receipt with her social security number instead. Is that even legal?
0 coins
Brianna Schmidt
โขYes, that's actually completely normal for small home daycares. If they operate as a sole proprietor rather than a corporation, they can use their SSN instead of an EIN. The IRS allows this for small businesses. When you fill out Form 2441 for the child care credit, there's space for either an EIN or SSN of the provider.
0 coins
GalaxyGazer
I had a similar situation two years ago when our family daycare suddenly shut down mid-year. Here's what worked for me: 1. Check with your bank - if you paid by check, the canceled checks might have the EIN printed on them when they were processed by the daycare's bank. 2. Contact your state's Department of Social Services or equivalent agency that oversees childcare licensing. They maintain records of all licensed providers including their tax identification numbers. 3. Try reaching out to other parents who used the same daycare. Someone might have kept better records or received different paperwork that includes the EIN. 4. If the daycare was part of a larger organization or franchise, try contacting the parent company - they would have the EIN information. Don't give up on claiming this credit - $14,000 is a substantial amount and you're entitled to significant tax savings. Worst case, you can file your return and attach a statement explaining the situation. The IRS may follow up for more documentation, but they generally work with taxpayers in good faith when businesses close unexpectedly.
0 coins