Has anyone successfully completed this through the online application portal? I tried but got stuck at the "Who owns the LLC?" question. There's no option for "trust" or "partnership" - just individuals and existing corporations. Do I seriously have to use the paper form and wait weeks for processing?

I've been dealing with this exact scenario for my practice and wanted to add some clarification on the responsible party requirements. The IRS actually issued updated guidance in 2016 (Rev. Proc. 2016-21) that addresses this specific situation. For disregarded entities owned by non-individuals, the responsible party must be an individual who has "significant control" over the owning entity. This means: - For a trust-owned LLC: Use a trustee (not a beneficiary) - For a partnership-owned LLC: Use a general partner or managing member - For a corporation-owned LLC: Use an officer, director, or controlling shareholder The key is that this individual must have authority to make decisions for the owning entity. You're not claiming to be the owner - you're identifying yourself as the controlling person of the actual owner. Also, make sure to include a brief explanatory statement with your paper application describing the ownership structure. Something like: "Single-member LLC owned by [Name of Trust/Partnership], disregarded entity for federal tax purposes." This helps prevent processing delays. The paper route is definitely your best bet here. The online system hasn't caught up with these complex structures yet.

I went through this exact same situation about 3 years ago when I started doing freelance web development alongside my regular job. The stress is real, but you're going to be okay! First, don't beat yourself up - this is incredibly common for new 1099 workers. The IRS knows this happens frequently, which is why they have systems in place to handle it. Here's what worked for me: I calculated what I should have paid for each missed quarter using Form 1040-ES and made all the payments at once. Yes, there were penalties, but they were much smaller than I feared - about $240 total on roughly $35k of 1099 income. The key is acting quickly now rather than waiting until tax season. With your monthly income of $2,800-3,200, you're looking at roughly $33k-38k annually from the 1099 work. Set aside about 30-35% of that for taxes (both income tax and self-employment tax). So you'd want to pay around $2,500-3,000 per quarter. One tip: consider increasing your W2 withholding instead of making quarterly payments going forward. I ended up doing this and it's so much easier - just fill out a new W4 and have extra withheld from each paycheck. The IRS doesn't care where the money comes from as long as you're paying enough throughout the year. You've got this! Take action now and you'll minimize any penalties.

I completely understand your panic - I was in the exact same situation when I started doing freelance graphic design work alongside my W2 job! The quarterly payment requirement really catches people off guard. Here's the reality: yes, you'll likely face some penalties for missing the quarterly payments, but they're usually much more manageable than people expect. The IRS penalty for underpayment is currently around 8% annually on the amount you should have paid, calculated from when each payment was due. With your 1099 income of $2,800-3,200 monthly, you're looking at roughly $34k-38k annually. You should generally set aside about 30-35% for taxes (this covers both income tax and the 15.3% self-employment tax for Social Security and Medicare). My advice: 1. Calculate what you owe for the missed quarters using Form 1040-ES 2. Make the payments ASAP to minimize additional penalty accrual 3. Consider increasing your W2 withholding going forward instead of quarterly payments - just fill out a new W4 with an extra amount per paycheck The good news is that if you've been setting money aside, you're already ahead of many people in this situation. Don't let the stress consume you - take action now and you'll get through this just fine. The IRS deals with this scenario constantly, especially with the growing gig economy.

Also remember that with 1099-NEC income you might need to make quarterly estimated tax payments next year to avoid penalties! I learned this the hard way last year when I got hit with an underpayment penalty.

This is such great advice in this thread! I'm actually dealing with a very similar situation - W-2 from my main job and just got my first 1099-NEC from some consulting work I did last year. One thing I wanted to add that I learned from my accountant friend is to keep really detailed records of ALL your business expenses throughout the year, not just at tax time. I started using a simple spreadsheet to track every business-related purchase, mileage, and even the percentage of my phone/internet that I use for work. Also, if your 1099-NEC income is going to be ongoing, definitely look into opening a separate business checking account. It makes tracking expenses so much easier and helps if you ever get audited. Some banks even offer free business accounts for sole proprietors. Thanks everyone for sharing your experiences with the different tools and services - definitely bookmarking this thread for next year!

One thing that tripped me up in a similar situation - make sure your S election is actually valid! If the original election wasn't filed properly or if you've had disqualifying events, you might actually be taxed as a partnership instead of an S-corp, which would change everything about how the K-1s work. You can verify your S election status by calling the IRS Business & Specialty Tax Line at 800-829-4933. They can confirm if your S election is still valid. In my case, we thought we were an S-corp for 2 years before discovering our accountant never actually filed the Form 2553!

This is a really comprehensive thread with great advice! One additional consideration - since you mentioned the other members are unresponsive about tax matters, you should document all your attempts to communicate with them about their K-1s and tax obligations. Keep records of emails, certified mail receipts, or any other communication attempts. The reason this matters is that if the IRS ever questions the S-corp's compliance, you'll be able to demonstrate that you made good faith efforts to notify all members of their responsibilities. This documentation could protect you personally and protect the S-corp's election status. Also, for future years, you might want to consider adding language to your operating agreement requiring members to acknowledge receipt of their K-1s and confirm they understand their individual filing obligations. This could help prevent similar situations going forward and give you clearer grounds to address non-participating members. The loss carryforward aspect is also worth mentioning - if your partners don't report their share of this year's losses, they can't use those losses to offset future income. So they're not just missing out on current tax benefits, but potentially future ones too.

Make sure you use the right dependent code on your tax return! Many tax software programs will ask if the dependent is your "qualifying child" or "qualifying relative" - your grandmother would be a qualifying relative. Using the wrong code could trigger unnecessary reviews.

Just to add some reassurance - I work in tax preparation and see this situation frequently. The IRS audit from last year has absolutely zero impact on your ability to claim your grandmother as a dependent for 2024. Each tax year is evaluated independently. Based on what you've described, your grandmother should qualify as your dependent under the qualifying relative rules. Her Social Security income of $14,500 is likely mostly non-taxable (especially if it's her only income), which means her gross income for dependency purposes is probably well under the $5,050 threshold for 2024. The key thing is documenting your support. Since you're paying $1,800-2,000 monthly for her expenses, that's $21,600-24,000 annually - far more than her $14,500 Social Security income. Keep receipts for housing, utilities, food, medical expenses, and anything else you pay for her. One tip: calculate the exact support test by adding up ALL sources of her support (what you pay + what she pays from her own income), then make sure your contribution exceeds 50% of that total. Given your numbers, you should easily pass this test.