I've handled several similar situations, and the key is really documenting the level of services the owners actually provide. If they're truly passive (using a property management company, minimal involvement in tenant selection, repairs handled by others), you can make a strong case for minimal or no compensation. However, I'd be cautious about completely eliminating W-2s if they've been issuing them consistently. A middle ground approach might work better - reduce the compensation to reflect only the actual services performed (maybe equivalent to what you'd pay for bookkeeping, tax prep coordination, major decision-making) while treating the rest as distributions. The documentation is crucial here. Keep detailed records of what services the owners actually perform, time spent, and how decisions are made. This will support your position whether you go with minimal compensation or argue for none at all.

This is a nuanced situation that I've encountered multiple times in my practice. The consensus here is correct - the compensation requirement hinges on whether the owners are providing actual services versus passive investment. One practical approach I've used successfully is conducting a "services audit" with the client. Document everything: Who handles tenant screening? Lease negotiations? Maintenance coordination? Financial reporting? Even if they use a property management company, there are often oversight duties that constitute services. For clients transitioning away from W-2s after years of issuing them, I recommend a phased approach over 2-3 years while building strong documentation. Start by reducing compensation to reflect only actual services performed, then potentially eliminate it entirely if the documentation supports truly passive ownership. Also consider the state tax implications - some states may have different rules or be more aggressive in examining S corp compensation. The federal position is only part of the equation. The key is having a defensible position backed by solid documentation. Better to be conservative and pay some modest compensation than face an audit where you can't substantiate a zero-compensation position.

Am I the only one who thinks it's weird that we have to ask for EXTRA money to be taken out of our paychecks?? The whole system is so messed up. The IRS already knows how much we should be paying, why make it so complicated???

This is definitely frustrating, and you're right to be concerned. Your employer is legally required to follow the withholding instructions on your W-4, including any additional withholding amounts you've requested. Here's what I'd recommend: 1. **Gather your documentation** - Make sure you have a copy of the signed W-4 showing the $40 additional withholding request, and collect all your pay stubs showing the missing withholding. 2. **Contact payroll immediately** - This could be a simple processing error. Bring your W-4 copy and ask them to explain why the additional withholding isn't appearing on your pay stubs. 3. **Request immediate correction** - If it was an error, ask them to fix it for future paychecks AND to make a catch-up withholding for the missed amounts ($40 x number of paychecks missed). 4. **Get everything in writing** - Document all conversations with dates, names, and what was discussed. If your employer refuses to comply, you may want to contact your state's labor department, as this could be considered a payroll violation. The IRS doesn't directly handle employer compliance issues, but proper documentation will help if you face underpayment penalties at tax time. Don't panic about owing taxes yet - focus on getting this fixed for the remaining pay periods this year, and you might be able to make up most of the difference.

Is anyone using QuickBooks Online for their S-Corp bookkeeping? I'm trying to figure out if the extra cost for the plus version is worth it for the project tracking features.

I made this exact transition two years ago and can share what worked for me. Started with a CPA for the first year to get everything set up correctly - S-Corp election, payroll system, proper bookkeeping structure. Cost me about $2,500 but was worth every penny to avoid mistakes. Year two I took it over myself using TaxAct Business which handles S-Corp returns well. The key is having good bookkeeping throughout the year - I use QuickBooks to track everything properly so tax time isn't a nightmare. One thing I wish I'd known earlier: set aside money monthly for your quarterly payroll taxes and estimated payments. The cash flow is different from sole prop where you just pay once a year. Also, keep detailed records of any business expenses and mileage since the documentation requirements are stricter. At $75k revenue, you're right on the edge where S-Corp starts making sense. I'd run the numbers with a CPA first to make sure the tax savings actually exceed the additional costs (payroll processing, extra tax prep fees, state requirements, etc.).

Have you tried contacting a Taxpayer Advocate? They're supposed to help when normal channels aren't working! I'm worried about your quarterly issue causing cascading problems if it's not resolved quickly. Would your accountant be able to help navigate this? So frustrating that our tax system makes it this difficult to just talk to someone!

I feel your frustration! As someone who's dealt with similar IRS phone issues, I found success with a few strategies: First, try the automated callback feature when available - you can request a callback instead of waiting on hold. Second, consider faxing your inquiry to the Business & Specialty Tax Line at 855-641-6935 with your specific discrepancy details and contact info. Third, if this is truly time-sensitive for your estimated payments, you might qualify for Taxpayer Advocate Services (mentioned by others) - they have authority to expedite cases that could cause financial hardship. Also, check if your issue can be resolved through your online IRS account or by mailing Form 843 if it's about penalties/interest. Document everything for your records!

I'm confused about something. If the mom died in 2021 and the dad died in 2022, how were they filing a joint return? I thought you could only file jointly if both spouses were alive at the end of the tax year?

Just to clarify the timeline - the original post mentions mom died in June 2023 and dad died in April 2024. Dad filed a joint return for 2023, which is completely valid since mom was alive for part of that tax year. When one spouse dies during the tax year, the surviving spouse can still file a joint return for that year. The confusion might be coming from misreading the dates. Since dad filed the 2023 joint return after mom's death but before his own death in 2024, everything follows normal tax rules. The refund is now part of dad's estate since he was the last surviving taxpayer on that return. @f0a5c9e0aa63 - You should definitely review that trust document carefully. Even if it doesn't specifically mention tax refunds, it might have language about how "income" or "assets" from joint accounts or filings should be distributed between the families. This could impact whether your stepsister has any claim to the refund.