Has anyone actually USED FreeTaxUSA's Audit Assist service during a real audit? All I'm seeing is theoretical discussion about what it offers, but I'd love to hear from someone with firsthand experience.

I actually went through a full IRS audit last year using FreeTaxUSA's Audit Assist, so I can give you real firsthand experience. I was audited for my 2022 return which included some business expenses that apparently raised red flags. The Audit Assist team was genuinely helpful throughout the process. They walked me through the initial audit letter line by line, helped me create a timeline for gathering documents, and even provided templates for organizing my receipts and records. When I had questions about what the IRS was asking for, they responded to emails usually within 24 hours. The limitation is exactly what others mentioned - they don't represent you directly. So when it came time for the actual meeting with the IRS agent, I was on my own. But they did help me prepare thoroughly, reviewed all my documentation beforehand, and gave me talking points for the meeting. In the end, the audit went smoothly and I only owed about $200 in additional taxes. Whether that was due to their preparation help or just luck, I can't say for sure, but I felt much more confident going into it than I would have on my own. For the price point, I think it's decent value, though if you're dealing with something really complex you might want to spring for actual representation.

Pro tip: check your transcripts early morning EST time, thats when they usually update. Source: been doin this for years

Don't panic! This is totally normal for returns filed at the end of January. The "Return Not Present" message doesn't mean your return was lost or rejected - it just means the IRS hasn't processed it into their system yet. During peak filing season (Jan-April), the IRS can take 3-4 weeks or even longer to process returns, especially with the volume they're dealing with right now. Your return is likely sitting in their processing queue. If you filed electronically, you should have received a confirmation email with an acknowledgment that it was successfully transmitted. That's your proof it made it to them. If you're really concerned, you can use the "Where's My Refund" tool on IRS.gov - it updates more frequently than transcripts and will show if there are any issues with your return. I'd give it another week before calling the IRS directly. Their phone lines are swamped right now and you'll probably just get told the same thing - to wait for processing to complete.

Has anyone used the online payment options for paying late taxes? I'm wondering if it's better to use IRS Direct Pay or pay with a credit card (even with the processing fee) to avoid further penalties?

One thing that might help you avoid this situation in the future - the IRS actually allows you to set up automatic payments when you file your return, even if you can't pay the full amount right away. You can schedule the payment for up to 180 days after the filing deadline, which gives you time to get the money together without incurring the failure-to-pay penalties. For your current situation, definitely make the payment ASAP since penalties and interest compound daily. The calculations others provided look accurate, but I'd also recommend calling the IRS (or using one of those callback services mentioned) to see if you qualify for any penalty relief programs. Sometimes they'll waive penalties for first-time offenders or if you have a reasonable cause for the late payment. Also worth noting - if you're going to be in a similar cash flow crunch next year, you can adjust your withholdings or make quarterly estimated payments to avoid owing a large amount at tax time.

Important heads up - if you're renting rooms in your house, check if you need a local permit or business license! I got hit with a $500 fine from my city because a neighbor complained and I didn't have the proper rental permit. Each city has different rules. Some places classify renting rooms differently than a full house rental. And some HOAs prohibit it entirely, so check your CC&Rs too.

Great thread everyone! As someone who's been doing the room rental thing for about 3 years now, I wanted to add a few practical tips that might help: 1. **Separate bank account**: Open a dedicated checking account just for rental income and expenses. Makes tracking SO much easier at tax time and shows clear separation between personal and rental finances if you ever get audited. 2. **Document everything**: Take photos of the rooms in their rented condition, keep copies of rental agreements (even informal ones with friends), and track when roommates move in/out. This helps establish your rental percentage if questioned. 3. **Quarterly estimated taxes**: Don't forget you might need to pay estimated taxes on your rental income throughout the year, especially if you're making decent money from the rooms. I learned this the hard way my first year and owed a penalty. 4. **Insurance considerations**: Check with your homeowner's insurance about renting rooms. Some policies require notification or additional coverage. Mine was fine but they wanted to know about it. The tax stuff gets easier once you establish a good system. Good luck with your rental venture!

Your accountant has been dropping the ball if they haven't been tracking your stock basis!!! That's literally S-Corp 101. Here's my understanding: Your basis starts with your initial investment. Each year, it increases by your share of income (K-1 line 1-10) and decreases by distributions (K-1 line 16). If distributions exceed basis, that excess is capital gains. The REAL issue is that S-Corp distributions must be proportionate to ownership. Taking disproportionate distributions can risk your S election or be reclassified as compensation (subject to employment taxes). Sometimes the easiest solution is just to adjust ownership percentages to match the economic reality of how profits are being distributed. If you consistently take 10% of profits, maybe you should own 10%, not 1%. Talk to a tax attorney (not just an accountant) about this. There are legitimate ways to handle this situation but they need proper documentation.

This is exactly the kind of S-Corp situation that trips up so many small business owners! You're definitely not alone in this confusion. The key thing to understand is that you can't just treat distributions as "expenses" to reduce profits before K-1 calculations. S-Corp profits flow through to shareholders based on ownership percentage regardless of actual cash distributions taken. Here's what I'd recommend as next steps: 1. **Reconstruct your stock basis ASAP** - Start with your original investment, add your cumulative share of S-Corp income from all K-1s since 2008, subtract all distributions you've taken. This determines whether excess distributions are taxable as capital gains. 2. **Consider increasing your salary** - This IS a legitimate business expense that reduces corporate profits. Just make sure it's "reasonable" for services performed or the IRS might reclassify future distributions as wages. 3. **Document any excess as shareholder loans** - If you're taking more than your proportionate share, properly document the excess as loans from the corporation to you, with reasonable repayment terms. This avoids the disproportionate distribution issues. 4. **Evaluate ownership restructuring** - If you consistently need more than 1% of cash flow, maybe your ownership percentage should reflect the economic reality. The management company structure another commenter mentioned is interesting but complex. I'd definitely run that by a tax attorney before implementing. Your accountant should have been tracking basis all along - this is basic S-Corp compliance. You might want to get a second opinion from someone who specializes in S-Corp taxation.