Has your wife tried talking to her employer directly about this before filing the SS-8? Some companies genuinely don't understand the classification rules and might fix it voluntarily if approached. I was misclassified a few years ago, and when I explained the issue to my boss with some printouts from the IRS website, they actually reclassified me and issued a W-2 instead. Saved a lot of hassle with forms and waiting for IRS determinations.

You're absolutely right to file the SS-8 and 8919 forms - this is exactly the situation they're designed for. Based on what you've described about your wife's work arrangement, she clearly meets the common law test for employee status. A few key points to keep in mind: 1. You'll report the 1099-NEC income on your return, but the Form 8919 will calculate the correct employee share of Social Security and Medicare taxes (7.65% instead of the full 15.3% self-employment tax). 2. For the reason code on Form 8919, use code G since you're filing the SS-8 first and waiting for determination. 3. Make sure to keep copies of everything and consider certified mail for the SS-8 filing to have proof of submission. 4. The SS-8 process typically takes 3-6 months, but filing the 8919 with your current return protects you from overpaying taxes while you wait. The fact that she has an employee handbook to follow while being classified as a contractor is particularly strong evidence in your favor. Good luck with the process!

Has anyone considered suggesting they convert to a partnership or LLC? Might be worth exploring if holding in an S corp is causing more headaches than benefits. Especially with the TCJA 199A deduction considerations.

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.

Has anyone calculated how much extra you might be paying in taxes because of this? Like if you're getting taxed on an extra $50 per shift that you're not actually getting, that adds up to thousands over a year!

This is a really common issue in the restaurant industry, and you're absolutely correct to be concerned. The IRS requires that tip income reported on your W-2 matches what you actually received, not what the POS system initially allocated. Your employer needs to implement a proper tip pooling adjustment in their payroll system. Many modern POS systems have tip pooling features that can handle this automatically, but if yours doesn't, they need to manually adjust the allocations before processing payroll. Here's what I'd recommend: Document everything for at least 2-3 weeks (your readings vs actual take-home), then present this to management with a clear explanation of the tax implications. If they don't understand or refuse to fix it, you can contact your state's Department of Labor or file Form SS-8 with the IRS to get an official determination on proper tip reporting procedures. Also keep in mind that if this has been going on for 8 months, you may be able to file amended tax returns to recover any overpaid taxes from previous years. The IRS allows amendments up to 3 years after the original filing date.

I'm seeing alot of zeros on mine too. Called IRS and was on hold for 2hrs just to get hung up on 🤡

Same thing happened to me last year! All zeros across the board even though I had W2 income. Turns out the IRS was just behind on processing - took about 3-4 weeks for my transcript to update with the actual numbers. Since you mentioned self-employment income, make sure all your 1099s were filed correctly by your clients. Sometimes if there's a mismatch between what you reported and what was filed, it can cause processing delays. Don't panic yet, but definitely keep an eye on it and maybe call if it doesn't update in the next couple weeks.

I just went through this exact nightmare scenario in my 2024 taxes. Had Medicaid and Marketplace overlap for 5 months without realizing it was a problem. Here's what happened: 1) I used TurboTax and when I entered my 1095-A form, it automatically calculated that I had to repay some premium tax credits 2) Because my income was about 250% of the federal poverty level, I hit the repayment cap of $850 rather than paying back the full $2,100 in tax credits I received during the overlap 3) No one accused me of fraud, no criminal charges, just had to pay back the $850 with my tax return 4) The IRS did NOT care that it was an honest mistake - the system just sees it as a tax credit you have to repay One thing to think about: don't remove your current tax credits if you no longer have Medicaid. That would just be giving away money you're now eligible for. Just be prepared to handle the repayment for those past overlap months when you file your taxes next year. This whole system is ridiculously confusing and you're not the only one who's gotten caught in this trap!

I completely understand your panic - I was in a very similar situation last year and felt the same way! The good news is that this is definitely not a criminal issue, and you won't face jail time. What you're dealing with is called "excess advance premium tax credits" and it happens more often than you'd think. The IRS treats this as a reconciliation issue during tax filing, not fraud. When you file your 2025 taxes, you'll need to complete Form 8962 (Premium Tax Credit) which will calculate how much you need to repay for those overlap months. The key thing that helped me was understanding that there are repayment caps based on your income level. If your household income is under 400% of the Federal Poverty Level, you won't have to repay the full amount - there are maximum limits that protect you from huge repayment amounts. My advice: Don't remove your current tax credits since you no longer have Medicaid and are now eligible for them. Keep accurate records of which months you had both coverages, and consider working with a tax professional who understands ACA premium tax credit issues when you file next year. This will all work out - it's just paperwork and a manageable repayment amount, not the disaster it feels like right now!