5 Did your brother get a mortgage to buy you out or did he pay cash? Just wondering because when I went through this with my family, my sister needed a mortgage and the bank required a formal appraisal, which then really helped with documenting the stepped-up basis for tax purposes.

I'm dealing with a very similar situation right now - inherited my mom's house with my siblings and had to figure out the tax implications when we sold it. The stepped-up basis rule that others mentioned is absolutely correct and will likely save you from owing much (if any) tax on this. One thing I'd add is to keep really good records of everything - the informal appraisal, any expenses related to the sale or transfer, and documentation of when your father passed away. Even if your brother's real estate agent friend just gave a verbal estimate, try to get that in writing if possible. Also, don't forget that you might be able to deduct certain expenses from the sale that could reduce any potential gain even further - things like legal fees, transfer taxes, or other costs associated with the property transfer between siblings. These can add up and further reduce your tax liability. The IRS is generally pretty reasonable about inherited property situations as long as you can show you made a good faith effort to determine fair market value at the time of death.

Make sure you get things in writing from that sleazy preparer if possible! I went through something similar and the texts where my preparer admitted to "being creative" with my deductions were crucial evidence that I wasn't trying to commit fraud. Also, don't forget to check your state tax situation! If your federal returns were messed with, chances are your state returns have issues too. My federal audit triggered a state audit automatically, and I wasn't prepared for that.

I'm so sorry you're going through this - it's incredibly frustrating when someone you trusted puts you in this position. The good news is that you're taking all the right steps, and the IRS does understand the difference between taxpayers who were deceived versus those who intentionally committed fraud. A few additional thoughts based on what others have shared: 1. Document everything with timestamps - not just emails, but also phone calls (write down dates, times, what was discussed). This creates a clear timeline showing your good faith efforts. 2. Consider requesting a copy of your preparer's PTIN (Preparer Tax Identification Number) history from the IRS to see if there were any prior complaints against him. This could strengthen your case that you weren't aware of his practices. 3. When you meet with the auditor, bring a written statement outlining exactly what happened, including how you discovered the fraud and what steps you've taken to correct it. Being organized and proactive will work in your favor. The fact that you refused his suggestion to lie to the IRS and that you're voluntarily correcting the other years shows clear intent to comply. Criminal prosecution is extremely rare for cases like yours where taxpayers were victims of preparer fraud and are cooperating fully. You're doing everything right - stay the course and keep documenting everything!

I've been following this thread closely since I'm in a similar situation with about $145k in 1099 income this year. The consensus seems clear that retroactive S Corp election isn't possible, but I wanted to add a few practical considerations I've discovered while researching this. First, if you do decide to form the LLC in December, make sure you understand your state's publication requirements. Some states like New York require you to publish a notice in local newspapers, which can cost $1,000+ and take several weeks. This could delay your ability to get everything set up cleanly. Second, I've been talking to several CPAs about the "reasonable salary" issue that keeps coming up. The general rule of thumb I'm hearing is 60-70% of your net profit should be salary, with the rest as distributions. But this varies significantly based on your industry and role. For consulting/contracting work like ours, they're suggesting looking at comparable W-2 salaries for similar roles in your area. Third, don't forget about state-level considerations. Some states don't recognize S Corp elections or have additional franchise taxes that can eat into your federal savings. Has anyone here dealt with multi-state issues? I have clients in 3 different states and I'm worried about creating nexus issues with an LLC that I don't have as a sole proprietor.

I'm dealing with a very similar situation and want to thank everyone for the detailed responses here. I'm at about $128k in 1099 income this year and was also hoping I could somehow make an S Corp election work retroactively. One additional consideration I haven't seen mentioned - if you're planning to make this transition, start thinking about your 2026 estimated tax payments now. When you switch from sole proprietor to S Corp, your quarterly payment calculations become more complex since you'll have both payroll taxes and potential distributions to account for. I spoke with my accountant yesterday and she mentioned that many people underestimate their Q1 2026 payments because they forget that the "reasonable salary" portion will have payroll taxes withheld throughout the year, but any distributions taken early in the year won't have taxes withheld. This can create a cash crunch at tax time if you're not careful. Also, for those asking about the actual savings - I ran the numbers with my CPA and at my income level, we're looking at roughly $6,800 in annual self-employment tax savings after accounting for payroll processing costs and additional filing fees. That's definitely worth the extra administrative burden for me. The liability protection alone makes forming the LLC worthwhile even without the immediate tax benefits. Better to get everything set up properly now rather than rushing through it in January when everyone else is trying to do the same thing.

I'm actually dealing with a similar situation right now! Just wanted to add that if you do decide to go ahead with the second job, make sure to keep really good records of all your expenses related to it - things like gas for commuting, work clothes if the retail job requires specific uniforms, etc. These can sometimes be deductible and help offset some of the additional tax burden. Also, since you mentioned credit card debt from your wedding, you might want to look into whether any of the interest is deductible (probably not for personal credit cards, but worth checking). The extra income from the second job could also help you qualify for better debt consolidation rates if that's something you're considering. One last thing - retail jobs during tax season (which you'd be starting soon) can sometimes lead to opportunities to learn about tax prep services, which could be another potential income stream down the road if you find you're good with numbers. Just a thought! Good luck with whatever you decide.

One thing I haven't seen mentioned yet is the timing aspect of starting your second job. Since we're already into 2025, you'll want to be extra careful about your withholding calculations because you'll have fewer pay periods to spread the additional tax burden across. I'd strongly recommend using the IRS Tax Withholding Estimator (irs.gov/W4App) rather than just the paper worksheet, since it can account for the partial year of second job income. When you input your information, make sure to include what you've already earned and had withheld so far this year from your main job. Also, consider this: at $58k + potential $12k from the retail job, you're looking at about $70k total income. That keeps you comfortably in the 22% bracket for 2025 (which doesn't kick in until around $47k for single filers). The real benefit is that extra $1000/month could knock out your credit card debt much faster, saving you tons in interest charges that far outweigh any additional tax burden. One practical tip: ask your retail employer about their payroll schedule. If they pay weekly while your main job pays bi-weekly, it might actually help smooth out your cash flow for debt payments!

Anyone else notice TurboTax keeps pushing their "live expert" add-on now? I tried it last year and it was... meh. The "expert" seemed to just be reading from the same help screens I could access myself.

I made the jump from TurboTax to a CPA when my income hit around $160k, and honestly wish I'd done it sooner. The biggest eye-opener wasn't just finding more deductions, but learning about tax strategies I never even knew existed. My CPA showed me how to optimize my 401k contributions, set up a backdoor Roth IRA (which TurboTax never suggested), and restructure some investments to be more tax-efficient. The first year alone, these strategies saved me more than double what I paid in CPA fees. At your income level, you're probably hitting some phase-out thresholds for certain deductions and credits that TurboTax might not explain clearly. A good tax pro can walk you through these and help you plan ahead for next year too. Even if you decide to go back to software later, having a professional review your situation once during this big income change could be really valuable.