Don't forget about self-employment taxes! That's a huge factor that might explain some of the disparity. On pass-through income from an LLC, you both pay self-employment tax (15.3% for Social Security and Medicare) on top of regular income tax. If you're both taking the exact same profits but have drastically different other income, the tax impact is going to be very different. Your partner's federal income tax rate on the business profits might be 32% or 35% while yours might be 12% or 22% - that alone could justify a big difference in tax withdrawals. But like others have said, this should all be documented and transparent. You should be able to see exactly how much of the business profit is causing what tax liability for each of you.

I think the key issue here is that you need complete transparency and documentation of how these tax distributions are calculated. While it's true that your partner may legitimately owe more taxes due to being in a higher bracket, the current setup sounds problematic from an accountability standpoint. Here's what I'd recommend: First, request detailed calculations showing exactly how much of each person's total tax liability is attributable to the LLC income versus other sources. Second, establish a formal policy for tax distributions in writing - many partnerships use a formula where distributions are made based on each member's estimated tax rate multiplied by their share of business income. Most importantly, consider changing your process so that tax distributions go to each partner individually, and then you each pay your own taxes. Having one person write checks directly from the business account to cover their personal tax obligations creates unnecessary confusion and potential for disputes. You should also verify that you're both getting the same K-1 amounts - if you're truly 50/50 partners, your Schedule K-1 forms should show identical income allocations. If they don't, that's a red flag that needs immediate attention. The fact that your friends and family think something's off suggests your instincts are right to question this arrangement, even if the underlying tax principles are legitimate.

Just a heads up that if you pay your amended return balance quickly, you can sometimes call and request an abatement of penalties (though not the interest). I amended my return last year after forgetting about a 1099-K, and when I called after paying the full amount, they removed about $120 in failure-to-pay penalties as a one-time courtesy since I had a good previous compliance history. Worth trying if this is your first time having an issue! The IRS can be more reasonable than people expect if you're proactive.

I went through something very similar last year and wanted to share a few additional tips that helped me get through it: First, make sure you're calculating the self-employment tax correctly - it's 15.3% on 92.35% of your net self-employment income (not the full amount). You can deduct the employer-equivalent portion when calculating your income tax, which helps reduce the overall burden slightly. Second, if you haven't already, look into whether you can claim any business expenses related to that side gig. Things like equipment, software, supplies, or even a portion of your home office if you worked from home. These can help reduce your net self-employment income and lower your overall tax bill. The payment plan process is actually pretty straightforward - I was able to set mine up online in about 10 minutes. Since you owe less than $50,000, you should qualify for the streamlined installment agreement. Just be aware that interest will continue to accrue on the unpaid balance, but it's usually much more manageable than trying to pay everything at once. One last thing - keep detailed records of everything related to this amended return. If you do any freelance work in the future, you'll want to make quarterly estimated payments to avoid this situation again. The IRS has worksheets to help you calculate these, and it's much less stressful than dealing with a big bill at tax time. You're handling this the right way by addressing it proactively. It's stressful now, but you'll get through it!

Make sure when you file the 1040-X that you're starting with the numbers from your ORIGINAL return! Biggest mistake I made was trying to create a new return with all my info plus the new 1099. You need to use exactly what you originally filed, then show the changes column by column on the 1040-X.

Just went through this exact same situation a few months ago! The rejection message you got is totally normal - the IRS system automatically blocks multiple returns for the same tax year because most people who try this are accidentally filing duplicates. Like others mentioned, you definitely need Form 1040-X to amend your original return with the freelance income. One thing I'd add is to make sure you have a copy of your original return before you start the amendment process. You'll need those exact numbers to fill out the "Original Amount" column on the 1040-X. Also, don't stress too much about the timing. Since you received the 1099 late, you're being proactive by filing the amendment. The IRS would have eventually caught the discrepancy anyway when they matched their records, so you're actually saving yourself potential penalties by addressing it now. Just be prepared for the longer processing time - mine took about 20 weeks to get processed and the refund adjustment.

Same here! My as of date has been stuck for weeks while I see others moving forward. It's so frustrating not knowing what's happening. I've been checking my transcript daily but nothing changes. Really hope we get some movement soon 🤞

I'm in the exact same situation! My as of date hasn't budged while others in my weekly cycle got the 2/24 update. From what I've researched, it usually means one of a few things: either there's a minor hold/review on your return, you're in a different processing batch, or sometimes the system just processes accounts at different speeds even within the same cycle. The frustrating part is not knowing which one it is! I've been trying to stay patient but it's tough when you see others moving forward. Hopefully we'll see some movement in the next update cycle 🤞

Quick question - how long do amended returns typically take to process? I'm in a similar boat (forgot a W2) and worried about timeline.

Pro tip: Make sure you keep detailed records of WHEN you discovered the error and when you took steps to correct it. The IRS is more lenient with honest mistakes that you voluntarily correct promptly. Document everything.