Does anyone have experience with state taxes when it comes to S-Corps vs LLCs? My accountant mentioned something about some states imposing franchise taxes or fees on S-Corps that don't apply to LLCs reporting on Schedule C.

The key factor everyone seems to be missing is timing and cash flow management. Yes, S-Corps can provide SE tax savings, but there's a hidden cost that hits many small businesses hard: you MUST run payroll every pay period, which means regular cash outflows for payroll taxes, even during slow months. With Schedule C, you pay estimated taxes quarterly based on your actual earnings. If you have a bad quarter, you can adjust. With S-Corp payroll, you're committed to that salary regardless of business performance. I've seen too many seasonal businesses struggle with this requirement. Also, the "reasonable salary" standard isn't just about avoiding audits - it affects your Social Security benefits calculation. If you artificially suppress your salary to minimize payroll taxes, you might be shortchanging your future retirement benefits. For younger entrepreneurs, this could mean giving up decades of higher Social Security payments to save a few thousand in current taxes. The math works great on paper, but real-world cash flow and long-term planning often tell a different story.

Another thing to consider is that even if you don't owe taxes, there might be credits you're eligible for that you can only get by filing. Like the Earned Income Tax Credit or education credits if you were in school. These can be worth thousands of dollars, but you have to file to claim them, even if you didn't have any tax withheld. Some tax credits are even refundable, meaning they can give you money back even if you didn't pay any taxes in. Don't leave that money on the table!

I forgot to file an extension last year and was freaking out, but since I was owed a refund it really wasn't a problem! The only thing that bit me was that I waited too long (like 4 years) to file one of my returns and lost out on like $800 refund. Dont be me lol.

21 One other thing to consider - doing delivery work might affect your financial aid package if you're getting any for university. The extra income could potentially reduce your aid eligibility for the next academic year. Might want to check with your school's financial aid office about how that works before diving in.

Great question about financial aid! For FAFSA purposes, there's actually a student income protection allowance of around $7,040 for the 2024-2025 academic year. This means you can earn up to that amount without it affecting your Expected Family Contribution (EFC) at all. However, once you go over that threshold, about 50% of your additional income will be counted toward your EFC, which could reduce your aid eligibility. The exact impact depends on your total family income and circumstances. The good news is that business expenses (like mileage deductions for delivery driving) reduce your Adjusted Gross Income, so they help keep you under the threshold. If you're planning to do delivery work just during breaks, you might be able to stay within the protected amount anyway. Definitely worth having a conversation with your financial aid office before you start - they can run some scenarios to show you exactly how different income levels might affect your aid package.

I went through this exact situation with a small construction company last year. Your instincts are absolutely right - you're being misclassified as an independent contractor when you're clearly an employee. The IRS has a 20-factor test they use to determine worker status, and based on what you've described (set schedule, using their equipment, following their instructions, no other clients), you definitely qualify as an employee. Here's what I learned from my experience: Document everything now. Keep records of your work schedule, any written instructions from your boss, photos of you using company equipment, and any communications about your work arrangement. This documentation will be crucial if you need to file Form SS-8 or Form 8919 later. The financial impact is significant - as a misclassified contractor, you'll pay about 15.3% in self-employment taxes instead of the 7.65% you'd pay as an employee (since your employer would cover their half). On a $40,000 salary, that's over $3,000 extra you'd be paying. I'd suggest having one more conversation with your employer, but this time come prepared with specific IRS guidelines printed out. Sometimes showing them the potential penalties they face (which can be substantial) helps them understand this isn't just about paperwork convenience. If they still refuse, you have options through the IRS, but be prepared that this might affect your relationship with the employer. Whatever you do, don't just accept it and hope for the best. This kind of misclassification is exactly what the IRS cracks down on, and you shouldn't have to bear the financial burden of your employer's mistake.

This is a really tough situation, but you're absolutely right to be concerned about the misclassification. Based on your description - fixed schedule, using company equipment, following their specific instructions, and having no other clients - you're clearly an employee under IRS guidelines. One thing I haven't seen mentioned yet is that you might also be missing out on other employee protections beyond just the tax issue. As a misclassified "contractor," you're likely not covered by workers' compensation if you get injured on the job, you're not eligible for unemployment benefits if you're let go, and you're not protected by labor laws regarding overtime pay. I'd recommend calling your state's Department of Labor as well as dealing with the IRS issue. Many states have their own worker classification laws that are even stricter than federal guidelines, and they often have resources to help workers in your situation. Some states will actually investigate employers who habitually misclassify workers and can impose additional penalties. If you're worried about retaliation, keep in mind that it's illegal for employers to retaliate against workers who assert their rights regarding proper classification. Document any negative treatment that happens after you raise this issue - it could be important evidence if you need to file a complaint later. The bottom line is that this isn't just about paperwork convenience for your employer - they're essentially making you subsidize their business by shifting their tax obligations onto you. Don't let them get away with it.

This is such a frustrating situation, and unfortunately you're not alone in dealing with UBTI surprises from bankrupt MLPs. The key issue here is that bankruptcy debt forgiveness often gets misclassified by custodians. A few immediate steps I'd recommend: 1. **Request the complete bankruptcy settlement documents** from Fidelity - specifically look for how debt cancellation income was allocated between return of capital vs. taxable income. Many bankruptcy settlements classify a significant portion as return of capital, which shouldn't generate UBTI. 2. **Challenge the disproportionate allocation** between your accounts. With only 22% more shares in the Roth but 12x the tax liability, something is clearly wrong. The UBTI should be allocated proportionally to your ownership. 3. **File Form 5329 immediately** to request penalty relief due to reasonable cause (the custodian's late filing). This alone could save you significant money. 4. **Get professional help** - given the $20K+ potential liability, spending $500-1000 on a tax pro who specializes in UBTI/partnership taxation could save you thousands. The fact that multiple people in this thread have successfully contested similar situations with their custodians is encouraging. Don't just accept these numbers - the calculations are often wrong, especially for complex bankruptcy situations. Time is critical though - you typically have 60-90 days to contest these assessments, so act quickly.

This is exactly why I always warn people about holding MLPs in retirement accounts - the UBTI complications can be nightmarish, especially during bankruptcy situations. What you're experiencing is unfortunately common: when MLPs restructure debt during bankruptcy, the forgiven debt often gets treated as taxable income to partners, even when you've lost your entire investment. It's one of the most unfair aspects of tax law. The massive difference between your IRA and Roth tax liability is a red flag though. UBTI calculations should generally be proportional to ownership, so having 12x the tax on only 22% more shares suggests a calculation error. Here's what I'd do immediately: 1. **Don't pay anything yet** - you likely have 60-90 days to contest these calculations 2. **Request the bankruptcy Plan of Reorganization** from Fidelity - this document will show exactly how debt forgiveness was supposed to be allocated (often much of it is return of capital, not income) 3. **Get the detailed UBTI calculation worksheets** - custodians often use generic templates that don't account for specific bankruptcy terms 4. **File Form 5329 for penalty relief** - the custodian's late filing gives you strong grounds for "reasonable cause" I've seen many cases where initial UBTI calculations from bankruptcies were wrong by tens of thousands of dollars. The custodians just don't have the expertise to properly interpret complex bankruptcy settlements. Given the amounts involved, this is definitely worth hiring a tax professional who specializes in partnership taxation. A $1,000 consultation could easily save you $15,000+ in taxes and penalties. Don't let Fidelity brush you off - escalate to their UBTI specialists if needed. You have rights here, and these calculations are often wrong.