Dont panic! I went thru this last yr. Just be organized, respond on time, and stay on top of any followup letters. And def get a tax pro if its complicated.

I've been through a similar situation! Your 2024 refund shouldn't be automatically held up just because you have an open 2022 audit - they're separate tax years. However, the IRS might take a closer look at your 2024 return if there are patterns they're investigating from 2022. My advice: Don't delay filing your 2024 taxes. File on time and separately handle the 2022 audit. The key is responding to that March 26th deadline with complete documentation. I'd also suggest calling the IRS practitioner priority line if you have a tax pro helping you, or the regular taxpayer line to confirm they received your response once you send it. One thing that helped me was creating a timeline of all correspondence and keeping detailed records of what I sent and when. The online account tracking is helpful but sometimes lags behind actual processing.

Just want to add something nobody's mentioned yet - if your LLC has high profit margins, you might actually benefit from changing your tax election from S-Corp to Schedule C sole proprietor. As a sole prop, you can contribute up to 20% of your net self-employment income as employer contributions, which could potentially be higher than the S-Corp 25% of W-2 wages if you're keeping your salary low to save on employment taxes.

As someone who just went through this exact calculation for my own single-member LLC S-Corp, I can confirm what others have said - the 25% employer contribution is based on your W-2 wages ($13,500 in your case), giving you a maximum of $3,375 for the profit sharing portion. One thing I learned the hard way though is timing. Make sure you get your employer contributions in by the tax filing deadline (including extensions) for the tax year. Employee contributions have to be made by December 31st, but employer profit sharing contributions can be made up until you file your return. Also, since you mentioned you have about $35k in net profit ($42k revenue minus $7k expenses), you might want to consider increasing your W-2 salary. The IRS expects "reasonable compensation" and $13.5k seems pretty low relative to your business income. Increasing your salary would also allow for higher retirement contributions, though you'd pay more in employment taxes. It's worth running the numbers both ways.

Has anyone mentioned the mortgage fraud aspect? I'm a mortgage underwriter, and we absolutely pull tax transcripts directly from the IRS for self-employed borrowers. We also request business bank statements and analyze deposits. If your friend applies for a mortgage showing business income that doesn't match their tax returns, or if their loan statements show debt obligations that don't align with their credit report, it will 100% trigger a fraud alert in our system. Then we're required to file a SAR (Suspicious Activity Report) with FinCEN, which shares information with other federal agencies including the SBA. This happens even if we deny the loan. So even if they somehow avoided detection until now, the mortgage application process could be what finally exposes everything.

This situation is beyond alarming. As someone who's dealt with IRS compliance issues for years, I need to emphasize that your friend has created a perfect storm of federal violations that will almost certainly be discovered. The IRS and SBA have been sharing data extensively since 2020. When your friend files their actual 2022 return showing no estimated payments, it will automatically be cross-referenced against their SBA loan applications. The IRS has sophisticated algorithms that flag these exact discrepancies. What makes this worse is the timing - they're planning major financial moves (marriage, home purchase) right when scrutiny is highest. Mortgage lenders now use automated systems that compare tax transcripts, bank statements, and existing loan obligations. Any inconsistencies trigger immediate fraud alerts. The "small business won't get audited" assumption is dead wrong. The SBA Inspector General has dramatically increased fraud investigations, especially for loans taken during economic downturns. They're specifically targeting cases with falsified tax documents. Your friend needs to understand: this isn't going away. The federal government has invested billions in fraud detection systems specifically designed to catch this type of scheme. Making payments on time doesn't eliminate the crime - it just delays discovery. They need a federal criminal defense attorney immediately. Not next week, not after they tell their spouse - now. Every day they wait makes their position worse and limits their options for potential cooperation agreements. This is career-ending, marriage-ending, and potentially freedom-ending serious.

Has anyone tried filing through mobile web browsers instead of apps? My phone doesn't have much storage left for another app but I still need to file from it.

I actually filed my taxes completely from my phone this year and it was way easier than I expected! I used TurboTax Mobile and the whole process took about 2 hours spread over a couple evenings. The photo capture feature for uploading documents worked really well - just snap pics of your W-2 and 1099 and it pulls all the info automatically. Way better than typing everything manually on a small screen. The app walks you through each section step by step, so you don't miss anything important. Since you mentioned being worried about security, I'd definitely stick with the major established providers like TurboTax, H&R Block, or FreeTaxUSA. They all have strong security measures and are authorized IRS e-file providers. Just make sure to download directly from the official app store and look for the verified developer badges. One tip: have your documents organized before you start since switching between apps to find info can be annoying on mobile. Good luck with your filing!

One thing nobody's mentioned yet is the small contractor exception that exists in some states. If your annual revenue is under certain thresholds (varies by state, usually $100k-500k), you might qualify for simplified reporting or even exemptions. I'd also recommend joining your local builders association if you haven't already. Ours provides members with updated tax guidance documents specific to our state, and they even host quarterly seminars with tax professionals to cover changes. Way cheaper than paying for individual consulting.

As someone who's been dealing with multi-state construction tax compliance for over a decade, I completely understand your frustration! The complexity is real, and it only gets worse as you grow. One critical point I'd add to the excellent advice already given: don't forget about use tax obligations. This is where many contractors get tripped up during audits. When you purchase materials tax-free with an exemption certificate but then use them in taxable work, you often owe use tax to the state where the work is performed. Also, keep detailed records of your contracts and change orders. Tax authorities love to scrutinize whether work should be classified as repair/maintenance versus capital improvements, and having clear documentation of the scope can save you thousands in disputed assessments. For immediate relief while you're figuring out long-term solutions, consider getting registered for voluntary disclosure programs in your operating states. This can help you get compliant without penalties for past periods where you may have missed requirements. Most states offer these programs, and they're much better than waiting for an audit to find issues. The learning curve is steep, but once you get systems in place, it becomes much more manageable. Don't try to handle everything manually at your current scale - you'll burn out and make costly mistakes.