I'm currently going through this EXACT situation with my husband's employer in Cincinnati. His boss "forgot" to withhold federal taxes for SIX MONTHS!!! We're looking at owing like $7k we don't have. 😭 We consulted with a tax attorney who said we should: 1. Send a certified letter to the employer formally requesting they start withholding correctly 2. If they don't fix it in 2 pay periods, file Form 3949-A with the IRS to report them 3. Start making estimated tax payments NOW to reduce penalties later Has anyone actually gone through with filing Form 3949-A? Did the IRS actually do anything?

I'm really sorry you're dealing with this stressful situation! Based on what others have shared here, it sounds like you have several solid options to protect yourself. First, your employer is 100% legally required to withhold federal income tax and FICA taxes from W-2 employees - there's no debate about that. The fact that they're brushing this off as "your responsibility" shows they either don't understand basic payroll law or are trying to avoid accountability. Here's what I'd recommend doing immediately: 1. **Document everything** - Save all paystubs, your original W-4, and any communications with your employer about this issue 2. **Calculate what you'll owe** - Use the IRS withholding calculator to estimate your tax liability and start setting money aside if possible 3. **Put your employer on notice** - Send an email (so you have it in writing) explaining the issue and requesting they fix it immediately Don't quit your job over this! You have rights, and there are protections against retaliation for reporting tax violations. If they don't fix it within a couple pay periods, definitely consider filing Form 3949-A with the IRS as others have mentioned. The good news is that while you'll still owe the taxes, you won't face criminal penalties since this was your employer's error, not intentional tax evasion on your part. The IRS has payment plans available if you can't pay everything at once. Stay strong - you've got this! 💪

Has your new CPA filed the missing returns yet? This is super important! Even while you're fighting the penalties, you need to get those past returns filed ASAP to stop additional penalties from accruing. Each month adds more to what you owe. Also, check if you were actually due a refund for either of those years. If you were, you might be facing a smaller penalty than you think once everything is properly calculated. But there's a 3-year deadline for claiming refunds, so don't delay!

I went through almost the exact same situation two years ago with a negligent tax preparer who failed to file my 2019 and 2020 returns. The IRS hit me with over $7,000 in penalties and I was absolutely panicked. Here's what worked for me: I immediately had my new CPA file the missing returns (this stops additional penalties from accumulating). Then we prepared a detailed penalty abatement request using Form 843, including every email, text, and payment record showing I had repeatedly tried to get the original preparer to file on time. The key is documenting your "reasonable cause" - you need to show you made good faith efforts to comply but were prevented by circumstances beyond your control. Your email trail asking for the filings will be crucial evidence. I also filed a complaint with my state's board of accountancy and sent a demand letter to the CPA's professional liability insurance. While the board complaint is still pending, his insurance company actually settled and covered most of the penalties to avoid a lawsuit. Don't give up! The IRS does approve these requests when you have solid documentation. It took about 6 weeks, but they abated about 80% of my penalties. The whole experience was a nightmare, but there definitely are ways to fight this.

Don't forget about qualified business income deduction (Section 199A)! As a construction company owner you might qualify for up to 20% deduction of your business income. That alone could save you $200k on taxes. But there are income limitations and it gets complicated depending on if you're considered a "specified service business" or not.

Wow, congratulations on hitting $1M in profit! That's incredible growth for a construction business. I can totally understand feeling overwhelmed by the tax implications though. A few quick thoughts to add to the great advice already given: 1. **Equipment purchases** - Since you're in construction, definitely look into buying equipment before year-end. Things like trucks, excavators, tools, etc. can often be fully deducted in the year of purchase. 2. **Business structure** - The S-corp suggestion is solid. With your income level, the self-employment tax savings alone could be huge. You'd essentially be saving 15.3% on a large portion of your income. 3. **Retirement contributions** - Max out whatever retirement accounts you can. With $1M profit, you could potentially contribute $61K+ to a SEP-IRA or Solo 401(k), which directly reduces your taxable income. 4. **Professional help** - At this income level, investing in a good CPA who specializes in construction businesses is worth every penny. They'll know industry-specific deductions and can help with proper tax planning for next year too. The key is acting quickly since we're getting close to year-end. Don't let analysis paralysis cost you - even basic moves like maxing retirement contributions and strategic equipment purchases can save you tens of thousands.

One thing I've learned after getting several IRS letters over the years - ALWAYS respond by the deadline even if it's just to say you're working on it or need more time! That's been my #1 rule and it's kept me from having small issues turn into bigger ones.

Now that you've mentioned it's a CP75 notice, I can definitely understand why your tax preparer wasn't overly concerned - these are routine audits for the Earned Income Tax Credit that happen quite frequently. The IRS randomly selects returns that claimed EITC for verification, and it's not necessarily because they think you did anything wrong. However, I do think your tax preparer should be more proactive in helping you respond properly. For a CP75, you'll typically need to provide documentation like birth certificates for any children you claimed, school records showing where your kids lived during the tax year, medical records, and proof of your income. The specific requirements should be listed in the letter. Since you used a professional tax service, they should have copies of all the documents you provided when filing and should be able to help you gather what's needed for your response. I'd recommend scheduling a proper meeting with them rather than just texting - this type of notice requires a documented response, and they should be walking you through exactly what needs to be submitted. Don't stress too much about it, but definitely don't ignore it either. Most people who respond properly to CP75 notices with the right documentation get through the process without any issues.

Don't forget about state filing requirements too. Depending on where your LLC is registered, you might need to file state partnership returns as well. In California for example, an LLC with multiple members has to file Form 565 plus pay an $800 annual tax. This caught me by surprise when I tried to DIY my partnership return last year.

One thing I'd add to the conversation is that you should also consider the time value of money when deciding whether to DIY vs. hire a CPA. Even if you can save $1,500-2,000 by doing it yourself, you need to factor in the 10-15 hours it might take you to learn the process, prepare the forms, and handle any corrections. That said, if you're planning to keep this LLC for several years, the initial learning investment could pay off long-term. I'd suggest maybe trying a hybrid approach for your first DIY year - prepare the return yourself but have a CPA review it before filing. Some CPAs offer review services for $300-500, which could give you peace of mind while still saving money. Also, make sure you're comfortable with the potential liability. When a CPA signs your return, they're taking on professional responsibility. When you sign it yourself, any errors or omissions are on you. For a simple investment LLC like yours, the risk is probably manageable, but it's worth considering.