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Has anyone had to file an amended return because of a corrected 1099? I'm in a similar situation but I already filed my taxes last week, and now I'm seeing that my 1099-DIV from Schwab might have some errors. Will the IRS automatically flag this or should I be proactive and file an amended return?
You should definitely file an amended return using Form 1040-X once you receive the corrected 1099. The IRS will likely catch the discrepancy through their matching program, but it's better to be proactive than to wait for a notice. The good news is that if the correction results in you owing more tax, as long as you file the amendment before the IRS contacts you about it, you'll typically avoid any accuracy-related penalties. You might still owe interest on any additional tax, but that's usually minimal if you amend quickly.
I dealt with a similar Robinhood 1099 issue last year. One thing that helped me was downloading my full transaction history from Robinhood's web platform (not just the monthly statements) and doing a line-by-line comparison. Sometimes the discrepancies come from how they categorize certain transactions or handle stock splits. Also, make sure you're looking at the right boxes on the 1099 - qualified dividends vs ordinary dividends are reported separately, and sometimes what looks like an error is just dividends being split between different categories. If you find a genuine error after double-checking everything, Robinhood's tax support team is actually pretty responsive during tax season. I got my corrected form in about 10 business days. Don't stress too much about the audit risk - 1099 corrections are extremely common and the IRS expects them. Just make sure you file with the correct information once you have it.
Has anyone dealt with the K-1 vs W-2 issue as a founder? My company started classifying me as a partner last year after raising our Series A, and I got a K-1 instead of a W-2. The quarterly estimated tax payments are killing me, and I wasn't prepared for the full self-employment tax hit.
I went through this exact thing. If you have a K-1, you'll need to make quarterly estimated tax payments (federal AND state), plus you're paying both halves of Social Security and Medicare taxes. It's roughly an extra 7.65% you're paying compared to being a W-2 employee.
I'm a tax attorney who's dealt with many founder classification cases. Your co-founder cannot unilaterally change your employment status, especially when you have a signed employment agreement. This is a common tactic to shift payroll tax burden from the company to the individual. The IRS uses a multi-factor test to determine worker classification, focusing on behavioral control, financial control, and relationship type. Based on your description - fixed salary, specific job title, limited decision-making authority, and formal employment agreement - you're clearly an employee under IRS guidelines. If your co-founder insists on this change, I'd recommend getting a written determination from the IRS using Form SS-8. This gives you official classification that protects both parties. Also consider that misclassification can trigger penalties and back taxes for the company, plus you could lose certain employment protections and benefits. Don't let him pressure you into taking on additional tax liability without proper legal review of your agreements and circumstances.
Urgh, I hate when this happens. The IRS is holding our money hostage and can't even tell us why without making us wait for some letter that may or may not even arrive. This is my third year in a row dealing with delays. The system is broken beyond belief.
I feel your frustration! I went through something similar last year and it turned out to be an automated review for Head of Household filing status. The IRS has been extra cautious about HOH claims lately because of fraud. In my case, they just needed to verify that I actually qualified for HOH status - had to provide documentation showing I supported a qualifying person and paid more than half the household expenses. The whole process took about 6 weeks from the initial "Action Required" message to getting my refund. Try not to panic - it's likely just a routine verification and not an audit. Keep checking your transcript online as others mentioned, and if you don't get a letter within 30 days, definitely call them directly.
CosmicCadet
Looking at this from another angle - there's a bigger issue with how these high-value artifact/art donations work. The whole "buy for X, appraise for 3X, then donate" approach seems problematic regardless of whether the items were stolen. The IRS has been cracking down on art donation schemes for years. They have special rules for donations over $5,000 and even stricter ones for donations over $500,000 - including requiring a qualified appraisal and attaching a complete appraisal report to the tax return. I wonder if the Green family's donations have been scrutinized under these rules? The IRS Art Appraisal Services unit specifically looks at high-value art and artifact donations because of the potential for abuse.
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Chloe Harris
ā¢Good point. I read somewhere that donations of art/artifacts over $50k can trigger automatic review by the IRS Art Advisory Panel, which is made up of outside experts who determine if the claimed value is reasonable. I wonder if these donations went through that process?
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CosmicCadet
ā¢You're correct about the Art Advisory Panel - they automatically review any artwork valued at $50,000 or more per item that's donated. For very high-value donations (which these certainly were), the Panel brings in outside experts in the specific type of artifact to evaluate the appraisals. Additionally, when there's a related-party transaction like this (same family owning both the business and the museum), the IRS applies extra scrutiny. They look for what's called "private benefit" - where the charitable donation primarily benefits the donor rather than serving a true charitable purpose. The fact that the Green family controls both entities would definitely raise flags in an IRS review, particularly with the 3x valuation pattern they apparently seek.
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Diego Mendoza
I'm surprised nobody mentioned Form 8282 "Donee Information Return" yet. If the museum sold or disposed of the donated property within 3 years, they would have been required to file this form reporting the sale price back to the IRS. This form is specifically designed to catch inflated appraisals - if someone donates something claiming it's worth $10 million but the receiving organization turns around and sells it for $2 million, the IRS gets notified of the discrepancy. In this case though, since the museum kept the items (until they had to be returned), this reporting requirement probably wouldn't have been triggered.
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Anastasia Popova
ā¢That's a good point about Form 8282. But I think there's another form at play here too - the museum would have had to file Form 8283 with their original appraisal information. That form requires signatures from both the donor AND a responsible person at the receiving organization AND the appraiser. So everyone involved is essentially certifying the claimed value. If the items later turn out to be stolen, I wonder if that exposes all three parties to potential penalties for filing false information?
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Ella Lewis
ā¢@Anastasia Popova You raise an excellent point about Form 8283 and the multiple party signatures. However, penalties for false "information typically" require intent or gross negligence. If the parties genuinely believed the items were legitimate based on reasonable due diligence at the time, they might not face penalties even if the items later proved to be stolen. The IRS would likely focus more on whether proper appraisal procedures were followed and if the claimed values were supportable, rather than penalizing parties who were unknowingly deceived about provenance. That said, the IRS does expect donors and receiving organizations to exercise reasonable care in verifying authenticity, especially for high-value artifacts from regions known for trafficking issues. The bigger exposure is probably the recapture of tax benefits rather than fraud penalties, unless there s'evidence that any party knew or should have known about the stolen nature of the items.
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