I'm confused about one thing... when calculating the employer portion for a sole proprietor (Schedule C), is it actually 20% of net profit or is it 25% of (net profit - half SE tax)? I've seen both formulas used in different places and now I don't know which is correct.

This is such a helpful thread! I'm in a similar situation as a freelance writer making around $55k. One thing I learned the hard way is to also consider the timing of your contributions throughout the year. Since we don't have regular paychecks like W-2 employees, it's easy to wait until the end of the year to make a big lump sum contribution. But I found it's actually better to make quarterly estimated contributions to my solo 401(k) to smooth out cash flow and take advantage of dollar-cost averaging. Also, don't forget that you can make contributions up until the tax filing deadline (plus extensions) for the previous year. So you have until April 15th, 2025 to make 2024 contributions, which gives you some flexibility if you're still figuring out your exact numbers. One more tip - keep detailed records of all your contributions and the calculations you used. The IRS can ask for documentation years later, and having everything organized from the start will save you major headaches down the road.

Has anyone had the IRS actually correctly process Form 8960 for 2022 yet? I'm still waiting on my refund and have the same issue - filed with investment income tax but my transcript is showing they're not calculating it correctly.

I'm dealing with almost the exact same situation! Filed my 2022 return in February with Form 8960, and my transcript is showing the same weird discrepancies - negative investment income on their end while I reported positive amounts, and their system calculating zero NIIT when I clearly owe it. What's frustrating is that I've filed Form 8960 successfully for the past three years without any issues. This definitely seems to be a systematic problem with how the IRS updated their 2022 processing rules. I also have the code 570 on my transcript dated March 15th. Based on what others are saying here, it sounds like we just need to wait for manual review to fix their computer errors. I'm keeping detailed screenshots of everything in case they send the wrong refund amount and try to collect it back later. Has anyone gotten any timeline estimates from IRS representatives about when these Form 8960 reviews might be completed?

Anyone know if there's a threshold for how many board members can overlap before you're automatically considered related organizations? We have 2 people who serve on both our main nonprofit and our supporting foundation (out of 13 board members total on each).

This is such a helpful discussion! I'm dealing with a similar situation at our charter school network where we have a supporting foundation. One thing I wanted to add - make sure you're also checking the intermediate sanctions rules under section 4958. When you have overlapping board members between related organizations, any compensation arrangements could potentially be subject to excess benefit transaction penalties if they're not properly documented as reasonable. We learned this the hard way when the IRS questioned whether our executive director's compensation was reasonable given that she served on both boards and the foundation was paying part of her salary. We had to provide extensive documentation showing comparable salaries at similar organizations. It's worth having your compensation committee document their decision-making process and maintain records of any salary surveys or benchmarking studies used. Also, don't forget about the intermediate sanctions disclosure requirements on Schedule L - you need to report any loans, grants, or other financial transactions between the related entities, including that property lease arrangement mentioned in the original post.

One more thing - even if you don't get any form from your employer documenting the gift card, you're still legally required to report it as income. The IRS considers all prizes and awards as taxable income unless they're very specific exceptions (which a workplace raffle isn't).

Hey Micah! I went through something similar last year with a raffle prize at work. The key thing is to check your most recent paystub after you won the gift card - many employers will automatically include the value as taxable income and withhold taxes right away. If you see an extra $300 (or close to it after taxes) on your paystub labeled as "bonus," "other compensation," or something similar, then your employer already handled it and it will show up on your W-2. In that case, you're all set! If it's not on your paystub and you don't receive a 1099-MISC by early February, you'll need to report it as "Other Income" on Schedule 1, Line 8z. Just write something like "workplace raffle prize - $300" next to it. Either way, you'll pay regular income tax on it based on your tax bracket. So if you're in the 22% bracket, you'd owe about $66 in federal taxes on that $300. Good luck with your first solo tax filing!

Hey guys, I actually found a way to skip the hold time. There's this service called claimyr.com that calls for you, waits on hold, and then connects you when an agent picks up. It costs $20, but it saved me hours of waiting. Here's the link: https://www.claimyr.com

Another option to consider is requesting your account transcript by mail or fax - it's free and gives you a complete breakdown of your tax account, including any balances owed, payments made, and penalties/interest. You can request it using Form 4506-T or by calling the automated transcript line at 1-800-908-9946. It takes about 5-10 business days to receive by mail, but you don't have to deal with hold times. Just have your SSN, date of birth, and filing status ready when you call the automated line.