10 Since nobody else mentioned it - yes, the 7.65% employer portion is a business expense that's tax deductible! So while you're paying that extra amount, it does reduce your overall business income for tax purposes. Let's say you're an S-corp or LLC with profits around $150k. That employer portion of payroll taxes would reduce your taxable business income. Depending on your tax bracket, this could offset roughly 22-37% of the cost.

Just wanted to add some practical advice from someone who's been doing payroll for small businesses for over 8 years - make sure you're also budgeting for workers' compensation insurance, which varies dramatically by industry. For landscaping like yours, it can be quite expensive (sometimes 3-8% of payroll) since it's considered higher risk. Also, don't forget that some states have additional payroll taxes beyond what's been mentioned. For example, California has State Disability Insurance (SDI) that employers contribute to, and New Jersey has both disability and family leave programs. These can add another 0.5-1% to your employer costs. I'd recommend setting up a separate account where you automatically transfer about 12-15% of each payroll to cover all these taxes and fees. It prevents the shock when quarterly payments are due and helps with cash flow planning.

22 Has anyone used Form 5329 to report and pay the 6% excise tax on excess contributions? I'm wondering if it's better to just pay the penalty for a year rather than going through the hassle of removal if the amount is relatively small.

I went through almost this exact situation two years ago! For the 2022 contribution, you're unfortunately stuck with the return of excess contributions route since the recharacterization deadline has passed. The 6% excise tax will apply for each year it stayed in there, but getting it out now prevents future penalties. For 2023, if you're still within the deadline (including extensions), definitely go with the recharacterization to Traditional IRA followed by the backdoor Roth conversion. Just make sure you understand the pro-rata rule implications if you have other traditional IRA balances. One tip that helped me - when dealing with your custodian, be very specific about what you're requesting. Say "I need to remove excess contributions and earnings for tax year 2022" rather than just asking about "fixing" contributions. The customer service reps are usually better equipped to help when you use the exact terminology. Also, don't be afraid to ask for a supervisor if the first person you talk to seems unsure about the process.

Don't forget that if you're due a refund from any of the years you didn't file, you only have 3 years from the original due date to claim it. After that, the money is gone forever. But if you OWE money, there's no time limit for the IRS to collect! Not fair but that's how it works.

I went through this exact same situation about two years ago - four years of unfiled returns with gig work income mixed in. The anxiety was eating me alive until I finally bit the bullet and dealt with it. Here's what I learned: The IRS actually wants to work with you more than you think. I ended up qualifying for First Time Penalty Abatement which wiped out a huge chunk of the penalties. The key is being proactive about fixing it rather than continuing to avoid it. For your income level and situation, you'll likely owe some back taxes but it won't be catastrophic. The failure-to-file penalties are the killer (5% per month up to 25%), but once you get those abated, you're mostly looking at the actual tax owed plus interest. My biggest regret was waiting so long to address it. Every month you wait, more interest accrues. I'd definitely recommend getting professional help - an Enrolled Agent was worth every penny for me. They knew exactly which forms to file and how to minimize the damage. You've got this! It's scary but totally manageable once you start the process.

I've seen this pattern repeat every tax season for the past decade. In my experience working with various financial institutions, Wells Fargo specifically tends to not show pending deposits from the IRS until very early morning of the actual deposit date. I recall back in 2019 when I helped several clients with similar concerns - in every case, the money appeared on the DDD despite no pending notification. The IRS batch processing typically runs overnight between 12am-4am, and Wells Fargo's system updates around 3am-6am Eastern. If your transcript shows a valid 846 code with tomorrow's date, I'd recommend checking your account early tomorrow rather than worrying tonight.

I completely understand your anxiety - amended returns can make everything more complicated and stressful! Based on what others have shared here, it sounds like Wells Fargo's system just doesn't show pending IRS deposits until the very last minute. Since you filed an amended return on 1/15, I'd definitely recommend checking your transcript one more time tonight to make sure that 846 code with 2/28 is still there and no new hold codes appeared. If everything looks good on the transcript side, try to get some sleep and check your account first thing tomorrow morning around 6am. The IRS usually processes these overnight, and Wells Fargo updates early morning. Fingers crossed for you! 🤞

Something nobody has mentioned - check if your state has different rules about carryovers when converting from C to S. Some states don't fully conform to federal treatment of S-Corps and may allow carryover of certain attributes that the federal rules prohibit. For example, California has its own set of rules for S corporations that sometimes differ from federal treatment. Might be worth exploring if your state gives you more flexibility than the federal rules.

This is a tough situation, but you're not completely out of options. First, definitely verify the timing of your S election - if it was made within the first 2 months and 15 days of your tax year, you can still revoke it with unanimous shareholder consent. Beyond that window, you'd need to show reasonable cause. Before making any decisions, I'd strongly recommend getting a second opinion from a tax attorney who specializes in corporate conversions. The $270k carryover is substantial enough that it's worth exploring all possibilities, including: 1. Whether any exceptions might apply to your specific situation 2. Asset restructuring strategies (like the equipment holding company idea mentioned above) 3. State-level treatment that might differ from federal rules 4. Alternative tax benefits you might qualify for post-conversion The decision to stay C-Corp vs convert to S-Corp involves many factors beyond just this carryover. You'll want to model out the long-term tax implications of both scenarios before deciding whether to proceed with or revoke the election.