Have you considered a Defined Benefit plan instead of just increasing your W2? I'm also an S-corp owner and was able to contribute an additional $87K annually above my 401K limit. It's especially powerful if you're older (40+) and trying to catch up on retirement savings. The downside is you need to maintain contributions for several years and there are higher admin fees compared to a 401K, but the tax savings more than make up for it. Worth talking to a TPA (Third Party Administrator) who specializes in these plans for S-corps specifically.

Don't overlook the potential of utilizing a Backdoor Roth if increasing your W2 wages pushes you beyond the Roth IRA income limits. Anyone can contribute to a Traditional IRA regardless of income, and then convert it to a Roth IRA.

Has anyone tried calling the Taxpayer Advocate Service about these old health insurance penalties? I've heard they sometimes help with IRS issues when you're facing hardship or can't get resolution through normal channels.

I went through something very similar with a 2017 health insurance penalty notice last year. The key thing to understand is that the IRS is definitely still collecting on these, despite what people said back then about being able to ignore them. When I got my CP71H notice, I was also confused about why my refunds hadn't been offset. I learned that the IRS has specific rules about which debts they can offset refunds for, and the health insurance penalty has some restrictions around that process. My advice would be to act quickly on this. The interest keeps accruing daily, and while $711 might not seem like a huge amount, it can grow pretty fast. I ended up calling the IRS (eventually got through after multiple attempts) and they were actually quite reasonable about setting up a payment plan. The agent explained that they're working through a backlog of these penalties systematically, which is why some people are just now getting notices for 2017 tax years. Don't assume this will just go away - the 10-year collection period gives them plenty of time to pursue it. If you can afford to pay it in full, that's probably your best bet. If not, the installment agreement option is definitely worth exploring.

Has anyone here actually e-filed state returns separately? Which tax software actually lets you do this easily? I tried it with H&R Block last year and it was a nightmare - the software kept insisting I file federal and both states together.

I went through this exact situation two years ago when I moved from Wisconsin to Florida mid-year. Here's what I learned from my CPA: You absolutely CAN file your state returns at different times, but there's a critical detail everyone seems to be missing - you need to be very careful about your part-year resident status on each return. For Colorado, you'll file as a part-year resident and only pay Colorado tax on the income you earned while living there (January through July). For Arizona, you'll also file as a part-year resident for the income earned there (August through December). The key is making sure your total income across both state returns matches what you'll report on your federal return. If you're missing Arizona documents, you could estimate based on your pay stubs, but honestly it's safer to wait until you have everything. One more thing - check if Colorado has any special rules about when part-year residents must file. Some states require you to file by the federal deadline regardless of when you moved.

My parents did this conversion last year with their beach house and their tax guy told them the fair market value ONLY matters if it's LOWER than your adjusted basis (original cost + improvements). If FMV is higher (which it usually is these days), you still use your adjusted basis for depreciation. The whole point is the IRS doesn't let you depreciate market appreciation - only what you actually spent on the property.

This is a really common issue with rental conversions! One thing that might help is to look at your homeowner's insurance records from over the years. Insurance companies often require you to update your coverage amounts when you make major improvements, so those records can help establish when improvements were made and their approximate value. Also, don't forget about smaller improvements that add up - things like new HVAC systems, water heaters, windows, or even significant landscaping can all be included in your basis. Even if you can't find receipts, you can often get estimates from contractors for similar work done in your area during the same time period. Another tip: if you financed any of the renovations through a home equity loan or cash-out refinance, those loan documents and disbursement records can help establish the timeline and amounts spent on improvements. The key is being reasonable and methodical in your approach - the IRS understands that homeowners don't always keep perfect records, but they do expect you to make a good faith effort to reconstruct the information.

Has anyone actually been audited for this type of issue? I accidentally had a similar situation last year but just left it alone. My contribution was coded for the wrong year but I took the deduction anyway on my taxes. It's been 18 months and nothing has happened. Maybe I'm living on borrowed time but wondering if the IRS actually cross-references these?

I went through almost the exact same situation last year with my SEP IRA! The key thing to remember is that this is an administrative error, not a true recharacterization issue. Since you made the contribution before the 4/15/24 deadline with clear intent for 2023, you have strong grounds to get this fixed. First, gather all your documentation - any emails or forms where you specified this was for 2023, bank records showing the timing, etc. Contact Fidelity immediately and explain the situation. They can reach out to your previous institution on your behalf to request corrected Form 5498 reporting. If the old advisor won't cooperate, you can file Form 4852 with the IRS as a substitute for the incorrect Form 5498. Include a detailed explanation and all supporting documentation showing your intent. The October deadline mainly applies to true recharacterizations between IRA types, but administrative error corrections can sometimes be handled even after that date. Don't amend your 2023 return yet - fight to get the coding fixed first. You legitimately made a 2023 contribution and deserve to keep that deduction. Time is of the essence though, so start making those calls tomorrow morning!