Be REALLY careful with tax relief companies! Most of them charge huge fees and promise things they can't deliver. They basically do the same things you can do yourself (set up payment plans, apply for currently not collectible status, or submit an offer in compromise). The IRS has their own programs that don't require paying a middleman. Check out the IRS Fresh Start program before paying some company thousands of dollars for something you could do yourself for free.

Thank you for this practical advice. If I go the loan route, do I need to create the documentation before or after taking the money? I've already taken about $15K more than my 1% share would justify in 2024, and we haven't filed yet. Can I retroactively document this as a loan? Also, any guidance on what a "reasonable" interest rate would be in the eyes of the IRS?

Ideally, loan documentation should be created before the money is distributed, but you can retroactively document it if you haven't filed yet. The key is to create the documentation before the end of the tax year - so you're still within the window for 2024. For interest rates, the IRS publishes Applicable Federal Rates (AFR) monthly. For a loan between related parties, you should use at least the minimum AFR for the appropriate term (short, mid, or long) from the month the loan was made. For April 2024, the short-term rate was around 5.25%. Using anything significantly below this could cause the IRS to impute interest, which creates tax headaches for both parties. The documentation should include a clear repayment schedule, consequences for default, and signatures from both parties. Make sure your accountant records it properly on the books as a loan to shareholder rather than a distribution.

This could trigger gift tax issues depending on the value of the company. If mom gives additional ownership percentage that has significant value, it might require filing a gift tax return. Also some S-corps have restrictions in their operating agreements about ownership transfers. But I agree it might be the cleanest solution long-term.

Thanks for bringing this up! I did pay for my flight to Atlanta (about $350) plus the hotel for 3 nights (~$600) and the convention entry fee ($150). Would all of these potentially be deductible against the prize money? And where exactly would I list these on my tax forms?

Yes, those expenses would potentially be deductible against your prize money! The flight, hotel, and convention entry fee would all count as expenses directly related to winning the prize. You would list these as a reduction to the income on Schedule 1, Line 8z. For example, if your prize was $2,500 and you had $1,100 in related expenses, you would report "Gaming tournament prize income $2,500 less related expenses of $1,100 = $1,400" on that line. Make sure to keep all your receipts in case of an audit.

Yep, and if you won it while physically in Texas but live in North Carolina, you might need to file a non-resident tax return for Texas too if they require it for prize winnings. Tax rules vary by state!

Do you know if there's a specific place on Schedule C where we should note the 1099-K amount vs our actual total? I'm new to all this and confused about how to show the breakdown.

On Schedule C itself, you just report your total gross receipts on line 1. There's no specific place on Schedule C to break out 1099-K amounts separately. If you're using tax software, it might have a worksheet where you can enter various income sources and 1099 forms, but the Schedule C will show the combined total. Keep your own separate worksheet that reconciles your total income with the 1099-K amounts in case of questions later.

If you're on cash basis (most small sellers are), you report income when received and expenses when paid. So if the return/refund happens in the next year, it would be an expense for that next year, not an offset to the current year's income.

Thanks for the software suggestions! I hadn't heard of ATX. I'm definitely worried about the learning curve - is it realistic to pick up new tax software and be proficient by February if I start learning in November?

Yes, starting in November gives you plenty of time to get comfortable with the software. Most professional tax programs have similar workflows since they're all built around IRS forms. The differences are mainly in navigation, shortcuts, and additional features. Most vendors offer free training webinars in November-December specifically for new users. Take advantage of those! I'd also recommend doing 5-10 practice returns using last year's forms - use your own return, family members, or make up some scenarios. This hands-on practice will make you much more efficient when you're facing real client deadlines.

Also, make sure you get an EFIN from the IRS if you plan to e-file for clients. The application process can take 6-8 weeks, so don't leave it until January! And definitely get E&O insurance. I had a client situation last year where it saved me from a potential $14,000 claim when I made a mistake on a complex investment calculation.