Heads up from someone who did this wrong! My wife and I started an S-Corp for our graphic design biz in 2018 and only paid ourselves tiny salaries ($15k each) while taking hefty distributions the first two years. Got audited in 2021 and the IRS reclassified most of our distributions as salary. Had to pay back employment taxes plus penalties. Ouch! Now we use the 60/40 rule - roughly 60% salary to 40% distributions, and document everything like crazy. Our accountant says there's no magic formula but reasonable should mean reasonable for your industry and workload.

As a newer S-Corp owner myself, I've found that documentation is absolutely key. We started conservative with salaries too, but what helped us was creating a simple spreadsheet tracking our monthly revenue, expenses, and profit margins. Every time we adjust our salaries, we document the business justification. One thing that's been helpful is looking at job postings for similar roles in our area to establish benchmarks. For tattoo shops specifically, you might look at what experienced tattoo artists or shop managers earn locally. Since you're doing both artistic work AND business management, your reasonable compensation should reflect both roles. The 30-40% of profits rule mentioned earlier is solid, but don't stress too much about hitting exact ratios every month when you're still growing. The IRS understands that new businesses have variable income. Just make sure whatever you're paying yourselves is defensible based on what you'd pay someone else to do your jobs, and keep good records of how you determined those amounts.

Does anyone know if we're supposed to attach the K-3 to our personal tax return or is it just for reference? My tax software is confusing me about this.

Based on everyone's experiences here, it sounds like USO definitely won't qualify for the K-3 waiver. I'm in a similar situation with commodity investments and was hoping to avoid the extra complexity, but it makes sense that anything dealing with global markets would have foreign activity. One question though - if USO sends out the K-3, do we need to report everything on it or just the parts that actually apply to our tax situation? Some of the international stuff might not be relevant to my particular circumstances, but I don't want to miss anything important that could trigger an audit later. Also, does anyone know roughly when these K-3s typically get sent out? I'm trying to plan my tax filing timeline and don't want to file early only to get the K-3 later and have to amend.

yall need to stop checking WMR every day its not good for your mental health trust

I went through the exact same thing last month! Topic 152 disappeared after being there for weeks, then about 5 days later I got my refund date. It's actually a good sign - means they're actively processing your return. The waiting is brutal but you're probably close to getting an update. Keep checking but try not to stress too much about it disappearing! 🤞

Zoe, I suggest calling the IRS and getting the status. $5 discount for first time callers using Claimyr https://join.claimyr.com/be256b

To all those having trouble reaching a human at IRS. I just ran across this video that gave me a shortcut to reach a human. Hope it helps! https://youtu.be/_kiP6q8DX5c

welcome to the waiting game fam. grab a seat, we're all stuck here 🤡

The 971 code is basically the IRS saying "hey, we're sending you mail" - nothing more, nothing less. Since yours is dated 06-25-2024, you should be getting that letter any day now if you haven't already. The $0 amount is totally normal for this code. Here's what I'd suggest: stop obsessing over WMR and your transcript for a few days (I know, easier said than done 😅). Wait for that letter to arrive because it'll tell you exactly what they need or what's happening with your return. Could be anything from simple identity verification to requesting documentation for a deduction. Pro tip: once you get the letter, respond ASAP if they're asking for something. The sooner you send back what they need, the sooner your refund gets moving again. And yeah, the waiting sucks but at least you're seeing movement now!