Warning from someone who made an expensive mistake: Be careful about rushing into an LLC with S-Corp election just for tax savings! I did this in 2022 without really understanding all the requirements. Yes, I saved about $8k in self-employment taxes, but then got audited because my "reasonable salary" was too low compared to my distributions. Ended up owing back taxes PLUS penalties. The IRS is watching this area closely. The rule is that your salary must be "reasonable" for your industry and the work you do. You can't just pay yourself $30k and take $200k in distributions if comparable positions would pay $120k. Also, the administrative hassle is real. Quarterly payroll filings, extra tax forms, higher accountant fees, etc. For me it added about $3,200 in extra costs annually.

This thread has been incredibly helpful! I've been running a freelance graphic design business as a sole proprietorship for 3 years now and had no idea about these different tax structures. Reading through everyone's experiences, it sounds like the S-Corp election could potentially save me money, but I'm nervous about the "reasonable salary" requirement that @Mateo Perez mentioned. My income fluctuates a lot - some months I make $15K, others I barely break $3K. For those who have made the S-Corp election, how do you handle the salary requirement when your income isn't consistent? Do you have to pay yourself the same amount every month even if the business didn't earn that much? And what happens if you guess wrong on what's "reasonable" - is there a safe harbor rule or something? Also wondering if anyone has experience with creative businesses specifically. I'm not sure what comparable salaries would be for someone doing logo design, web design, and brand identity work.

One thing nobody mentioned yet is that you should open a separate business checking account ASAP if you haven't already! Makes tracking business income and expenses sooooo much easier when tax time comes. I didn't do this my first year and spent like 3 full days sorting through personal bank statements to figure out what was business vs personal. Nightmare!

As someone who just went through this exact situation last year, I can offer some reassurance! You're not automatically doomed for missing those first two quarterly payments, especially since you literally didn't know about the business when the April deadline hit. The key thing is to make your September 15th payment and make it substantial enough to cover what you should have paid earlier. Since you started in March and have made $34,500 so far, you're looking at owing both regular income tax AND self-employment tax (that 15.3% Social Security/Medicare hit that nobody warns you about). Here's what saved me: I calculated what my total tax liability would be for the year, then made my September payment large enough to get me to that 90% threshold by year-end. The IRS is surprisingly reasonable about first-year businesses as long as you show good faith effort to catch up. Also, definitely start setting aside 25-30% of every payment you receive going forward. I use a separate savings account and transfer the tax money immediately when clients pay me. Trust me, you don't want to be scrambling to find tax money next April! Your photography business sounds like it's off to a great start - don't let the tax stress overshadow that success!

570 codes often pair with 971 notice codes. Check for that too. It's usually just verification. Nothing to panic about. Most clear in 2-3 weeks. Tax Advocate Service can help if it goes longer. They prioritize financial hardship cases. Keep checking your transcript weekly. Look for the 571 release code. That's your signal that processing has resumed.

I totally understand your frustration - once you're in their "system" it really does feel like you're flagged forever! I've been dealing with similar issues since a 2017 offset situation. One thing that helped me was setting up an online IRS account if you haven't already. Sometimes notices show up there before they're mailed, and you can see additional account details that don't appear on the basic transcript. Also, with three kids in activities, I know how tight budgets can be - consider reaching out to Tax Advocate Service (taxpayeradvocate.irs.gov) if this drags on beyond 30 days. They specifically help with cases involving economic burden and have more power to expedite reviews than regular customer service. Hang in there - most 570 codes with CTC do resolve within a few weeks, especially if everything on your return is accurate.

Just want to add something important about dual-status aliens and Form 5471 that hasn't been mentioned yet. Even though you don't need to file Form 5471 for shares sold before becoming a US resident, you might still need to report the sale on your dual-status return. If the sale of those foreign shares resulted in a capital gain, you'll need to report it on Schedule D and Form 8949, but only if it was US-source income or effectively connected with a US trade or business. Foreign-source capital gains realized during your non-resident period are generally not taxable in the US. Double check if you have any dividend income from those shares before selling them too. Depending on the source, those might need reporting.

Has anyone used TurboTax for a dual-status return with foreign income issues? I'm trying to figure out if it can handle Form 5471 correctly for part-year residents.

Has anyone in this thread used TurboTax for multiple LLC situations? Their interface seems to struggle with two separate Schedule Cs with different QBI calculations. I'm wondering if the OP's spreadsheet might actually be better than commercial software for this specific case.

This is really impressive work! As someone who's been through the frustration of CPAs missing obvious deductions, I totally get why you went the DIY route. Your spreadsheet approach sounds comprehensive. One area I'd suggest double-checking is the interaction between your home office deduction and the QBI calculation. The home office deduction reduces your Schedule C profit, which then reduces your QBI base. But if you're also claiming the home office deduction on Schedule A (for the non-business portion), make sure you're not double-dipping anywhere. Also, have you considered how state tax implications might affect your federal deduction strategy? Some states don't follow federal bonus depreciation rules, so maximizing federal deductions could actually increase your state tax burden. The fact that you're covering 13 different forms shows you're really thinking holistically about this. That's exactly what most tax preparers miss - they focus on individual forms instead of optimizing across the entire return.