Does anyone know if there's a minimum salary requirement for S Corps? My CPA told me I need to pay myself at least $40k, but a buddy with an S Corp says he only pays himself $30k on $90k of revenue. I'm confused by all the different advice.

This is such a common struggle for new S Corp owners! I went through the exact same thing when I converted my consulting business two years ago. Based on my research and discussions with my CPA, here's what I learned: The IRS doesn't have a magic formula, but they do look at several factors - what you'd pay someone else to do your work, your geographic location, your experience level, and the time you spend on the business. For a web developer in the Midwest making $120k net profit, I'd lean toward the higher end of reasonable compensation - probably around $70-80k salary. Since you're doing ALL the work (coding, design, client meetings), you can't really argue that a significant portion of the profit comes from business assets or other employees. One thing that helped me was looking at actual job postings for senior web developers in my area and calculating what a full-time equivalent would make, then adjusting slightly for the entrepreneurial risk/reward factor. I kept screenshots of those job postings as documentation. Also, don't forget that paying yourself a higher salary isn't necessarily "bad" from a tax perspective - yes, you'll pay more in employment taxes, but you'll also build up more Social Security credits and potentially qualify for higher unemployment benefits if needed. The key is finding the sweet spot that's defensible to the IRS while still providing S Corp tax benefits.

Anyone know if it makes a difference whether you set up the campaign for yourself vs for someone else? Like if I create it for my brother but use my account, does that make me responsible for taxes?

Great question! I went through something similar when helping my neighbor after a house fire. The key thing to remember is that donations for personal hardships like legal fees are generally treated as gifts, not taxable income to the recipient. However, there are a few important considerations: First, keep detailed records of all donations and how the money is used - this documentation will be crucial if there are ever any questions. Second, be very clear in your campaign description that the funds are for personal legal expenses, not for any business purpose or in exchange for goods/services. Regarding who sets it up - it doesn't fundamentally change the tax treatment, but having your cousin create it directly might be simpler administratively. If you set it up and the money flows through your account first, you'll technically be making a gift to him when you transfer the funds (though this usually doesn't create tax issues either). One heads up: if the campaign raises over certain thresholds (typically $20,000+ with 200+ transactions), the platform may issue a 1099-K form. Don't panic if this happens - it doesn't automatically make the money taxable. You just need to properly document on the tax return that these were non-taxable gifts for personal expenses. Consider consulting with a tax professional if you end up raising a substantial amount, just to make sure everything is handled correctly.

Don't forget about state-level considerations! Your Delaware LLC may be federally disregarded, but Delaware still requires annual reports and franchise tax payments regardless of your investment activities. Also, depending on how much passive income your LLC generates from investments, you might trigger economic nexus in other states if the stocks/bonds are from companies based there. Some states have started to get aggressive about claiming tax jurisdiction based on investment income sourced to their state. Make sure you keep your registered agent in Delaware current too - if you miss service of process notices, you could face default judgments.

One thing nobody's mentioned - watch out for FDII (Foreign-Derived Intangible Income) calculations if your software business starts generating significant income. The presence of investment assets on your books can affect the deemed tangible asset calculations that go into FDII deductions if you later elect to be treated as a corporation. Also, make sure your operating agreement clearly separates business activities from investment activities. This becomes important if the IRS ever questions whether your passive investments are actually part of your active business model.

Can anyone recommend good tax software that handles Section 179 for side businesses properly? I tried using [redacted] last year and it kept getting confused about my W-2 income counting toward the limitation. I ended up having to override some calculations manually.

Great question! You're absolutely correct in your understanding. The Section 179 income limitation does include your W-2 wages along with your LLC income. This is specifically covered in IRC Section 179(b)(3) and the regulations. For individuals, the "taxable income from the active conduct of any trade or business" limitation includes: - Your Schedule C business income (your LLC's $12,000) - All W-2 wages, salaries, tips, and other employee compensation - Any other trade or business income So with your $85,000 W-2 income plus $12,000 LLC income, you have $97,000 available for the Section 179 limitation, which easily covers your $20,000 equipment purchase. Just make sure the equipment qualifies (used more than 50% for business) and that you're within the overall annual limit ($1,160,000 for 2025). Also keep good records showing the business use percentage if it's mixed personal/business use. One small tip: if your equipment has any personal use, only deduct the business percentage. So if it's 80% business use, you'd claim Section 179 on $16,000, not the full $20,000.

Consider using IRS Direct Pay instead of waiting to include payment with your mailed 1040-X. You can pay the additional tax immediately, which will stop further interest accrual. When using Direct Pay, select "Amended Return" as the reason and "1040-X" as the form number. I did this last year when I had to amend, and it saved me exactly $87.42 in interest charges over the 18 weeks it took for my amendment to process. The IRS will match your payment to your amendment when it's processed.

I went through a very similar situation when I retired in 2022. Here's what worked for me: Since you filed with H&R Block originally, I'd recommend using their amendment service - it cost me about $75 but saved hours of work since they had all my original data. The key things to remember: 1) You'll need to mail the 1040-X (can't e-file amendments), 2) Include Form 2210 if you owe penalties, 3) Pay immediately through IRS Direct Pay to stop interest from accruing further. My amendment took 17 weeks to process, but paying upfront saved me about $200 in additional interest. Also, double-check if your state requires an amendment too - mine did, and I had to wait for the federal to complete first. The whole process was stressful but manageable if you stay organized. Good luck!