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Just wondering, does anyone have experience with using services like Gusto for S corp payroll? I'm considering the switch but worried about the complexity of running payroll for just myself.
I use Gusto for my single-member S corp and it's super easy. Costs about $45/month for just me, which eats into the tax savings a bit, but saves me tons of headaches. They handle all the payroll taxes, filings, and year-end stuff automatically. I just set up my reasonable salary as a recurring payroll and barely think about it now.
I made the S corp switch at around $85K and it's been worth it, but I want to emphasize something that hasn't been mentioned much here: timing your election properly is crucial. If you're thinking about this for next year, remember that Form 2553 (S corp election) generally needs to be filed within 75 days of incorporation OR by March 15th for the tax year you want it to take effect. Miss that deadline and you're stuck waiting until the following year, which could cost you thousands in additional self-employment taxes. Also, don't forget about estimated quarterly taxes once you switch. As an S corp owner, you'll need to make estimated payments on your distributions since there's no withholding on those. I use the safe harbor rule (pay 110% of last year's tax liability) to avoid underpayment penalties, but it requires more cash flow planning than when I was just a sole proprietor. The administrative burden is real, but if you're organized and use good tools (like the Gusto suggestion above), it's manageable. Just make sure you're truly ready for the additional complexity before making the jump.
Does anyone know if Cash App will be adding support for Form 1116 anytime soon? I'm in the exact same boat with around $700 in foreign taxes but I really like using their software.
I asked their customer support about this last month. They said they're planning to add support for more international tax forms in the next major update, but couldn't give me a specific timeline. Might be worth checking with them directly.
Just wanted to chime in as someone who's dealt with this exact situation! You absolutely can choose to only claim the $600 simplified credit and forfeit the remaining $182. The IRS doesn't require you to claim every credit you're entitled to - it's your choice. I've been doing this for the past two years with my international index funds because my tax software doesn't support Form 1116 either. Never had any issues with the IRS. The simplified method is specifically designed for situations like yours where the paperwork complexity isn't worth the extra credit. Just make sure your foreign taxes qualify for the simplified procedure (sounds like they do since they're from mutual funds). You're definitely not the only one who'd rather keep things simple and leave a little money on the table!
This is really reassuring to hear from someone who's actually been doing it! I was worried there might be some hidden rule or audit risk with voluntarily forfeiting credits. How do you handle it on your return exactly? Do you just enter $600 as your foreign tax paid, or do you enter the full amount but somehow limit the credit to $600?
Does anyone know if the "lookback rule" applies here? I think there's some rule where you can make IRA contributions for the previous year up until the tax filing deadline, but I'm not sure if it affects how you report it on an amended return.
Yes, the "lookback rule" is exactly what allows you to make IRA contributions for 2023 up until the tax filing deadline in 2024 (April 15, 2024 for most people). Since the OP made their contribution before this deadline, they can definitely count it for 2023. For amended return purposes, you report it exactly the same way you would have on the original return - as a 2023 contribution. Just make sure your IRA provider correctly coded it as a 2023 contribution when you made it.
I went through this exact same situation two years ago and totally understand the panic! The good news is that filing an amended return for a missed IRA contribution is really straightforward and won't cause any issues with the IRS. Since you made the contribution before the April deadline for 2023, you're absolutely entitled to claim it. The IRS actually prefers when people voluntarily correct their returns - it shows good faith compliance. A few things that might help ease your anxiety: - This is considered a "taxpayer favorable" amendment since you're likely reducing your taxable income - The IRS processes thousands of these amendments every year for the same reason - You have up to 3 years to file an amended return, so there's no rush or penalty For TurboTax, just log into your account and look for "Amend a Return" - the software will walk you through it step by step. The whole process took me maybe 30 minutes once I had my IRA contribution documentation ready. You'll likely get an additional refund if the contribution was deductible, which is a nice bonus for doing the right thing!
This is such a relief to read! I've been losing sleep over this for days thinking I messed up big time. Your point about it being "taxpayer favorable" really helps put things in perspective. Did you end up getting a bigger refund when your amendment was processed? I'm trying to figure out if I should expect to owe money or get more back since this was a traditional IRA contribution that should be deductible.
Another approach: if you've already paid enough in Q1 to cover 25% of last year's tax liability, you might already be meeting the safe harbor for Q2 even without an additional payment. The safe harbor rule states you won't face a penalty if you pay at least 100% of last year's tax (or 110% if your AGI was over $150k) in equal quarterly installments.
Wait, so if I've already paid 50% of my previous year's tax liability between withholding and Q1 payment, could I theoretically skip Q2 AND Q3 payments and just make a final payment in Q4?
No, that's not how the safe harbor works. To avoid penalties, you need to make payments in equal quarterly installments. If you need to pay $10,000 to meet safe harbor for the year, that would be $2,500 per quarter. Paying $5,000 in Q1 and skipping Q2 and Q3 would still potentially subject you to penalties for those missed quarters. The exception is if your income is highly seasonal or irregular, in which case you might qualify to use the annualized income installment method (Form 2210, Schedule AI). This allows for unequal quarterly payments based on when you actually earned the income.
Fyi for anyone confused about when freelancers actually "receive" income - it's when the money is available to you, not when you invoice or do the work. I learned this the hard way! If client pays you July 2, that's Q3 income even if the work was done in April/May.
Does this apply to checks too? Like if client mails me a check dated June 30 but I don't deposit it until July 3, which quarter counts?
For checks, it depends on your accounting method. If you're on cash basis (which most freelancers are), income is recognized when you receive the check, not when you deposit it. So if you receive a check dated June 30 on June 30, that's Q2 income even if you deposit it July 3. However, if the check arrives in your mailbox July 1, then it's Q3 income. The key is when you actually have possession of the payment, not when you cash/deposit it.
Mateo Sanchez
I was in this situtation for almost 3 weeks. website said verify but when I got through to an agent they told me i was already verified. the online system is a total mess and doesnt update properly. dont stress about it, your probably already good to go.
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Kai Rivera
This is so frustrating but unfortunately totally normal! I went through the exact same thing last year. The IRS systems are ancient and don't communicate with each other at all. After I verified in person, it took almost 3 weeks for the online portal to stop showing that notification, but my refund was actually processed much faster than that. The key thing is that you got verbal confirmation from the IRS employee that your verification was complete. That's what actually matters for processing your return. The online notification is basically just a leftover flag that doesn't get cleared automatically. If you want peace of mind, you can check your account transcript in about a week to see if there's any movement on your return processing. But honestly, I'd just ignore that notification for now and check back in 2 weeks. If it's still there after that AND you haven't seen any progress on your return, then maybe give them a call. The whole system is a joke but at least you did everything right on your end! š
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