Does including a note or explanation with the 1040-X actually help speed things up? I've got a similar situation but with a 1099-NEC I just received last week.

The explanation doesn't necessarily speed up processing, but it can help prevent miscommunications or additional questions from the IRS. For 1040-X, there's actually a specific area where you're required to explain the reasons for amendment - it's Part III of the form. If you're filing with a 1099-NEC you just received, definitely note that you received the form after filing your original return. Being specific about dates can help show good faith compliance. While amendments generally take 16+ weeks regardless, clear documentation helps avoid further delays from the IRS asking for clarification.

There's no minimum threshold - technically ALL income needs to be reported regardless of amount. The real question is whether the IRS would notice or pursue it. They'll definitely receive the W-2 info from your employer, so the mismatch will be in their system.

I've heard about cost segregation but wasn't sure if it applied to smaller commercial properties. Mine is only about 15,000 sq ft. Is there a minimum size where it makes financial sense? Also, does the fact that I'm getting it significantly below market value affect how cost segregation would work?

There's no specific minimum size where cost segregation makes sense - it's more about the potential tax savings versus the cost of the study. For a 15,000 sq ft property, it's definitely worth considering, especially if you're doing significant renovations. The below-market purchase price doesn't negatively impact cost segregation benefits. In fact, it might actually make the percentage benefit greater. Cost segregation works on your actual basis in the property (purchase price plus improvements), so while your basis might be lower than market value, the percentage of that basis that can be accelerated might be higher due to the renovation component. When you're putting significant renovation dollars in, those improvements often contain many items that qualify for 5-7 year depreciation.

I did something similar on my last building. Which specific energy credits did you claim? I used the 179D deduction but heard there were others that might stack.

Thanks for bringing this up! My tracking spreadsheet just has deposits and withdrawals with dates, but not broken down by actual playing sessions. If I play multiple times in one day, do I need to track each individual session or can I just track by day?

Each distinct playing session should be tracked separately, even if they occur on the same day. The IRS considers a session to end when you stop playing a particular game for a significant period. For online gambling, a good rule of thumb is that if you log out or stop playing for several hours, that ends a session. If you play blackjack for an hour, take a break for several hours, then play again, those would be two separate sessions. Some tax professionals recommend documenting the start and end times of each online gambling session to make this clear. The more detailed your records, the better position you'll be in if questions ever come up.

This is true! The IRS has reporting requirements for banks too. Any deposit over $10k gets automatically reported, and they also look for patterns of smaller deposits that might be trying to avoid that threshold. Plus with the new reporting for payment apps like Venmo and PayPal, there's a lot more visibility into money movement than people realize.

Thanks for breaking down the numbers! So even with the extra costs of payroll processing and additional tax filings, I'd still come out way ahead. Do you recommend using a payroll service or trying to handle it myself?

Definitely use a payroll service. The cost is minimal (usually $50-75/month for just yourself) and the peace of mind is worth it. They handle all the tax deposits, quarterly filings, W-2s, etc. Trying to DIY payroll is asking for trouble - the penalties for missed deadlines or incorrect deposits are steep. I use Gusto for my S corp payroll, but there are plenty of good options like OnPay, QuickBooks Payroll, or SurePayroll. Most accounting software integrates with these services too, making bookkeeping easier.

Wait, I thought QBI applied to S-Corp distributions too? My accountant definitely included my S-Corp distributions in QBI calculations last year...

Yes, that's exactly what I said - QBI applies to S corp distributions but NOT to the salary portion. So if you take $150k salary and $120k in distributions from your S corp, only the $120k would potentially qualify for the QBI deduction. Your accountant was correct to include S corp distributions in QBI calculations. I was just pointing out that when you compare sole proprietorship to S corp, you need to account for the fact that the salary portion of S corp earnings won't qualify for QBI, whereas all net income from a sole proprietorship potentially qualifies.

What's the advantage of doing this instead of just adjusting your W-4 though? It seems like you're giving up interest you could be earning on that money by essentially giving yourself a tax bill.

The main advantage is simplicity, especially if your second income fluctuates. When my side gig earnings vary month to month, it's easier to just save a percentage than constantly update withholdings. You're right about potentially earning interest, but with a high-yield savings account, I'm still earning something on that money until tax time. The peace of mind of knowing I've got the tax bill covered is worth more to me than the small amount of extra interest I might get. Plus, I can adjust my "savings rate" if I think I'm putting too much aside.

Any chance you'd be willing to share a template of that spreadsheet? I'm terrible at creating those from scratch but that sounds super useful.