Thank you for the specific form recommendation! I didn't know about the 14157-A. Would you mind sharing how long the investigation into your preparer took? And did you end up having to pay back all the incorrect refunds you received in your situation?

The investigation took about 8 months before I received notification that action had been taken against the preparer. The IRS doesn't share specific details about penalties they impose, but I did receive a letter confirming my complaint was substantiated and that "appropriate action" had been taken. Regarding repayment, yes, I did have to pay back the incorrect refunds plus interest. However, the IRS did waive most of the accuracy-related penalties after reviewing my documentation showing I'd been misled. I was able to set up a payment plan with manageable monthly payments. The most important thing was separating myself from the fraudulent behavior by being completely transparent and proactive.

This is incorrect advice. They said they filed SEPARATELY, not jointly. Innocent spouse relief only applies to joint returns. Please be careful giving tax advice when you don't fully understand the situation.

Wait, really? I had no idea about this QBI deduction! Does it have income limits or phase-outs I should know about? And do I need to form an LLC or something to qualify for it?

Yes, there are income thresholds where phase-outs begin. For 2025, the phase-out begins at $191,950 for single filers and $383,900 for married filing jointly. Since your income is $105k, you should be well below these limits and eligible for the full 20% deduction. You don't need an LLC to claim this deduction - you can claim it as a sole proprietor reporting income on Schedule C. The QBI deduction is calculated on your net profit after business expenses, not on your gross 1099 income. This is another reason to make sure you're tracking all legitimate business expenses properly.

S-Corps can definitely be a tax-saving strategy for higher-income contractors, but they come with additional costs and complexity. With an S-Corp, you'd pay yourself a "reasonable salary" which is subject to FICA taxes (Social Security and Medicare), but you can take the rest of your business profits as distributions that aren't subject to self-employment tax. This can save you about 15.3% on the distribution portion. However, you'll have additional expenses: incorporation fees, annual state fees, separate tax return preparation, payroll processing, etc. Generally, the breakeven point where an S-Corp makes sense is around $80-100k of net profit, so at $105k you might benefit, but you should run the numbers carefully.

Do you just manually calculate your portion each month, or have you found a way to automate this? My bill varies slightly each month so I'm always having to recalculate.

I manually calculate it each month since my bill does vary slightly. I keep a simple spreadsheet that shows the total bill, my portion, and the 50% business use calculation. This takes me about 2 minutes each month but provides a clear audit trail. I know some people set up a fixed monthly amount based on an average, but I prefer the exact calculation each month for accuracy.

I use Zoho Analytics and it's great for this. I created a custom dashboard that pulls my expense data and shows trends in my split costs. You can set up categories for "fully business" vs "partially business" expenses and track them separately.

That's exactly what I needed to know! I'll look into setting up that dashboard. Do you track the percentages separately or just the dollar amounts?

I hadn't thought about Roth conversions at all. How would you determine how much to convert each year? Is there some kind of sweet spot?

You want to convert just enough each year to "fill up" her lower tax brackets without pushing her into a bracket where the tax cost becomes too high. It's often best to convert amounts that keep her in the 10% or 12% federal brackets. For the Social Security taxation specifically, you'd ideally convert amounts that keep her combined income (AGI + nontaxable interest + 1/2 of SS benefits) below $25,000 if possible, or at least below $34,000 to avoid the 85% taxation threshold. Many people find converting $5,000-8,000 per year strikes a good balance, but it's very specific to her overall financial situation.

I've had good luck with H&R Block Premium. It has a feature that lets you run scenarios for the following year and shows how different income levels affect your Social Security taxation. Not perfect but better than TurboTax for this specific issue in my experience.

How did you handle the transition to CCH Engagement? Did you have to convert a lot of existing documents? We're currently using a hodgepodge of Excel workpapers and I'm worried about the time investment to switch.

The transition did take significant effort, but we did it gradually over about a year. We didn't try to convert historical workpapers - instead, we started using the new system with new clients first, then gradually transitioned existing clients as they came in for the next tax season. We created a core set of templates and standard workpapers before we rolled it out to the team. This upfront investment paid off tremendously as it ensured consistency from the beginning. We did need training from CCH to get everyone up to speed, but that was worth the investment.

We used Canopy for about a year but ultimately switched to SmartVault. Canopy has some nice features for client communication and task management, but we found the document management aspects to be less robust than we needed for complex business returns. The interface is clean and user-friendly, but it was missing some advanced referencing features that we wanted. If your practice is primarily individual returns with some simple business returns, it might be sufficient. For a practice with complex business clients, you might find it limiting.