Thank you for mentioning the state filing! I completely forgot about that. We're in Texas so I think we're okay since there's no state income tax, but I'll double check if there are any other state-level requirements for partnerships. Any idea if having a tax preparer handle this now would help with getting the penalties waived? I'm wondering if it looks better to the IRS if a professional helps fix the issue rather than us doing it ourselves.

You're in luck with Texas! They don't have a state income tax, so there's no equivalent partnership return filing requirement at the state level. However, make sure you're keeping up with any franchise tax requirements if those apply to your LLC. Having a tax preparer handle the late filing could potentially help with penalty abatement. They may have more experience drafting effective reasonable cause letters and can make sure everything is properly prepared. Some tax professionals also have special practitioner hotlines to the IRS that can sometimes resolve issues more efficiently. That said, the most important factor for penalty abatement is still going to be your reasoning and prior compliance history, not necessarily who prepares the form.

This is actually really important advice. I had this exact issue and my numbers were off by about $1,200 between what I reported personally and what was on the late-filed K-1. Ended up having to amend my personal return and it triggered a small audit. Total nightmare.

So should she adjust her W4 at her main job to have MORE tax taken out to compensate for the other jobs not taking enough? And is there a way to calculate exactly how much extra to withhold?

Yes, exactly! She should submit a new W4 to her main employer asking for additional withholding to cover the taxes from her other jobs. The easiest way to calculate this is to use the IRS Tax Withholding Estimator on their website. It lets you input information from all your jobs and will tell you exactly how to fill out your W4. You'll want to complete Step 4(c) on your W4 form which allows you to specify an additional dollar amount to withhold from each paycheck. The estimator will tell you the precise amount needed based on your multiple income sources.

The child tax credit is still there, but it's being offset by her underwithholding from multiple jobs. She's getting the credit, but she also owes more tax than was withheld throughout the year. If she DIDN'T claim her kid, she'd owe even MORE money because she wouldn't get the child tax credit at all, plus she'd have potential penalties for inaccurate filing.

Thanks for the warning! I was just going to put it in a regular envelope. Should I include anything specific with the documents to make it easier for them to process?

Definitely include a copy of the 2800C letter they sent you on top of your documents package. Also include a brief cover letter that references your taxpayer ID (SSN), the tax year in question, and a list of exactly what documents you're enclosing. Try to make it super easy for them to match your documents to your case. I'd also recommend writing your taxpayer ID on the back of each document you send (in case pages get separated). And keep digital scans of everything you send for your own records.

In my experience (tax preparer), these verification issues typically take 6-12 weeks to resolve AFTER they receive your documentation. The IRS is still dealing with major backlogs. If it's been more than 12 weeks, I'd recommend calling to check status.

That's really interesting! So do you completely separate them on different parts of your Schedule C or just keep them separate in your internal bookkeeping? How does that work with deducting expenses?

I just keep them separate in my internal bookkeeping for clarity, but on the Schedule C, it's still all reported together. The supplies used in services go on line 22 (Supplies), while any larger components I occasionally resell would go through Cost of Goods Sold. The benefit of this approach is that it gives me clear visibility into the different aspects of my business while still filing correctly. Most of my parts and components qualify as supplies since they're incidental to my services and relatively low in value. This also makes it easier to justify my tax treatment if I'm ever questioned, since I can clearly show what percentage of my business is service vs. product sales.

Section 179 is definitely worth considering for more expensive items, but you need to be careful about the "placed in service" requirement. Items must actually be used in your business during the tax year to qualify for Section 179, not just sitting on a shelf as backup inventory.

Does anyone know if this deduction is coming back after 2025? Or is it gone for good? I'm planning a move next year but maybe I should wait if this is coming back...

The current suspension of the moving expense deduction is set to expire after 2025, so technically it should return in 2026 unless Congress extends the suspension or makes the change permanent. However, tax laws are constantly changing, so I wouldn't base major life decisions like when to move solely on this potential tax benefit. Many provisions of the Tax Cuts and Jobs Act are scheduled to sunset after 2025, but it's impossible to predict which ones will be extended and which will revert. If the move makes sense for your career and life circumstances, I wouldn't delay it just for a potential tax deduction that may or may not be available later.

I amended a return last year to claim a missed education credit. Used the IRS Free File Fillable Forms for the 1040-X. It took about 16 weeks to process but I got an additional $1,500 refund. Just make sure you have documentation to back up whatever you're claiming.