Doesn't using a PEO create complications with the S-Corp structure though? I heard that can cause issues with how distributions are handled versus salary.

No complications with the S-Corp structure at all. The PEO only handles the employment administration side - payroll processing, tax filings, compliance, etc. You still maintain complete control over your business operations and how you structure your compensation. Your S-Corp still exists exactly as before, and you can still take distributions separate from your salary. The PEO simply handles the W-2 employee portion of your compensation. Actually, many PEOs have specific expertise with S-Corps and can help ensure you're maintaining the proper salary-to-distribution ratio to satisfy IRS requirements while maximizing tax benefits.

You technically can do this, but you need to be careful. The IRS expects regular, reasonable compensation for services performed. Running payroll just once or twice a year with large amounts can raise red flags, especially if you're taking distributions throughout the year.

How complicated is the penalty abatement form? Did you need help filling it out or is it something that's pretty straightforward?

The penalty abatement form (Form 843) is actually pretty straightforward. It's just two pages, and for First-Time Penalty Abatement, you basically need to explain that you've had a good compliance history before this issue and had reasonable cause for the failure to pay. I wrote a simple letter stating I had always filed and paid on time previously, was unaware of the proper estimated tax requirements for my new business, and was now taking steps to resolve the situation. Include your contact info, the tax periods you're requesting abatement for, and why you believe you qualify. It took about 8 weeks to get approved in my case.

Thanks for mentioning COVID relief options. My business was definitely affected during that time. Do you know if these programs are still available in 2025? Also, how exactly do they calculate "disposable income" for the OIC formula?

Many of the COVID relief options have expired, but the IRS is still processing applications submitted during the eligible periods. If your tax debt originated during the pandemic years, you might still qualify for certain penalty relief under their broader "reasonable cause" criteria. It's worth mentioning in any communications with the IRS. For calculating disposable income in an OIC, they take your gross monthly income and subtract what they call "allowable expenses." These are based on national and local standards for living expenses like housing, transportation, food, etc. The key is that they use their own standards, not your actual expenses for many categories. So if your car payment is higher than their standard transportation allowance, they'll only count the standard amount. This is where many people run into issues with OICs - the IRS might calculate your disposable income as higher than what you actually have available after paying your real bills.

17 Have you run into any issues with the FIRE system rejecting files? I tried it once and got frustrated with all the format requirements and ended up just paying a service.

22 The FIRE system can be finicky about formatting, for sure. The most common rejection issues I've encountered were with TIN/name mismatches and control sequence errors in the file. My advice is to run the file through their test system first before submitting - that catches most formatting problems. Once you get a clean template working, you can reuse it year after year. The learning curve is steep but worth it if you're doing this regularly and want to avoid service fees.

14 I used the Excel 1099 service last year and it was decent for a small number of forms (I did about 25). The integration is pretty seamless if you're already using Excel. It's not the cheapest option though - I think I paid around $3.50 per form plus e-filing fees. And it doesn't handle state-specific forms, so I still had to do those separately. Might be worth looking at if you're only doing federal 1099-NECs and already have everything in Excel format.

2 Thanks for the info! I might check it out for next year. For now I'm going with Tax1099 since several people recommended it and it handles the state forms too.

Does anyone know if you can use dependent care FSA for summer camp? My kids are school age but need supervision during summer months. Would that qualify as a dependent care expense?

Yes, summer day camps generally qualify as eligible dependent care expenses for FSA purposes! This includes general day camps, as well as specialized camps focusing on sports, arts, or academics. The key requirement is that the camp enables you to work or look for work. Overnight camps do NOT qualify though, as they're considered primarily for entertainment rather than care. Also, kindergarten and higher education costs aren't eligible, as they're considered educational rather than care expenses.

Thx for the clear explanation! So if I'm in the 24% bracket plus 7% state tax, am I saving 31% by using the dependent care FSA? Or is there more to it?

Does this same rule apply to people who enrolled but then lost their job mid-year? My sister's income dropped below the threshold after a layoff but she still had marketplace coverage with premium tax credits for the full year.

Yes, this same rule applies to job loss situations as well. The critical factor is that when your sister initially enrolled, she provided an income estimate that qualified her for premium tax credits. The fact that her income later dropped below the threshold due to an unexpected layoff is exactly the type of situation this rule was designed to protect. The IRS recognizes that income can be unpredictable, especially with job loss, reduced hours, or difficulty finding employment. As long as the Marketplace determined she was eligible for advance premium tax credits at enrollment based on her good-faith income projection, she should be able to claim the premium tax credit for the entire year even though her actual income ended up below 100% FPL.

Immigration status definitely matters for ACA coverage. F-1 student visa holders are typically considered "non-resident aliens" for tax purposes for the first 5 calendar years, which affects eligibility. They're usually required to have health insurance through their school anyway, not the marketplace. If your friend got marketplace coverage, they might have issues because students on F-1 visas often don't qualify for premium tax credits. It depends on how long they've been in the US and whether they pass the "substantial presence test" for tax residency.