This is terrible advice. The IRS absolutely cares about unreported income of any amount! They have automated systems that match reported income against your return. If the employer files a 1099-NEC and you don't report it, you'll likely get a CP2000 notice. Don't risk penalties and interest to save a few bucks in taxes.

I was speaking from practical experience rather than the technical rules. Yes, you're correct that all income should legally be reported. The automated matching system does exist, but in reality, very small discrepancies often don't trigger further action due to the IRS's limited resources. However, I should have been clearer - it's always best practice to report all income regardless of amount because it's the law, and because even small unreported amounts can cause problems if there are other issues with your return that trigger a review.

You have a few options. If you know the employer will issue a 1099-NEC, you'd report it on Schedule C and pay self-employment tax. However, for a one-time payment where your status is unclear, you could report it as "Other Income" on Schedule 1, Line 8z. This reports the income without self-employment tax.

What's the best way to track basis? My accountant never mentioned this but I'm taking pretty large distributions relative to my salary ($60k salary, $120k distributions) this year.

I use a separate spreadsheet that tracks my basis year by year. Start with your initial capital contribution, add your income (or subtract losses) each year, subtract distributions, and that gives you your current basis. For your situation specifically, assuming this is your first year with those numbers, your basis would increase by the full $180k of business income and decrease by the $180k you're taking out ($60k salary + $120k distributions), so you'd be at break-even. But if you've taken losses in previous years or taken prior distributions, you'd need to factor those in. Many tax software programs like TaxACT or TurboTax Business can help track this, or you can ask your accountant to prepare a basis schedule for you annually.

Does this apply to HSA contributions too? I just set up an S-Corp and was planning to do a company-sponsored HSA.

Does the online account show if a check was issued and/or cashed? I'm having a similar issue with a missing refund and wondering if this would tell me what happened to it.

Yes, the online account will show if a refund was issued and the date it was sent. It doesn't specifically show if a check was cashed, but it does show the status as "refund issued" once they've sent it out. If your account shows the refund was issued but you never received it, that's when you need to request a trace (Form 3911) to determine if it was cashed or returned to the IRS. The account information at least confirms whether they actually sent something or if it's still being processed.

This is good to know! Does the interest get added automatically or do you have to request it specifically? And is it taxable income for the year you receive it?

The interest gets added automatically - you don't need to request it. The IRS system calculates it based on how long your refund has been delayed beyond the original due date of your return (not from when you actually filed if you filed late). And yes, unfortunately the interest is considered taxable income in the year you receive it. The IRS will actually send you a Form 1099-INT the following January if the interest is $10 or more, and you'll need to report it on your next tax return. Kind of ironic that they tax you on the interest they pay you for their own delay!

Does the QCD approach mean I wouldn't have to worry about whether I'm over the standard deduction threshold? I'm 72 and taking RMDs, but was going to just take standard deduction since my church donation is only $10k.

Exactly right! With a QCD, you don't have to itemize to get the tax benefit. The money goes directly from your IRA to the church and never counts as income to you in the first place. It's a much better approach for people who are taking RMDs and wouldn't otherwise itemize. Your $10k donation would reduce your taxable RMD amount by $10k, which typically saves more in taxes than itemizing would, especially if you wouldn't exceed the standard deduction threshold otherwise. Just make sure your IRA custodian sends the money directly to the church - you can't take the distribution yourself and then donate it.

Most churches automatically qualify as 501(c)(3) organizations even if they're not in the database. Churches don't actually have to apply for tax-exempt status, unlike other charities. But it's still good practice to make sure they can provide you with the proper donation acknowledgment letter.

Is there a way to see how much I've contributed to Social Security so far in my lifetime? I'm curious what my eventual benefits might look like.

Yes, you can create an account at ssa.gov (the official Social Security Administration website) and access your Social Security Statement. This shows your lifetime earnings record, FICA contributions, and provides estimates of your future benefits based on your current earnings trajectory. It's actually really interesting to see how your benefits are calculated based on your contributions. The SSA uses your highest 35 years of earnings to calculate your benefit amount, so your early career earnings will factor into what you eventually receive in retirement.

Except that Social Security might be insolvent by the time we retire...isn't that what everyone says? I feel like we're paying for current retirees but won't get anything ourselves.