Did you use a tax professional to help with your Offer in Compromise or did you handle it yourself? I'm wondering if it's something I can navigate on my own or if I should budget for professional help.

I started the process myself but ended up hiring a tax resolution specialist about halfway through. The forms themselves aren't super complicated, but determining the right offer amount is tricky. The IRS rejected my first submission because I miscalculated my "reasonable collection potential." The professional helped me resubmit with the correct calculations and stronger documentation of my hardships. It cost me about $1,500 for their help, which felt worth it since they got my offer accepted. If your situation is straightforward you might be able to do it yourself, but having someone who knows what the IRS is looking for definitely improved my chances.

Is that automatic or do you have to apply for that specific benefit? My tax debt is around $14k so I'm worried about liens affecting my credit.

Good point! I just found the W-2 and they did withhold about $95 in federal taxes. Does that mean I might not owe anything additional or could potentially get more back?

That withholding will definitely help offset what you might owe! The $95 they already withheld gets credited against any tax due on that income. Depending on your tax bracket, you might end up owing very little or possibly even getting a small additional refund. It's still important to file the amendment to get your records straight with the IRS, but this makes it less likely you'll face a big tax bill. When you file your 1040-X, make sure to include that withholding amount so you get credit for those taxes already paid.

Generally you have 3 years from the original filing deadline to amend a return. So for 2024 taxes that were due in April 2025, you'd have until April 2028. But I wouldn't wait that long - the IRS computers usually catch missing W-2s within 6-18 months and they'll send you a notice with penalties and interest by then.

That exclusive use requirement is so tricky! I have a home daycare and the IRS has different rules specifically for daycare providers. We can claim spaces that have mixed use (like kitchen, bathroom) based on time used for business. I wonder if there's any similar exception for pet boarding? Might be worth looking into.

That's a really good point. Do you think I need to file amended returns for previous years? Or could I just start doing it correctly going forward? I'm a bit worried about opening a can of worms if I start amending returns.

Generally, if you discover an error on past returns, you should file amended returns. However, there's a 3-year statute of limitations on most tax issues, so you'd typically only need to amend returns from the past 3 years. That said, this isn't necessarily a black-and-white error. There are legitimate situations where rental arrangements between yourself and your business can be appropriate, especially if you have the right business structure. Before amending anything, I'd recommend getting that third opinion from someone who can look at your specific situation. If you do need to amend, a tax professional can help you present the changes in the most favorable light, possibly reducing or eliminating penalties. Sometimes when you self-disclose and correct issues, the IRS is more lenient than if they discover the issue during an audit.

Does filing Form 8919 with reason code G mean you don't have to pay the self-employment taxes while waiting for the SS-8 determination? Or do you still need to pay them and then get a refund later if the determination is in your favor?

When you file Form 8919 with reason code G, you only pay the employee portion of FICA taxes (7.65%) instead of the self-employment tax rate (15.3%). You're essentially reporting the income as wages rather than self-employment income while your SS-8 is pending. If the IRS eventually determines you're actually an independent contractor, you might need to pay the difference later. But if they rule you're an employee (which sounds likely in your case), you won't have overpaid. It protects you from both penalties and overpayment while waiting.

And unemployment benefits! If you're properly classified as an employee, you could qualify for unemployment if you lose your job. Independent contractors can't get regular unemployment. This literally saved me when I got laid off last year after fixing my classification status.

Absolutely right about unemployment benefits! Also, proper classification means you're covered by workers' compensation if you get injured on the job. As a contractor, you'd be on your own for medical costs from workplace injuries. The other significant benefit is overtime pay protection. If you're working over 40 hours in a week as an employee, you're entitled to overtime pay in most cases. Independent contractors don't have this protection, which is why some employers try to misclassify workers.

Yes! I did this last year. When you file your return, there's an option to apply your refund to next year's estimated taxes, but for past balances you need to call them. Once you have your return processed and the overpayment confirmed, call and ask them to apply it to your outstanding balance instead of issuing a refund.

That's impressive! I had a similar issue with a 1099-K that was issued in error by a payment processor. They reported the gross amount of money that passed through my account (including refunds and personal transfers) as income. Took three letters and almost 5 months, but finally got it resolved. The CP2000 notice is scary when you first get it, but it's just a proposal and definitely worth contesting if there's an error!