Don't forget Box 15 on your 1099-DIV should tell you how to treat the Non-Dividend Distribution. There are different codes that indicate if it's a return of capital (ROC) or something else. Most commonly it's code "R" for return of capital, which is when you reduce your basis. If the amount exceeds your basis, you record a capital gain. It's actually not that complicated once you understand the principle - they're basically returning part of your investment back to you tax-free, but tracking it by reducing your cost basis.

Just a tip - I use FreeTaxUSA for filing and it handles this situation really well. When you enter the 1099-DIV information, there's a specific field for non-dividend distributions. Then when you enter the stock sales info, it prompts you to adjust the cost basis accordingly. Much easier than trying to figure it all out manually. If the distributions are return of capital (which they usually are), the software automatically adjusts the basis. It's saved me a ton of headaches with my investment reporting.

Here's what I'm doing instead of the savings bonds program - I'm setting up an automatic transfer of 30% of my refund to a high-yield savings account as soon as it hits my bank. The current rates are actually better than what the Series I bonds were offering anyway (at least the fixed rate portion). Then once I hit $1000, I'll manually buy bonds through TreasuryDirect if rates look good. The automatic transfer accomplishes the same "forced savings" effect that the tax refund bond purchase did. Out of sight, out of mind.

Does anyone remember when you could actually get paper savings bonds with your tax refund? I miss those days. My grandparents gave me paper bonds when I was a kid, and I liked continuing that tradition with my own kids using the tax refund option. Now everything's electronic and it just doesn't feel the same.

Just to add some clarity on the partnership tax structure - partners can take money from the business in two ways: 1. Guaranteed payments - these are like regular payments for services rendered regardless of partnership profits. They're deductible by the partnership but still subject to self-employment tax for the partner receiving them. 2. Distributions - these are distributions of profit and aren't deductible by the partnership. They've already been taxed as income flowing through to your personal return. The confusion often happens because people want to "pay themselves" but don't understand the tax treatment. You can't deduct partner labor as COGS, but you can structure guaranteed payments if you want to create more of a salary-like arrangement.

Heres a simple example that might help make things clearer: Let's say your service LLC makes $200k revenue with $50k in legit business expenses (rent, software, travel, etc). That leaves $150k in profit. That $150k flows through to you and your spouse's personal tax returns based on ownership %. You cant deduct some made-up "value of partner labor" from this. If you want to take $120k out of the business, you just take $120k in distributions. The distributions arent separately taxed bc you already are taxed on the full $150k profit whether you take it out or leave it in the business. Does that help? Your tax software is probably just confusing you because its trying to handle both product and service businesses with the same screens.

One thing nobody's mentioned - make sure you're using the CORRECT 2020 tax forms! Don't just download current forms from the IRS website. You need the actual 2020 versions since tax laws change every year. You can find prior year forms here: https://www.irs.gov/forms-instructions (just search for the form number and select 2020 from the dropdown).

Don't forget that if you're filing a 2020 return now, any stimulus payments you received for that tax year need to be accounted for correctly on the return! The first two stimulus payments were tied to 2020 taxes (the $1,200 CARES Act payment and the $600 December 2020 payment). If you didn't receive these payments back then, you can claim them as the Recovery Rebate Credit on your 2020 return. But if you did receive them, you need to indicate that so you don't accidentally claim them again.

Former payroll specialist here. One thing to consider is HOW MUCH the difference will be. If the only change is bonus pay being recategorized from tips to regular income, the tax withholding might actually be pretty similar. The main difference would be that Social Security and Medicare taxes might have been under-withheld if they were incorrectly treated as tips (depending on if tip credits were applied). For most employees at a restaurant, this difference might not be huge. Ask your payroll provider to give you an estimate of the difference for a typical employee. If it's minimal (like under $200), filing now and amending later might make sense for folks who need refunds ASAP.

I've been in restaurant management for 15+ years and dealt with this EXACT situation in 2020. Here's what we learned: For our servers who really needed their refund $$$ fast, we advised them to: 1) File now with incorrect W-2 2) Get their refund 3) File 1040-X amendment after corrected W-2 arrived 4) Either pay back any difference or get additional refund For kitchen staff and managers who could wait, we suggested filing an extension to avoid the amendment hassle. The payroll company should offer to pay for tax amendment services for affected employees! Push them hard on this - it was THEIR error. Our payroll provider ended up giving us H&R Block vouchers for all affected employees to cover amendment costs.