What's considered a "clean tax record"? I filed late one year but paid everything I owed. Would that disqualify me from the first-time penalty abatement?

A clean tax record generally means you've filed all required returns and haven't had any significant penalties in the previous 3 tax years. Being late to file one year could potentially disqualify you, but it depends on whether you were assessed a failure-to-file penalty at that time. If you filed late but used an extension or weren't required to file that year, it shouldn't affect your eligibility. When in doubt, it's still worth asking the IRS about abatement - the worst they can say is no, and many people get approved even with minor issues in their history.

You got lucky with that wait time! What number did you call? I've been trying the general line and it just disconnects me after saying they're too busy.

1 I've heard about the S-Corp option but wasn't sure if it was worth the extra paperwork and compliance requirements. What income level do you think makes the S-Corp election worthwhile? And did you need to hire a specialized accountant to handle it?

22 Most tax professionals suggest considering S-Corp election when your business profit exceeds about $40,000-$50,000 annually. That's typically where the self-employment tax savings outweigh the additional costs of compliance. I did hire a specialized accountant because the S-Corp has more filing requirements including an annual 1120S corporate return. The costs run me about $1,200 annually for tax preparation, but I save around $4,000 in self-employment taxes, so it's definitely worth it. You'll also need to run regular payroll and maintain more formal business documentation, but the tax savings can be significant once your business is consistently profitable.

11 I used TurboTax Self-Employed last year for my single-member LLC with both 1099s and W-2 (I pay myself). It worked well and walked me through reporting the 1099 income on Schedule C, entering business expenses (including my salary to myself), and then separately entering my W-2. Just make sure you enter your salary as a wage expense on Schedule C - this is critical to avoid double taxation.

Did you also have to file an amended return, or was the payment enough? I'm not sure if I need to do additional paperwork or if just making the EFTPS payment takes care of everything.

Just making the payment is enough - you don't need to file an amended return for this specific situation. The deferred social security tax was always a payment timing issue, not a tax calculation issue. When you make the payment correctly through EFTPS, the system will match it with your outstanding liability. Just make sure you keep your payment confirmation for at least 3 years in case there are any questions later.

This happened to me too! Call the EFTPS customer service line at 800-555-4477 (not the regular IRS line). They can help reassign the payment to the correct tax period and type. Have your confirmation number ready. I was able to get mine fixed within a week. Don't bother with the general IRS line for this specific issue - the EFTPS folks can handle it directly.

If I get rid of these partnership investments now, will I stop getting K-1s next year? This is all way more complicated than I signed up for when I started investing.

Yes, if you sell all your partnership investments now, you won't receive K-1s for those investments next year. You'll just have a final K-1 for this tax year that includes the sale. Just be careful about which investments you're selling. Look specifically for anything labeled as MLP (Master Limited Partnership), LP (Limited Partnership), or PTP (Publicly Traded Partnership) in your portfolio. Don't just randomly sell investments because most normal stocks and many ETFs don't generate K-1s. Some platforms like Robinhood actually mark which investments might generate K-1s in their descriptions.

Bad idea. The IRS gets a copy of your K-1, so they know you received partnership income even if you ignore it. Ignoring it basically guarantees an audit or at minimum a tax notice and potential penalties. A friend tried this and ended up owing the original tax plus a 20% accuracy penalty and interest.

Whoa I had no idea there were different penalties! So if I file on time but can't pay everything, I'll only get the smaller penalty? Is there any way to avoid penalties completely if I just need like an extra month to pay?

Exactly! Always file on time even if you can't pay - the filing penalty is 10 times higher than the payment penalty. It's one of the most expensive mistakes new filers make. If you just need an extra month or two, you might qualify for a short-term payment plan with minimal or no setup fee through the IRS website. For extremely short delays (like a few weeks), sometimes you can call and request a one-time extension without penalties, but this is case-by-case and not guaranteed. Your best bet is to pay as much as you can by April 15th to minimize the amount subject to penalties, then set up a formal payment arrangement for the rest.

Most states align their deadlines with the federal April 15 date, but not all do! For example, Virginia's deadline is May 1st, and Hawaii's is April 20th. Always check your specific state's tax website to confirm.