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Important note that nobody has mentioned yet - if you end up having to pay taxes as if you were a 1099 contractor for 2023, make sure you deduct all your business expenses! That includes a portion of your phone bill if you use it for work, home office deduction if applicable, mileage, work supplies, etc. This can help offset some of the extra tax burden.
How do you properly document these expenses if you didn't track them throughout the year? I'm in a similar situation and I use my personal computer and cell phone for work all the time, but I don't have any special receipts or anything.
You can still claim those expenses even without perfect documentation. For things like cell phone and internet, determine what percentage is used for work (be reasonable and honest) and deduct that percentage of your bills. Pull your statements from 2023 to calculate the total. For a home office, measure the square footage of your dedicated work space compared to your total home size. That percentage can be applied to rent/mortgage, utilities, etc. For computer equipment you already owned, you can deduct the business-use percentage based on current fair market value if you started using it for business in 2023. Going forward, keep better records - a simple spreadsheet works, along with taking photos of receipts. Remember, in an audit you need to prove these were legitimate business expenses, so some documentation is better than none.
Has anyone actually succeeded in getting their employer to pay back taxes after being misclassified? My employer just agreed to make me W2 going forward but refuses to do anything about 2023 where I paid way too much in taxes.
I had partial success. Filed the SS-8 and 8919 forms, and after the IRS determination (took like 8 months), my employer had to pay their share of FICA taxes. They were annoyed but ultimately it worked out. We're still on good terms. The key was being super professional about it and framing it as "just following tax law" not a personal issue.
Has anyone used TaxAct or TurboTax for filing multiple years of back taxes with 1099 income? I'm in a similar situation and wondering which software handles this best.
I used TurboTax for 3 years of unfiled 1099 taxes last year. It worked ok but you have to buy each year separately which adds up fast. They don't make it super clear how to find the previous year versions either - you have to specifically search for "TurboTax 2019" etc. on their site. The business version is what you need for 1099s, which is their most expensive tier.
One important thing nobody's mentioned yet - if you're trying to catch up on unfiled 1099 taxes, make sure you're keeping your current year tax obligations on track too! For 1099 income, you should be making quarterly estimated tax payments. One of the biggest mistakes I made when catching up on my back taxes was ignoring my current year, which just created another problem. Set up those quarterly payments while you're sorting out the past years.
Just to add a bit more detail since I work in HR - the 1095-C form has three parts: 1. Your employer and personal info 2. Info about the coverage your employer offered 3. Covered individuals (if your employer is self-insured) Your husband probably got this from his large employer. The 1095-B is similar but comes from insurance companies or government programs. As others mentioned, you don't file these forms with your taxes, but keep them for your records in case the IRS has questions about your health coverage.
Do you know if these forms matter for the Premium Tax Credit? My sister gets insurance through the marketplace and she's trying to figure out if these forms affect her refund.
Great question! The 1095-B and 1095-C forms themselves don't directly impact the Premium Tax Credit. However, if your sister receives insurance through the marketplace, she should receive Form 1095-A, which IS needed to claim the Premium Tax Credit. The 1095-A is different from the B and C versions and contains essential information for calculating the Premium Tax Credit on Form 8962. So while the B and C forms are just for your records, the 1095-A is actually needed for filing if you got marketplace insurance and want to claim the credit.
I actually threw mine away last year thinking they were junk mail lol. Nothing bad happened! But now I know to keep them with my records just in case.
Same! I tossed mine and then panicked afterward. Called the IRS and they said it wasn't a big deal as long as I had health insurance. The forms are mostly for their records.
One thing nobody's mentioned yet - if you miss the 2 month 15 day window but still want S-corp status for the entire year, you can file Form 2553 and write "PURSUANT TO REV. PROC. 2013-30" at the top. Under Rev Proc 2013-30, the IRS provides automatic relief if: 1) You intended to be an S-corp 2) You file Form 2553 within 3 years and 75 days of the date you wanted the election to take effect 3) You have reasonable cause 4) All shareholders reported income consistent with S-corp status This saved me last year when I messed up my timing!
Does this Rev Proc 2013-30 actually work though? I've read horror stories about people thinking they qualified for relief but then getting rejected.
It absolutely works, but you have to make sure you meet ALL the requirements. The most important is that your shareholders (which is just you if you're a single-member LLC) have filed their personal returns consistent with S-corp status. That means if you're trying to get S-corp status for 2023 after the deadline, you'd need to have filed your 2023 personal return as if you were an S-corp owner (reporting K-1 income, not Schedule C). The IRS is actually pretty lenient with this relief procedure for small businesses. I submitted mine with a simple statement explaining I didn't understand the election timing requirements, and it was approved without any questions.
Just to add a practical note as a fellow photographer who went LLC/S-corp last year: remember that once you're an S-corp, you MUST pay yourself a reasonable salary through payroll with proper withholding. This is the #1 audit trigger for S-corps. I set my salary at about 60% of my net profits based on industry averages for photographers, and I use Gusto for payroll which makes it super simple. The remaining business profit passes through to my personal return without self-employment tax, which saved me about $7,300 last year. Worth all the extra paperwork!
What's a "reasonable salary" though? I've heard everything from 30% to 70% of profits and I'm confused about what's actually required.
Rudy Cenizo
What nobody's mentioning is the Qualified Business Income Deduction (Section 199A) which gives most self-employed people a deduction equal to 20% of their qualified business income. This is available regardless of whether you're a sole proprietor or have an S-corp. It's basically a tax break designed for small business owners.
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Natalie Khan
ā¢Does the QBI deduction apply if you're doing gig work like DoorDash? I'm confused about whether that counts as a "qualified" business.
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Rudy Cenizo
ā¢Yes, gig work like DoorDash typically qualifies for the QBI deduction. Any income you report on Schedule C as self-employment income generally qualifies, with some exceptions for certain service businesses at higher income levels. The deduction is calculated as 20% of your net business income after expenses, so make sure you're tracking all your mileage and other business expenses to maximize your deduction. For most gig workers, this ends up being a significant tax savings without requiring any special business structure or additional paperwork.
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Daryl Bright
Just to complicate things further - if your business is making really good money (like over $100k profit), you probably DO want to look into an S-Corp. I saved over $13k in self-employment taxes last year by switching from sole prop to S-Corp for my consulting business.
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Sienna Gomez
ā¢Totally this! My accountant had me switch to an S-Corp once I hit about $80k in profit and I'm saving a ton on SE taxes. But for smaller businesses its probably not worth the extra hassle and fees.
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