How does the IRS determine if you qualify for an Offer in Compromise? I owe about $6k and honestly would struggle to pay even $50/month right now.

The IRS looks at your ability to pay, income, expenses, and asset equity. They basically want to see if you can reasonably pay the full amount through a payment plan or if your financial situation makes that impossible. For the pre-qualifier tool, you'll need to enter detailed information about your financial situation - income, expenses, assets, etc. The tool then calculates the minimum offer amount the IRS might accept. It's pretty thorough, so have your financial information ready. If you're struggling with $50/month payments, you might indeed qualify, especially if you have limited assets and high necessary living expenses.

NO! Do NOT ignore IRS certified letters! They don't just go away. If you ignore them, the IRS can eventually levy your wages, put liens on your property, or seize money from your bank accounts without going to court. Maybe you just got lucky or they're still working their way to your case.

Is there an easy way to figure out how much to pay for those quarterly payments? Our situation involves some rental income on top of our regular jobs, and I think that might be why we keep owing so much.

For rental income, you'll want to estimate your annual rental profit (income minus expenses) and multiply by your tax bracket percentage. Then divide that amount into four equal payments. A simple approach is to take whatever you owed last year and divide by 4 - that's usually enough to avoid underpayment penalties under the "safe harbor" rule. The IRS only requires you to pay 90% of this year's taxes or 100% of last year's tax amount (110% if your income is over $150,000), whichever is smaller. If your rental situation is complex, you might want to consult with a tax professional for the first calculation, then you can handle the quarterly payments yourself going forward.

This is exactly right! The "don't give the government an interest-free loan" advice only makes sense if you're disciplined enough to actually invest that money instead. For many people, slightly overwithholding is a painless way to save.

Thanks for the suggestion, but unfortunately that's not feasible in our case. There are specific reasons (including some health insurance and retirement benefits) why this person needs to remain employed by the S-Corp rather than directly by the partnership. We looked into changing the employment structure earlier and determined it would create more problems than it would solve.

I understand the constraints with benefits. In that case, I think your best option is to follow the special allocation approach mentioned earlier. You'll need to amend your partnership agreement to specifically state that the $25k is first allocated to S1 as a special allocation to compensate for the employment expense, with the remaining profits split 50/50. This maintains economic substance while ensuring your allocations match the reality of your situation. Just make sure the special allocation language complies with the "substantial economic effect" requirements in Treas. Reg. 1.704-1(b)(2).

Accountable plans are typically for employee expense reimbursements, not for reimbursing one partner for paying another partner's compensation. I don't think it applies here since the partnership isn't reimbursing an employee for business expenses - it's a structural compensation arrangement between partners.

Do you literally just write down your odometer reading before and after each shift? Is there an app that's better for tracking? I just started with DoorDash and want to make sure I'm tracking correctly from the beginning.

You can track miles either by recording odometer readings or using an app. I personally use the Stride app (it's free) which tracks my miles via GPS while I'm working. At the end of the year, it gives me a report of all my business miles. Some other good options are Everlance, MileIQ, or even just a simple spreadsheet where you log the date, starting point, ending point, purpose of trip, and total miles. The key is consistency - track every work trip and keep the records for at least 3 years in case of audit. Whatever method you choose, just make sure you're tracking from day one - those miles really add up and can save you a ton on taxes!

So I definitely need Schedule C regardless, but I might not owe the self-employment tax if my net profit (after mileage and expenses) is under $400? That's really helpful to know! The mileage deduction alone might bring me under that threshold since I did put a lot of miles on my car for those deliveries. I'm going to track down all my gas receipts and see if I have any notes about the miles I drove too. Thanks everyone for the great advice. I feel much less confused about how to handle this on my taxes now!

What exactly are the penalties for late filing? I'm in a similar situation and just realized I'm supposed to be issuing 1099s to some contractors I used last year, but I'm way past the deadline now. Should I still file them late or just wait until next year and do it right?

The penalties depend on how late you file and whether the IRS considers it intentional disregard. For 1099s filed within 30 days after the due date, the penalty is $50 per form. For forms filed more than 30 days late but before August 1, it's $110 per form. For forms filed after August 1 or not filed at all, it's $280 per form. You should definitely still file them even if they're late. Filing late is better than not filing at all, as the penalties for intentional disregard of filing requirements can be even higher (up to $570 per form). Plus, getting into compliance now helps you avoid issues if you're ever audited. The IRS is more forgiving if you correct mistakes voluntarily rather than waiting until they catch them.

You don't need a SEIN in California just to issue 1099s. I'm a CA-based writer who hires editors and designers as independent contractors, and I've been issuing 1099s for years without a state employer ID. The SEIN is only required if you have actual employees with payroll withholding. For boxes 5-7 on the 1099-NEC, I just put "CA" in box 5, leave box 6 blank, and enter the full payment amount in box 7. I've been doing it this way for 3 years based on advice from my accountant, and never had any issues with the CA Franchise Tax Board or the IRS.