Thanks for bringing this up. We've been keeping personal and business finances separate, but we haven't been holding any formal meetings or keeping minutes. For board meetings, is this something we need to do monthly? And what kind of documentation should we keep for distributions?

You should hold and document board meetings at least quarterly, though monthly is better when you're making regular financial decisions. The minutes don't need to be elaborate - just record date, who attended, key decisions made (especially about finances), and have them signed. For distributions, create a simple corporate resolution for each one stating the amount, distribution date, and that it was approved by the board. Make sure distributions are proportional to ownership (51/49) unless you have specific documentation justifying otherwise. We got flagged because our distributions weren't matching our ownership percentages, which raised red flags with the IRS.

This is huge. I missed my first quarterly payment because I didn't understand S-Corp taxation and ended up with penalties. Talk to your accountant about setting up proper tax planning from day one.

Thanks for confirming this. When my S-Corp started making real money, I had no idea about estimated taxes and ended up with a huge tax bill plus penalties the following April. It's especially important with your 51/49 split - both of you will need to make individual quarterly payments based on your share of the profits, even before you take distributions.

This is exactly what I'm afraid of. Did you try calling the IRS beforehand to discuss settlement options, or did you go straight to representing yourself in court?

I tried calling the IRS multiple times but could never get through to anyone helpful. I just got transferred around and eventually disconnected. That's part of why I decided to fight it in court. Looking back, I should have been more persistent about reaching someone at the IRS who could discuss my case before the court date. Many cases get settled before court through their appeals process if you can actually reach the right person.

This is great advice! Do you need to qualify based on income to use these services? And how did you find them - did you just call the law school directly?

OP literally said they started the job in May. Reading comprehension ftw. That's obviously why the W2 shows less than the full salary amount.

You're right, I completely missed that part about starting in May. That perfectly explains the difference between the 62k salary and 55k on the W2 - it's just the prorated amount for the partial year worked.

That's actually a really good point I hadn't considered. I'll reach out to our HR department to verify they're using the current W4 calculation method. They're a fairly small company so it's possible they're using outdated processes. That could definitely explain the discrepancy. I'm realizing from all these comments that I probably did get the child tax credit benefit, just in my paychecks rather than as a lump sum at tax time. I think I need to decide whether I want more money throughout the year or a bigger refund, then adjust my W4 accordingly.

I had this exact issue with my company last year! They were using outdated software that wasn't correctly applying the Child Tax Credit on the new W4 form. Took them 3 months to fix it but they eventually had to give me back pay.

What exactly should I be writing down? Just the total amount or do I need to break it down by credit card vs cash tips?

Ideally you should record both your cash and credit card tips separately for each shift. Credit card tips are already tracked by the restaurant's system, but having your own record helps you verify everything's correct. For cash, just the total amount per shift is fine - you don't need to track each individual transaction. Also record the date, which shift you worked (lunch/dinner), and your total sales if possible. This helps establish the reasonableness of your reported tips if there's ever a question. Many servers use tip tracking apps now that make this super simple - just a quick entry at the end of each shift.

This is so true. I'm in New York and the state department of taxation came after me even though I'd settled things with the IRS. They have their own penalty structures too.

Thanks! Do you know if they have a "review" feature that checks for potential mistakes or missed deductions before filing? That's one thing I did like about TurboTax.

Yes, they absolutely have a review feature! It runs through everything before you file and flags potential issues or missed opportunities. It's actually pretty thorough - last year it caught that I hadn't entered a 1099-INT from a small savings account I had forgotten about. They also have a "maximize refund" pledge similar to other tax services, so they're incentivized to help you find all eligible deductions and credits.

Can confirm this limitation. I tried using it when I moved mid-year between states and it was confusing. Ended up using a different service for that year, but went back to FreeTaxUSA the next year when my situation was simpler.