That's a really good point about spreading it out. I think I'll do the 5 paycheck option since that would be way less disruptive to my monthly budget. Do you think I need to specifically ask HR about the state tax withholding or would they typically handle both?

Definitely ask HR specifically about state taxes. In my experience, some payroll systems don't automatically adjust state withholdings when federal is increased. Just tell them you want to make sure both federal AND state taxes are being withheld appropriately for the HRA payment. They should be able to handle that for you.

I don't think that's accurate. The taxes you pay are based on the tax year they're for, not when you pay them. So taxes for 2023 income always count toward 2023 SALT deduction regardless of when you actually pay them.

How much were the penalties? I have an LLC in Illinois too and I'm not sure if I filed correctly last year.

The penalties in Illinois were $100 for late filing plus the $75 annual report fee. So $175 total for a business that made exactly $0 that year. Pretty frustrating. The most annoying part is that the state filing deadlines often don't align with federal tax deadlines. In Illinois, the annual report is due by the first day of the LLC's anniversary month (when you formed it). So if you formed your LLC in March, your report is due by March 1st each year, regardless of tax filing extensions.

Banks generally only report interest income via 1099-INT if your account earned more than $10 in interest for the year. If your account had no activity and earned no interest (or less than $10), the bank typically doesn't report anything to the IRS about that account.

Good point! Also worth checking Box 16/17 for state withholding too. Lots of people forget about state taxes when considering amendments.

Thanks for the tip! I just double-checked the form and there's no withholding in Box 4 or any of the state boxes. It looks like they treated me as a pure independent contractor with no tax withholding. Since I already reported the full income amount and paid the appropriate taxes, I'm going to follow the advice here and not file an amendment. I was worried the IRS might send me some kind of automated notice about a "missing" 1099, but it sounds like their system will see I already included the income. That's a relief!

Actually depends on what the payment was for. 1099-MISC is still used for certain types of payments like rent, prizes, medical payments etc. 1099-NEC is specifically for nonemployee compensation (like independent contractor work). So it could be correct depending on what services OP provided.

Did your refund come faster or slower when you filed jointly vs separately? I've heard joint returns sometimes take longer to process.

Our refund actually came slightly faster when we filed jointly compared to previous years filing separately. We e-filed in early February and had our refund within 14 days, which was about a week faster than our experience with separate returns. I think what matters more for processing time is how early you file and whether your return has any complicated elements that might trigger extra review. In our case, a straightforward joint return with W-2 income and child tax credits was processed very efficiently.

Yes! TurboTax has a feature that lets you compare filing statuses. After you enter all your info, there's an option somewhere in the tax tools section called "Tax Scenarios" or something similar that shows the difference in refund/amount owed. I did this last year when deciding between joint and separate filing. It's not super detailed in explaining WHY one is better, but it does show you the dollar difference.

Thanks for the info! That sounds exactly like what I need. I don't need the deep explanation as long as I can see which option saves us more money. I'll look for that Tax Scenarios feature when I start our return this year.

But wouldn't it be weird to only charge for storage 14 days per year when the products are stored there all year round? Seems like it might raise red flags.

You're right that it might seem unusual to only charge for 14 days when the storage is ongoing, but that's actually how the Augusta rule works. Many business owners choose specific days throughout the year to "rent" their home to their business. You're essentially creating 14 individual rental events spread throughout the year. The key is proper documentation - having a written agreement specifying which days your home is being rented to the business, what spaces are included, and making sure the rental rate is comparable to market rates. This approach is completely legal as long as you stay within the 14-day limit and have the proper paperwork to support it.

Did you end up owing more taxes or just having to provide documentation? I'm always worried about making innocent mistakes that could turn into big problems.