Thanks for bringing up Form 4852! I actually didn't know about that option. So if I use my last pay stub to fill out this form, do I need to do anything special when filing my taxes? Like do I need to mail my return instead of e-filing?

You might need to mail in your return instead of e-filing if you're including Form 4852. Some tax software allows you to e-file with this form, but others don't. We ended up mailing ours to be safe. Also make sure you fill out Section 3 of the form explaining why you're filing a substitute W-2 and what efforts you made to get the original (like your phone calls and emails to the company).

Unfortunately that won't help in this case since they're trying to file 2022 taxes now in 2023/2024. They're already past the extension deadline. They need to file ASAP to minimize penalties.

I did call them but the office manager wasn't sure. They just said their accountant told them to issue 1099s for all referral partners who got over $600. They don't care how I file it on my end, just that they reported the payment to the IRS.

That makes sense - the $600 threshold is the standard for when businesses must issue 1099s. Based on that and what others have said here, it sounds like Schedule C is definitely your answer. The cleaning company is treating you as an independent contractor for these referrals (separate from your regular HVAC employment). Remember that with Schedule C income, you're responsible for both the employer and employee portions of Social Security and Medicare taxes, which comes out to about 15.3%. That's calculated on Schedule SE. You'll want to make sure you're setting aside enough to cover this additional tax burden.

The home office deduction is super strict though. You need a space used EXCLUSIVELY for business. If you use your dining table for paperwork but also eat there, it doesn't qualify.

You're absolutely right about the exclusive use requirement. The space must be used regularly and exclusively for business purposes to qualify for the home office deduction. A dedicated desk or room that's only used for managing these referrals would qualify, but a multi-purpose space like a dining table wouldn't. It's also worth mentioning that there are two methods for calculating the home office deduction: the regular method (based on actual expenses and the percentage of your home used for business) and the simplified option (a standard deduction based on the square footage of your office space). For someone with a small amount of self-employment income like the OP, the simplified method might be easier.

Fired him on the spot? But then you had to find someone new during tax season? How did you even manage that? Most good accountants are completely booked up by March.

This is an important point. A lot of people think any income loss during COVID qualifies, when the form is specifically for days you couldn't work due to very specific reasons. The IRS has been flagging suspicious 7202 claims for audit, so you definitely want to make sure you qualify and have documentation.

Thanks for clarifying! That makes more sense why you're pursuing this. Given your situation, I'd definitely push for including Form 7202. The credits can be substantial. One option not mentioned yet - some tax software programs like TurboTax or H&R Block software allow you to complete Form 7202 yourself. You could potentially use the software just for that form, print it out, and give it to your accountant to incorporate into your return. That's what a friend of mine did when her accountant was being difficult about some rental property deductions.

Do you know if this applies the same way for the Additional Child Tax Credit? And is line 18 showing the combined total of both credits or just the regular CTC? I'm looking at my form and can't figure it out.

The phase-out applies to the total Child Tax Credit before it gets split between the regular CTC and Additional Child Tax Credit. So if your total CTC gets reduced due to income phase-out, both portions would be affected. Line 18 typically shows the total combined amount of Child Tax Credit you're receiving (including both the non-refundable portion and the refundable Additional Child Tax Credit portion). If you want to see the breakdown, you need to look at Schedule 8812 which shows the detailed calculations.

Yes, you can absolutely file an amended return for previous years if you didn't receive the correct Child Tax Credit. Generally, you have 3 years from the original filing deadline to submit an amendment. So for 2021 taxes (filed in 2022), you have until April 2025 to amend.

11 Good point about the tax consequences, but isn't there a way to avoid some of these issues? I thought I read something about a post-termination transition period where you can still distribute AAA balances tax-free?

4 Yes, that's correct. After S corporation status ends, there is a post-termination transition period (generally 1 year after the last day of the last S corporation tax year) where shareholders can still receive distributions from the former S corporation's AAA tax-free to the extent of their stock basis. This can be really important for planning purposes. Some shareholders mistakenly believe all their distribution options end when S status is revoked, but this transition period provides a window to distribute accumulated S corporation earnings without dividend treatment under C corporation rules.

14 I dealt with something similar and we ended up going this route. The key was proving that we never operated as an S corp (no distributions, no K-1s issued, etc.) and that it was an honest mistake in the election. Saved us from having to do the split-year filings.