Wait the IRS actually pays interest when they're late with your refund? Is that automatic or do you have to request it somehow?

It's completely automatic! The IRS pays interest on refunds that are issued more than 45 days after the filing deadline (or the date you filed, if you filed after the deadline). The interest is calculated from the original due date of the return. The interest rate changes quarterly based on federal rates. Currently it's around 7% annually which is pretty decent. The interest gets added to your refund automatically - you'll see it as a separate amount on your refund check or direct deposit description. You will get a Form 1099-INT the following January because that interest is taxable income for the year you receive it.

States all have their own rules unfortunately. What state are you in? I know NY and CA don't penalize for late filing if you're due a refund, similar to federal.

I tried that first but couldn't find the zero wage indicator box anywhere in the interface. Is it hidden in an advanced section somewhere? The BSO interface is not exactly user friendly.

It's definitely not in an obvious place! You need to first select "Report Wages to Social Security" from the main BSO menu, then choose "Create/Edit W-2/W-2c Online." After you've entered the employee information, there should be a checkbox labeled "Zero Wage" near the bottom of the wage information section. If you still don't see it, make sure you're using the W-2 Online application and not the W-2 file upload option, as they have different interfaces. Also, sometimes you need to complete all the required fields first (name, SSN, address) before that option becomes visible. The BSO system is definitely frustrating to navigate!

Most regular tax software is for filing your personal or business taxes, not for creating and filing W-2 forms. You need specific payroll software or the BSO system for W-2s. TurboTax won't help with this particular issue.

16 Wait really? So if I tell my CPA about mistakes I made on past returns, they could be forced to tell the IRS, but a lawyer couldn't?

7 That's exactly right. Conversations with your attorney are protected by attorney-client privilege, which means they generally cannot be compelled to disclose what you've told them about past issues. CPAs do have a type of confidentiality privilege, but it's much more limited and has significant exceptions, especially in cases involving potential tax fraud or criminal matters. If you're concerned about disclosing past problems, speaking with a tax attorney first provides stronger protection while you figure out the best approach to resolve the situation.

22 Are they actually good though? I never heard of enrolled agents before. Can they handle complicated stuff like business taxes?

That's actually a really good point and might be exactly how I got into this mess in the first place. I didn't realize my employer's HSA match counted toward my annual limit! Is there any easy way to track this throughout the year so I don't go over again?

The easiest way to track it is to regularly check your HSA statements or online account. Most HSA providers show a running total of all contributions for the year, broken down by source (your contributions vs. employer contributions). Some providers also have alert features you can set up to notify you when you're approaching your limit. Otherwise, I'd recommend setting a calendar reminder to check your total contributions quarterly, especially if your employer makes irregular contributions or matches.

This is actually a great question! The IRS doesn't provide a specific formula, but the generally accepted method is to apply the overall account's rate of return to the excess amount. For example, if your HSA grew by 5% during the period the excess was in the account, you'd calculate 5% of your excess contribution amount to determine the earnings attributable to that excess.

Can I ask how long it took between submitting your S corp election and receiving the rejection/notices about your unfiled returns? Was there any warning or did they just hit you with everything at once?

It took about 6 weeks from when I submitted Form 2553 until I received the rejection letter. There was no warning at all - the rejection came first which specifically mentioned "taxpayer not in compliance with filing requirements" as the reason. Then about 2 weeks after that rejection letter, I started receiving separate notices for each unfiled tax year requesting that I file returns immediately. The notices came with proposed penalty amounts that increased with each year I was behind. The whole process created a much bigger headache than if I'd just caught up on filings first.

I used a CPA when I was in this exact situation last year. Having them handle everything definitely helped. They filed my missing returns first, waited about 45 days, then submitted the S corp election. Everything went through without issues. They told me the key was getting the personal returns processed BEFORE submitting Form 2553. Also, they filed a disclosure statement with my catch-up returns explaining the late filing was unintentional which may have helped avoid penalties.

Thanks for sharing your experience! That 45-day waiting period between filing the missing returns and submitting the S corp election makes a lot of sense. Did your CPA mention anything about whether you needed to wait for formal processing confirmation from the IRS before submitting the 2553?