This is a really important point. My previous employer did this exact thing, and it wasn't an "accident" - it was calculated. When multiple employees filed SS-8 forms, the company ended up getting audited and had to pay massive penalties plus back taxes for everyone they had misclassified. They also had to pay everyone back for the extra self-employment taxes we'd paid.

Exactly. The savings for employers can be substantial - typically around 20-30% of payroll costs. That's why the IRS has been cracking down on this practice. For anyone in this situation, it's worth knowing that the law has protections against retaliation for workers who file SS-8 forms or otherwise challenge their classification status. That doesn't mean it won't create tension, but you do have legal protections if your employer tries to fire you specifically for raising this issue.

If the IRS rules in your favor after filing Form SS-8, they'll typically assess the employer for their share of the FICA taxes (the 7.65% employer portion). You would file Form 8919 with your return to only pay the employee portion rather than the full self-employment tax rate. If you've already filed and paid the full self-employment tax, you can file an amended return to claim a refund for the difference once the determination is made. Just be aware that the SS-8 process can take 6+ months, so you might need to initially pay the higher amount and then amend later.

Thanks for explaining. That makes sense. I'll go ahead and file both forms then since it sounds like I can eventually get back the extra I paid if the determination goes in my favor.

2 Do you know if I can deduct the initial cost of my certification course and background check? I spent almost $500 getting certified and wasn't sure if that counts since it was before I actually started working as a signing agent.

9 Yes, you can absolutely deduct the initial certification costs and background check fees! Those are considered start-up costs for your business, and the IRS allows you to either deduct them in the first year (up to $5,000) or amortize larger start-up costs over 15 years. Even though you paid for them before earning your first dollar as a notary, they're directly related to your business and completely deductible. Just make sure you keep the receipts and documentation showing these were required steps to become a signing agent.

5 Can you explain more about this S-Corp thing? I've heard people mention it but don't really understand why it would save on taxes or when it makes sense.

Omg I didn't even think of that - my parents have always claimed me as a dependent but I moved out last May and have been supporting myself since then. How do I know if they can still claim me or not for 2024 taxes?

There are specific tests the IRS uses to determine if someone can be claimed as a dependent. The main ones are the support test (did you provide more than half of your own financial support for the year?) and the residency test (did you live with your parents for more than half the year?). Since you moved out in May, you lived with them for less than half of 2024, but the support test is the bigger factor. You need to calculate all your living expenses (rent, food, utilities, medical, education, etc.) for the entire year and determine if you provided more than 50% of that total yourself. If you did, your parents can't claim you. If they provided more than 50% (including while you lived with them), they can still claim you even though you moved out.

This is correct but keep in mind you might still need to file a state return if you earned any money in another state during the year (like if you had a summer job somewhere else). The tax software will ask you questions to determine this.

That's a fair point about the amount. My gym is actually $95/month because it has some specialized equipment I use for training. So it would add up to over $1,100 a year, which seems worth deducting if it's legitimate. But I definitely see your point about weighing the potential hassle against the benefit!

$95/month changes things for sure! That's over $1,100 annually, so the tax savings would be more significant. At that price point, it sounds like a premium gym with specific equipment beneficial to your work. Just make sure to document how you use the specialized equipment for referee-specific training. Take photos of yourself using equipment that helps with referee movements, keep a training log showing how your workouts connect to referee requirements, and save any communications from assigning bodies that mention fitness standards. With that kind of documentation and the higher expense amount, the deduction makes more sense.

This is super important advice. The IRS definitely looks at allocation for mixed-use expenses. But how would they even know what percentage you use for business vs personal? It's not like they follow you around the gym...

Honestly I hadn't considered doing it manually since I'm pretty intimidated by all the tax forms. Is Form 1065 something a regular person can figure out without an accounting background? And how would I calculate all the specific numbers for the K-1s?

Form 1065 is definitely doable without an accounting background, especially for a small, straightforward LLC with just two members. The IRS provides detailed instructions, and there are plenty of free guides online. For the K-1s, you basically take each income and expense item and allocate them according to your ownership percentages. So if your LLC had $10,000 in profits, your wife's K-1 would show $5,100 (51%) and yours would show $4,900 (49%). Same with deductions and credits. The actual form walks you through each line item. The trickiest part is usually just gathering all your business income and expense information, which you'd need to do for any tax preparation method anyway.

We're just a regular LLC with no special tax elections. When we formed it, we didn't do anything special with the IRS, so I think we're taxed as a partnership by default? Now I'm worried we messed that up too...

You're good then! You're right that a multi-member LLC is taxed as a partnership by default if you didn't make any special elections. You'll need to file Form 1065 and prepare K-1s for both of you showing the 51/49 split. One more thing to consider - if this is your first year filing, make sure you've obtained an EIN (Employer Identification Number) from the IRS. You'll need this for your partnership return. If you haven't done this yet, you can get one instantly online through the IRS website.