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Just a reminder that PPP has specific requirements for forgiveness. Make sure you're documenting how you use the funds! For sole props with no employees, it's actually pretty straightforward: You can claim up to 8 weeks of your average weekly net profit from Schedule C as "owner compensation replacement" (this would be your entire loan amount if you have no other eligible expenses). Keep records showing you transferred the PPP funds to a personal account as "owner compensation" over an 8-24 week period. The remainder can be used for business rent, utilities, etc. but keep ALL receipts and documentation. Some lenders are really scrutinizing sole prop forgiveness applications.
Do you happen to know if health insurance premiums for yourself (the sole prop) count as eligible expenses for the remaining 40%? I've been getting conflicting information.
For sole proprietors with no employees, health insurance premiums for yourself do NOT count as an additional eligible expense for the 40% portion. This is because health insurance for the owner is already factored into your net profit calculation on Schedule C. The eligible expenses for the 40% portion are limited to business mortgage interest, rent or lease payments, and utilities that were in place before February 15, 2020. The rules are a bit different for businesses with employees, which is probably why you've been seeing conflicting information. Always best to check with your specific lender since they'll be the ones processing your forgiveness application.
Has anyone actually received PPP as a sole proprietor without employees and also having a W2 job? I'm in the exact same boat (full-time job + side business as sole prop) and my bank (Chase) keeps giving me the runaround saying I don't qualify. They're saying because I have W2 income, my side business hasn't been "substantially affected" enough to qualify.
I got PPP for my sole prop photography business while having a full-time W2 job. Your bank is wrong - there's nothing in the PPP rules that disqualifies you for having W2 income. Try applying through a smaller bank or credit union, or one of the fintech lenders like BlueVine or Kabbage. I applied through BlueVine after BofA gave me similar pushback and was approved in 3 days.
Just wanted to add another option - I was able to amend my return with my 1099-NEC by downloading all my tax info using the IRS's "Get Transcript" tool online, then using that data to file an amendment through H&R Block's free online version. TurboTax isn't the only game in town, and their upselling tactics are getting worse every year. I had the exact same issue where they wanted me to upgrade just to fix a simple mistake. The H&R Block interface was pretty easy to use, and they didn't charge me anything for a basic amendment involving a 1099-NEC correction. Just make sure you have all your original tax data and the correct 1099-NEC information before starting the amendment process with any service!
Thanks so much for this suggestion! Did you need to create a new account with H&R Block or could you somehow import your return from TurboTax? I'm worried about having to re-enter all my information from scratch.
You do need to create a new H&R Block account, and unfortunately there's no direct import from TurboTax. However, you don't have to re-enter everything from scratch either. What I did was download my tax return transcript from the IRS website (the "Get Transcript" tool), which had all my basic info already included. Then in H&R Block, I just had to enter the main details from my original return based on that transcript, plus the correct 1099-NEC information. It took maybe 30-45 minutes total, which was worth it to avoid paying TurboTax's premium fee. They make the amendment process pretty straightforward, especially for correcting income on a 1099-NEC.
has anyone tried just waiting for the IRS to send a letter? i had a missing 1099-NEC last year and eventually got a letter from them saying i owed more money. i just paid the difference online and didnt have to file an amendment at all. saved me the headache of figuring out how to do an amended return.
That's actually not a great approach because the IRS will charge you interest and penalties if they catch the mistake first. When you file your own amendment, you can often avoid the penalties (though you'll still owe interest on any unpaid tax). Plus, having the IRS send you notices can increase your audit risk.
I'm surprised no one has mentioned that you can request your Wage and Income Transcript and Tax Return Transcript directly from the IRS website. Go to IRS.gov and search for "Get Transcript Online." This will show what was actually filed under your SSN for 2022, including the AGI that was reported. This might help you figure out what AGI to use, plus it gives you documentation of what was incorrectly filed in your name. The IRS computer systems often have record of your actual AGI even if your refund situation isn't resolved yet. You might also want to put a freeze on your credit since someone has your SSN and has already committed tax identity theft.
I tried to get my transcript online but couldn't pass the identity verification since I don't have a mortgage, car loan, or credit card in my name yet (I'm pretty young). Is there another way to get this information?
Yes, if you can't verify your identity online, you can use Form 4506-T to request your transcripts by mail. It takes about 10 days to receive them. You can also call the IRS transcript request line at 800-908-9946 to order transcripts by phone. Another option is visiting a local IRS Taxpayer Assistance Center in person - they can provide transcripts on the spot, but you need to schedule an appointment first by calling 844-545-5640. Bring your photo ID if you go this route.
Make sure you contact your state attorney general's office about the tax preparer who filed without your consent! That's actually illegal and they can be prosecuted for it. Tax preparers must have your signature on Form 8879 before e-filing on your behalf. When this happened to my brother, the AG's office got involved and it helped speed up the IRS resolution because now it was a criminal matter. The tax preparer ended up facing charges and had to pay restitution.
This is really good advice! My friend works for the state AG office and says they take tax preparer fraud very seriously. They can also help document the fraud for the IRS which speeds up your refund recovery.
Don't forget to check if your school/university offers free tax advice! I was a research assistant during grad school and my university had free tax workshops specifically for students with stipends and research positions. They even had dedicated sessions for independent contractors vs. employees. Worth checking if yours has something similar!
That's a great idea! I didn't even think to check with my university. Do you know what department typically offers this kind of service? Would it be financial aid or something else?
Usually it's either through the financial aid office or the student services department. Some universities also have it through their business school or accounting program where accounting students (supervised by professors) provide tax help as part of their practical training. The best approach is to just email your university's general help desk or student services and ask if they offer tax assistance. If they don't have an in-house program, they might still know about local resources specifically for students.
One thing nobody mentioned - get a separate bank account for your business income and expenses! I learned this the hard way when I started freelancing. The IRS can be really picky about commingling personal and business finances. Also download a free expense tracking app now and start using it immediately. Take pictures of all receipts. You'll thank yourself next April when you're not trying to remember what every purchase was for.
This is so important! And don't forget to keep track of any home office expenses. If you dedicate a space solely to your research work, you can deduct a portion of your rent and utilities.
Malik Johnson
For anyone who finds this thread later - I recommend planning ahead for next year! Set a calendar reminder 2-3 weeks before the deadline. I've been using the IRS-approved "Free File Fillable Forms" for my 7004 extensions which is completely free, but you need to set up an account ahead of time and it can be a bit clunky to use if you're rushing.
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Isabella Ferreira
ā¢Free File Fillable Forms includes Form 7004? I thought those were only available for individual returns like 1040s. Can you really use it for S-corps?
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Ravi Sharma
Don't forget that filing an extension only extends your time to FILE, not your time to PAY any taxes due. Make sure you're still paying your estimated tax liability by the original deadline to avoid penalties and interest, even if you're extending the actual filing.
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Connor O'Neill
ā¢Thanks for the reminder! My S-Corp doesn't have any tax liability (all profits pass through to my personal return), but this is definitely important for C-Corps or S-Corps with certain types of taxes due.
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