Oh man I didn't even think about state taxes! Does anyone know if I need to contact my state tax department proactively or wait to see if they send me something?

It depends on your state, but most states automatically receive information from the IRS about adjustments to federal returns. However, you usually need to be proactive and file an amended state return rather than waiting for them to contact you. In most states, you have a certain timeframe (often 60 or 90 days) after finalizing changes with the IRS to submit an amended state return without additional penalties. If you wait for them to notice and contact you, you'll likely end up paying more in interest and possibly penalties too.

Is it better to mail the response or use their online portal if available? I've heard horror stories about mailed documents getting lost.

Does your CPA think it's better to lease these vehicles instead of buying them outright? I've heard leasing changes the tax treatment somehow.

He actually said it depends on your specific situation. Leasing has different tax treatment - you can deduct the actual lease payments rather than using Section 179 or depreciation. This can sometimes be advantageous if you don't have enough income to utilize the full Section 179 deduction in one year. The luxury auto lease rules can make things more complicated though. For expensive vehicles, the IRS requires an "inclusion amount" that effectively reduces your deduction for leased vehicles above certain thresholds. Definitely something to discuss with your own tax professional based on your specific business needs and financial situation.

You're exactly right. Those videos almost always exaggerate the savings. It's a deduction, not a credit. And they never mention self-employment taxes in the calculation either, which can add significant savings for sole proprietors.

Thank you for pointing this out! I was actually confused about which tax year to report the missed distribution in. So to clarify - we take the missed 2022 RMD amount now, report it on our 2023 taxes, but file the Form 5329 with our 2022 taxes (or separately if we already filed)? And we still need to take the full 2023 RMD by the end of this year? That means double distributions this year, right?

That's correct. The missed 2022 RMD that you take now will be reported on your 2023 tax return because that's when you actually received the money. The Form 5329 reporting the missed RMD goes with your 2022 return because that's the year you were supposed to take it. Yes, you'll need to take both distributions this year - the missed 2022 one and your regular 2023 RMD. This sometimes creates a slightly higher tax situation since you're bunching two distributions in one tax year. If the combined amount might push you into a higher tax bracket, you might want to talk to a tax professional about timing the distributions to minimize the impact.

Good point about the spousal vs non-spousal differences. My understanding is that spouse beneficiaries have more flexibility. Can you explain what documentation we should keep if we're trying to get a waiver? Did your father use a tax professional for the appeal?

That's a really good point about starting mid-year! So should I have more or less withheld since I'm starting in March rather than January? And I like the idea of quarterly check-ins - do you use any particular method to estimate where you stand?

Since you're starting mid-year, you'll have less annual income than your salary rate would suggest for a full year, which could actually result in overwithholding if you don't account for it. However, this might balance out with your husband's income putting your combined total in a higher bracket. For our quarterly check-ins, we use a simple method. We take our year-to-date income from paystubs, multiply our most recent month by however many months are left in the year, add in expected bonuses/commissions, then use a tax calculator to estimate our total tax. Then we compare that to how much tax has been withheld so far plus what will likely be withheld for the remainder of the year. If there's a gap of more than $1,000 in either direction, we adjust our W4s.

The IRS Withholding Estimator is good but I found it super confusing to use. It asks for so much detailed information that I wasn't sure where to find on my paystubs. Does anyone know a simpler alternative?

Thanks for bringing this up - I hadn't even thought about the corporate formalities aspect. Do you think it's still possible to create those minutes retroactively without it looking suspicious? And would a regular business attorney handle this or does she need someone who specializes in tax issues?

Creating retroactive minutes is actually a common practice when catching up on corporate formalities. The key is to be honest about the dates - you're creating the documentation now, but accurately reflecting when decisions were made. You want to document major business decisions like officer appointments, banking authorizations, major purchases, etc. A regular business attorney who works with small corporations should be fine for this - you don't need a tax specialist for the corporate formalities aspect. Many attorneys will even provide templates for these minutes to make it easier. The important thing is showing a good faith effort to comply with requirements going forward while documenting the history as accurately as possible.

Is there a safe formula for what counts as "reasonable salary" for an S-Corp owner? I've heard everything from 30% to 70% of profits should be salary vs distributions.