Wait, so when my work says I have an annuity plan option, I might not actually get guaranteed income for life? That's literally the only reason I was considering it!

That's exactly right. Many employer "annuity plans" are really just tax-qualified retirement savings vehicles that give you the option to convert to an income annuity when you retire, but don't require you to. When you retire, you typically have several options for what to do with the money - take a lump sum, set up systematic withdrawals, roll it over to an IRA, OR convert it to an income annuity. Unless you specifically choose the annuity option at retirement, you won't automatically get guaranteed lifetime income. I'd suggest asking your HR department for the Summary Plan Description which should clarify exactly what options will be available to you at retirement.

That's exactly what I was thinking of doing! Did you find any downsides to splitting contributions this way?

Can you have both a 401k and qualified annuity at the same company? I thought it was usually one or the other. Do they share the same annual contribution limit?

Do they still try to sell you that "audit protection" add-on? They always made me feel like I was crazy for not wanting it.

Yes, they push the audit protection hard! It was an extra $45 last year. The preparer made it sound like I was practically guaranteed to get audited without it. I've declined it every year and (knock on wood) never been audited. They also try to upsell their "tax pro review" service which is another $89. Isn't that what I'm already paying them for by going to their office instead of using their software?

I use FreeTaxUSA for my rental properties and small business. It handles Schedule E perfectly and only costs $15 for state filing (federal is free). For casualty losses, they have a pretty good walkthrough. Saved me at least $600 compared to HRB.

Thanks for the suggestion. I've never heard of FreeTaxUSA - do they offer any support if you get stuck or have questions during the process?

Yes! We did this last year and it worked great. Donated to our usual charities plus prepaid some planned donations for this year. Itemized last year and will take standard deduction this year. Saved about $2,300 in taxes by concentrating deductions in one year instead of spreading them out.

That's a good point! Do you know if I can open an HSA myself as a contractor? My health insurance is a high-deductible plan but it's not through an employer since I'm self-employed.

Absolutely you can! That's actually one of the great things about HSAs - you don't need an employer to open one. As a self-employed person with a qualifying high-deductible health plan (HDHP), you can open an HSA through many banks, investment companies like Fidelity or Vanguard, or specialized HSA providers. Just make sure your health plan qualifies as an HDHP under IRS guidelines. For 2025, that means a minimum deductible of $1,600 for individual coverage or $3,200 for family coverage. The maximum 2025 contribution is $4,150 for individual coverage or $8,300 for family coverage, with an extra $1,000 catch-up contribution if you're 55 or older.

I've heard about the S-corp option but wasn't sure if it made sense for a small business like mine. Is there a certain income threshold where it becomes worth the extra hassle and paperwork? And would this help me fix my current situation with the incorrect W2?

S-corps generally start making financial sense once your business profit is around $40,000-$50,000 annually, though this varies by industry. Below that, the savings on self-employment tax often don't outweigh the additional costs (filing separate returns, payroll processing, possibly higher accountant fees). For your current W2 situation, converting to an S-corp now wouldn't retroactively fix the issue. You'd still need to correct the reporting for 2024. However, it would provide a clean path forward for properly paying yourself starting this year. The ideal approach is to fix the past issue separately (either by amending returns or following your accountant's guidance) while setting up the proper structure for the future.

This is exactly what I do too. I have a real estate LLC and I just take draws when I need money. Pay quarterly estimated taxes and then report everything on Schedule C at tax time. No need for the whole payroll hassle unless you're making serious money.

I only did payroll to get ADP's promotional rate - they had a deal where we got a big discount if we had at least 3 people on payroll. Since I had 2 actual employees, I added myself as the third to save money. I'm fine just taking draws going forward, but now I'm stuck with this incorrect W2 situation for 2024 that I need to fix. Still learning all the LLC tax stuff as I go!

Thanks for the direct links! Have you personally used the SSA's BSO system for late W-2 filings? Was it easy to navigate for someone who isn't super tech-savvy?

Yes, I've used the SSA's BSO system for late W-2 filings twice now. It's definitely designed with the average business owner in mind, not just for tech experts. The interface walks you through each step and clearly labels what information needs to go where. For late filings, there's a specific section where you'll see the original deadline and the system acknowledges you're filing late. It doesn't prevent you from proceeding. Just make sure you have all your business information and employee details ready before you start. You can save your progress and come back if needed, but having everything prepared makes it a much smoother process.

This is super important! I completely forgot about state W-2 filing and got hit with a $200 penalty from my state last year even though I filed the federal one.