I went through this exact situation with my consulting LLC last year. The short answer is no - multi-member LLCs cannot be treated as disregarded entities under any circumstances. The IRS is very clear that disregarded entity status is only available for single-member LLCs. Your default classification is partnership taxation (Form 1065), but you're absolutely right to explore other options. At your income level, an S-Corp election could save you significant money on self-employment taxes. Here's what I learned: 1. With partnership taxation, both members pay self-employment tax on their entire share of profits 2. With S-Corp election, you only pay employment taxes on reasonable salaries, not on distributions For a $125k business, if you each took $40k salaries and split the remaining $45k as distributions, you'd save about $3,400 in SE taxes annually (15.3% × $45k). The tradeoff is quarterly payroll filings and more complex bookkeeping. I'd strongly recommend running the numbers with a CPA before deciding. The breakeven point where S-Corp election makes sense is usually around $60-80k in profits, so you're definitely in the range where it could be beneficial.

Based on everyone's helpful responses here, I wanted to share what we ended up deciding for our multi-member LLC situation. After running the numbers and consulting with our CPA, we're moving forward with the S-Corp election since we're projected to hit $125k this year. The key factors that convinced us were: 1) The potential SE tax savings of around $3,500-4,000 annually at our income level, 2) The fact that we can keep our LLC structure and just change the tax classification, and 3) Our CPA confirmed that reasonable salaries for marketing professionals in our area would be around $45k each, leaving $35k in distributions that wouldn't be subject to SE taxes. We're planning to use QuickBooks Payroll to handle the compliance side since it's much cheaper than hiring a payroll service at our size. Thanks to everyone who shared their experiences - it really helped us make an informed decision! Will report back in a year with how it actually worked out in practice.

Something else to consider: if your state offers income tax benefits for 529 contributions, make sure you understand how those work! My wife and I messed this up last year. We live in New York which gives a state tax deduction for up to $5,000 per year ($10,000 for married couples) for contributions to NY's 529 plan. We had my in-laws contribute directly to our son's 529, but then found out WE couldn't claim the state tax deduction because we weren't the ones who made the contribution! Would have been smarter to have them give us the money and then WE contribute it to get the tax benefit.

Congratulations on becoming a dad! The 529 planning can definitely feel overwhelming at first, but you're smart to start early. One thing that might help simplify the decision-making process is to think about it in stages rather than trying to figure everything out at once. For the immediate term, you and your wife can each contribute up to $18,000 annually without any paperwork hassles. That's $36,000 per year just from you two. Then each set of grandparents can also contribute their own amounts using the same limits. If someone wants to contribute more than $18,000 in a single year, that's when the 5-year election comes into play, but honestly, unless your family is planning to contribute huge amounts right away, you might not even need to worry about that complexity initially. My suggestion would be to start with a basic contribution plan that stays within the annual limits, get the account set up and running, and then tackle the more complex gifting strategies later as your daughter gets older and your family's financial situation evolves. The most important thing is getting started - you can always adjust the strategy as you learn more!

I actually had this happen to me twice - once with a quarterly payment and once with my annual filing payment. Both times I was able to get it resolved by calling the IRS, but here's something that might help speed up the process: if you made the payment electronically, log into your bank account or payment method and screenshot the transaction details before you call. Having the routing/account numbers and exact transaction ID made the whole conversation go much smoother. The IRS agent was able to locate my payment instantly instead of having to search through multiple systems. Also, if you're calling during tax season (Jan-April), expect much longer wait times - I learned that the hard way! Good luck getting this sorted out.

I dealt with this exact same issue earlier this year! The fastest way I found to resolve it was calling the IRS at 1-800-829-1040 first thing in the morning around 7:30 AM - the wait times are much better then. Make sure you have your Social Security Number, the exact payment amount, date you made the payment, and which tax years need to be adjusted. When you get through to an agent, specifically ask for a "payment reallocation" between tax years. The agent should be able to handle this during the call, though it takes about 4-6 weeks to actually process and show up in your account. Definitely get a confirmation or case number for your records! Don't stress too much - this is actually a pretty common issue and the IRS deals with it all the time.

This has been such an eye-opening discussion! I'm relatively new to receiving PR packages and had no idea about the tax implications. Reading through everyone's experiences, especially the audit stories, has made me realize I need to get my documentation system in place ASAP. I love the practical tips shared here - the photo folder idea, email templates, and tracking spreadsheets are all going straight into my workflow. The point about quarterly payments is something I hadn't even considered, but with affiliate income on top of PR gifts, I'm probably going to hit that threshold sooner than expected. One thing I'm taking away is that it's better to over-report and over-document than to risk issues later. The IRS clearly takes this seriously, and having proper records seems to be the key to staying compliant. Thanks to everyone who shared their real experiences - this kind of practical advice is so much more valuable than trying to parse through vague IRS publications alone! Going to start implementing these systems today before my next PR packages arrive. Better late than never!

As a tax professional who works with several content creators, I can confirm that the advice in this thread is largely correct - PR gifts are generally taxable income regardless of whether content is explicitly required. However, I want to clarify a few important points I'm seeing some confusion about. First, the "fair market value" standard applies, which means you should use the retail price the general public would pay for the item. If a brand gives you a $100 serum, that's $100 of taxable income even if you only would have paid $20 for skincare. Second, regarding business deductions - you can potentially deduct expenses directly related to creating content about these products (lighting, backdrops, editing software, etc.), but you generally cannot deduct the cost basis of the "free" products themselves since you didn't purchase them. Finally, for those tracking everything manually, consider that most tax software now has features specifically for influencer income. TurboTax, FreeTaxUSA, and others have sections for "miscellaneous income from promotional activities" that can help ensure you're categorizing everything correctly. The documentation advice everyone's sharing is spot-on - keep detailed records, photograph everything, and when in doubt, report it as income. It's always better to be conservative with tax reporting!

I'm dealing with the exact same "Action Required" message right now and this thread has been incredibly helpful! Just got it yesterday and have been checking WMR way too many times already (guilty as charged 😅). What's really striking me is how consistent everyone's experience seems to be - that key phrase about "we'll mail a notice if we need additional information" appears to be the most important part to focus on. It's reassuring to see so many people like @Ana Erdoğan and @Ethan Moore come back with success stories after a few weeks without having to send any documents. The IRS really needs to change that "Action Required" wording because it's so misleading! Makes it sound urgent when it's really just their standard verification process. I was about to start calling them tomorrow but after reading everyone's advice about how phone reps can't tell you anything more than what's online, I think I'll hold off unless I actually get something in the mail. Thanks to everyone sharing their real experiences - it's way more helpful than the vague info on the IRS website. Going to try to be patient and limit my WMR checking to maybe once a week while focusing on daily mail checks instead. The waiting is going to be tough but seeing all these positive outcomes gives me hope! 🙏

I'm going through this exact same situation right now and honestly, this whole thread has been like a therapy session for my tax anxiety! Got that dreaded "Action Required" message two days ago and immediately went into panic mode thinking I'd screwed something up on my return. What's been most helpful is seeing how many people emphasize that crucial phrase: "If we need additional information, we'll mail a notice with further instructions." That really seems to be the key - no physical mail means we're just waiting for their internal review process to complete, not that we actually need to take any action despite the misleading heading. Reading success stories like @Ana Erdoğan's 4-week experience and @Ethan Moore's update about getting approved without sending any documents is incredibly reassuring. I was literally about to start organizing every tax document I own, but it sounds like patience is really the main requirement here. I'm definitely guilty of the obsessive WMR checking (probably 30+ times in two days, not my proudest moment 😅), but I'm going to try following everyone's advice about limiting it to once a week and focusing on daily mail checks instead. The IRS really needs to fix that "Action Required" wording - it creates so much unnecessary anxiety when "Review in Progress" would be way more accurate! Thanks to everyone sharing their real experiences here. This community is honestly saving my sanity while I wait this out! 🙏