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Congratulations on your marriage! I went through something very similar when I got married two years ago. Here's what I learned: Definitely update your W-4 with your employer ASAP - there's no official deadline, but the sooner the better. You've likely been overwithholding since June if you're still marked as single, especially with your husband working part-time. For your blended family situation, married filing jointly will almost certainly be better. The standard deduction is higher ($27,700 for 2023 vs $13,850 each filing separately), and you'll have access to credits that phase out quickly when married filing separately. One thing to keep in mind with your custody arrangement - make sure you and your ex coordinate who's claiming which child for 2023 taxes. The IRS gets really picky about this, and having it documented helps avoid any issues. I'd also recommend running the numbers both ways using tax software before filing. Most people in your situation (one full-time, one part-time income with dependents) benefit significantly from joint filing. You might be surprised by how much you save! Don't forget to update your address with the IRS too if you moved in together. Form 8822 is quick and easy to file.
This is really helpful advice! I'm curious about the coordination with my ex-husband regarding who claims which child - do we need to have some kind of written agreement, or is it just based on what we actually file? Also, when you say the IRS gets "picky" about this, what kind of issues should I watch out for? I want to make sure we don't accidentally both claim the same child or something like that.
Great question! While there's no legal requirement for a written agreement with your ex about claiming dependents, it's absolutely worth having something documented - even just a text or email confirming the arrangement for each tax year. This protects both of you if the IRS ever questions it. The IRS gets picky because they have systems that flag when the same Social Security number gets claimed as a dependent on multiple returns. If both you and your ex accidentally claim the same child, the IRS will reject one or both returns electronically, or if they're paper filed, they'll send notices to both parents asking for proof of who has the right to claim the child. To avoid this, I'd suggest sending a quick message to your ex before filing season confirming something like "Just to confirm for 2023 taxes - I'm claiming [Child A's name] and you're claiming [Child B's name], right?" Keep that confirmation for your records. Also, make sure whoever is claiming each child actually meets the IRS dependency tests for that year (residency, support, etc.). The alternating arrangement you described should work fine as long as you're both following the custody agreement consistently. @f3bfb6a7f75a had great advice about running the numbers both ways - definitely do that comparison!
Congratulations on your marriage! You're definitely not alone in forgetting to update things after getting married - it happens to the best of us! Yes, you should absolutely update your W-4 with your employer's HR department. Since you got married in June, you've likely been having taxes withheld as if you were single for the past several months, which could mean you're overwithholding (especially with your husband working part-time). There's no strict deadline, but the sooner you update it, the better your withholding will align with your actual tax situation. For your filing strategy, married filing jointly is usually more beneficial for couples in your situation. With one spouse working full-time and the other part-time, joint filing often results in a lower overall tax rate. Plus, you'll get a higher standard deduction ($27,700 for 2023 if filing jointly vs. $13,850 each if filing separately) and access to credits that might be limited when married filing separately. With your blended family setup, just make sure you coordinate with your ex about who's claiming which child for 2023 taxes. It sounds like you already have a good system in place with the alternating years. I'd recommend documenting this arrangement (even just via text/email) to avoid any confusion. Consider running the numbers both ways using tax software before you file - most couples in similar situations save significantly by filing jointly, but it's always worth double-checking with your specific numbers!
This is such great comprehensive advice! I'm actually in a very similar situation - just got married last month and completely forgot about updating my W-4 until I saw this post. Quick question though - when you mention that we might be "overwithholding" as single filers, does that mean we'd likely get a bigger refund next year, or could we actually end up owing money? I'm trying to figure out if I should rush to update my W-4 this week or if it can wait until after the holidays. Also, really appreciate the tip about documenting the custody arrangement with the ex - that's something I never would have thought of but makes total sense!
This just happened to my sister too! She made a copy of her return, wrote a letter explaining the situation, included proof that her check was cashed, and sent it all certified mail. Make sure you keep the certified mail receipt! She called a couple weeks later to confirm they received it, and they told her it would take 8-10 weeks to process but she wouldn't be charged any penalties since she had proof her payment was received on time.
Did your sister send her response to the address on the CP80 notice or to a different IRS address? I've heard different advice about where to send these kinds of responses.
I went through something very similar earlier this year! The key is to respond quickly and keep everything organized. Here's what worked for me: 1. Make copies of EVERYTHING - your original return, the CP80 notice, bank statements showing the cashed check, and any correspondence 2. Write "COPY - DO NOT PROCESS" in red at the top of each page of your tax return copy 3. Include a cover letter explaining that they cashed your check but claim they didn't receive your return - reference the CP80 notice number 4. Send everything via certified mail to the address listed on your CP80 notice I also recommend calling the IRS (even though it's painful) to get a representative to note in your account that you're responding to the notice. This creates a paper trail that you're addressing the issue proactively. The whole process took about 10 weeks to fully resolve, but I didn't get hit with any penalties since I had proof of timely payment. Stay organized and document everything - you'll get through this!
This is really helpful advice! I'm dealing with a CP80 notice right now and feeling pretty overwhelmed. How long did it take you to get through to someone at the IRS when you called? I've been trying for days and either get disconnected or the wait times are insane. Also, did you send your response to the exact address on the CP80 or did you use a different IRS processing center address?
I've seen this exact scenario play out multiple times with clients, and unfortunately the PEO is misleading you. The fundamental issue is that the IRS doesn't care about the administrative structure - they care about economic reality. Your clients remain 2% shareholders of the S-Corp regardless of whether their paychecks come through a PEO. The health insurance premiums will still need to be included in box 1 of their W-2s per IRC Section 1372(a) and Notice 2008-1. The PEO arrangement doesn't create any legitimate tax advantage here. I'd recommend having a frank conversation with the PEO about their claims. Many PEO sales reps either don't understand the nuances of S-Corp taxation or they're deliberately stretching the truth to close deals. Your instincts are absolutely correct - if it sounds too good to be true, it probably is. The only real benefits of a PEO in this situation would be potential cost savings on insurance premiums through group purchasing power and reduced administrative burden, not tax advantages.
This is exactly what I needed to hear! I'm relatively new to working with S-Corps and when the PEO rep was so confident about this "loophole," I started second-guessing my understanding of the basic rules. Your point about economic reality vs administrative structure really clarifies things for me. I'll definitely have that frank conversation with the PEO about their claims - it sounds like they're either misinformed or being deliberately misleading. Thanks for confirming that my gut instinct was right about this being too good to be true!
I've been dealing with S-Corp taxation for over a decade and this PEO "workaround" comes up regularly. The answer is definitively no - there's no legitimate tax advantage here. The core issue is that IRC Section 1372 treats 2% S-Corp shareholders as if they were partners for purposes of fringe benefits, including health insurance. This treatment is based on their ownership percentage in the corporation, not on who technically provides the insurance or processes payroll. When a PEO provides health insurance to these shareholders, the premiums must still be included in their W-2 wages (Box 1) because they're considered self-employed individuals for health insurance purposes. The fact that the insurance comes through a PEO's group plan rather than directly from the S-Corp is irrelevant from a tax perspective. I've seen multiple audits where taxpayers tried similar arrangements, and the IRS consistently disallows these strategies. They apply the substance-over-form doctrine - what matters is the underlying economic relationship (shareholder-employee of S-Corp), not the administrative mechanics of how benefits are delivered. The PEO may genuinely believe their interpretation is correct, but they're likely confusing employment law concepts with tax law. While PEOs can be "employers of record" for certain labor law purposes, this doesn't override federal tax classifications for S-Corp shareholders. Bottom line: stick with the established rules and avoid potential penalties from an aggressive tax position that lacks solid legal foundation.
Thank you for such a comprehensive explanation! As someone new to this community and S-Corp taxation, this really helps clarify the difference between employment law and tax law concepts. I've been researching similar issues for a client and kept getting confused by conflicting information online. Your point about the substance-over-form doctrine is particularly helpful - it makes sense that the IRS would look at the actual ownership relationship rather than administrative arrangements. Do you happen to have any specific case citations or IRS rulings that address attempts to circumvent the 2% shareholder rules through third-party arrangements? I'd love to have some concrete examples to reference when explaining this to clients.
I've been following this thread closely as someone who went through a very similar entity classification correction about a year ago. Just wanted to add a few practical tips that might help streamline your process: **Double-check the mailing address** - The Form 8832 goes to a specific IRS service center based on your state, NOT the same address where you send regular tax returns. I initially sent mine to the wrong address and had to resend, which delayed everything by about 6 weeks. **Include a cover letter** - While not required, I found it helpful to include a brief cover letter that summarized what was enclosed (Form 8832, reasonable cause statement, supporting documents) and referenced your EIN clearly. This seemed to help with processing. **Keep detailed records** - Make copies of everything and keep your certified mail receipt. I actually created a simple timeline document showing: LLC formation date β EIN application date β discovery of error β Form 8832 submission date. This helped when I later needed to reference the correction for other business purposes. **Consider timing with tax filings** - Since you haven't filed any returns yet, you're in great shape. But if you're approaching any filing deadlines, remember you can file an extension to give yourself breathing room while the Form 8832 processes. The IRS really is reasonable about these mistakes when you follow the proper procedures. Form 8832 with late relief is definitely your answer - don't second-guess that decision!
This is exactly the kind of detailed, practical advice that makes all the difference! The point about the specific IRS service center address is crucial - I can totally see how easy it would be to accidentally send it to the wrong place and lose weeks in the process. I really like your idea of including a cover letter and creating a timeline document. That level of organization probably makes things much smoother on the IRS side too, and having everything clearly documented could be helpful if any questions come up later. The timing consideration around tax filings is something I hadn't fully thought through. Even though we haven't filed anything yet, it's good to know that extensions are an option if we end up cutting things close with processing times. Thanks for sharing these practical insights from your experience! It's reassuring to hear from someone who successfully navigated this process and can offer specific tips to avoid common pitfalls. The detail about making copies and keeping the certified mail receipt is definitely going on my checklist. Did you end up needing to reference your correction documentation for any other business purposes later, or was it mainly just for peace of mind?
I went through this exact situation with my LLC partnership about 6 months ago! The frustration of getting different advice from multiple IRS agents is so real - I literally got four different answers from four different people, which made me question everything. Here's what actually worked for me: **Form 8832 is 100% the right approach.** The other suggestions you got (new EIN, general letters) are either wrong or ineffective. Form 8832 with late election relief is the established procedure for exactly this situation. **Your timeline is completely fine.** I corrected mine after about 10 months, and the IRS processed it without any issues. The key is demonstrating reasonable cause, which you clearly have since this was an unintentional error during the EIN application. **My successful process:** - Filed Form 8832 requesting partnership classification - Requested effective date matching our LLC formation date (retroactive) - Checked Box 6 for late election relief - Included a concise reasonable cause statement (about 3/4 page) explaining the EIN application confusion - Attached our state LLC formation documents and operating agreement - Both partners signed the form - Sent via certified mail to the specific address in Form 8832 instructions The IRS processed mine in about 8 weeks and sent a confirmation letter. Since you haven't filed any tax returns under either classification yet, your situation is actually much cleaner than many others. Don't stress too much about this - the IRS handles these corrections regularly and they're reasonable when the mistake is clearly unintentional. You've got a straightforward path forward with Form 8832!
This is incredibly reassuring! Your timeline of 10 months makes me feel so much better about being at 8 months. I was starting to worry that I'd waited too long, but it sounds like the IRS is pretty reasonable about these timeframes when the mistake is clearly unintentional. Your step-by-step breakdown is exactly what I needed to see. The fact that you got it processed in 8 weeks gives me hope that this won't drag on forever. I'm definitely going to follow your approach with the concise reasonable cause statement and making sure both partners sign. One quick question - when you say the confirmation letter came in 8 weeks, did it arrive exactly 8 weeks after you sent the form, or 8 weeks from when they received it? I'm trying to plan around potential filing deadlines and want to set realistic expectations. Also really appreciate you mentioning that having no prior tax returns filed makes the situation cleaner. I was worried that might somehow complicate things, but multiple people here have confirmed it actually works in our favor. Thanks so much for sharing your successful experience - it's exactly the encouragement I needed to move forward with confidence!
StarStrider
This is such a common concern during PATH processing! That "Information Not Available" message is basically the IRS's way of saying "we're still working on your return" - nothing more, nothing less. The system automatically shows that generic adjustment language whenever a return is in active processing, even though you didn't actually request any adjustments. Your transcript showing $0.00 for 2021-2023 is actually really reassuring - it means your account history is solid and this is just temporary processing status. I know the waiting is brutal when you're expecting your refund, but this INFO notice is completely normal for returns caught up in PATH verification. Should clear up within the next couple weeks once they finish their review! πͺ
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Sarah Jones
β’This is exactly what I needed to hear! π I've been stressing about this for days thinking something was wrong with my return. It's crazy how the IRS uses such confusing language - "adjustment" makes it sound like there's a problem when really it's just their standard processing message. Thanks for breaking it down so clearly! Definitely feeling more confident now that this is just the normal PATH waiting period and not something I need to worry about.
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Sophia Miller
I'm going through the exact same thing right now and this thread has been such a huge help! π I've been checking my transcript multiple times a day and seeing that "Information Not Available" message for 2024 had me convinced something was wrong. But reading everyone's experiences here really put my mind at ease. It's honestly ridiculous how the IRS phrases things - using words like "adjustment" when they really just mean "we're still processing your return." The fact that you can see clean $0.00 balances for your previous years is definitely a good sign that your account is in good standing. I'm trying to be patient but this PATH waiting period is seriously testing my nerves! At least now I know this is totally normal and not something to panic about. Thanks for posting this question - clearly a lot of us needed the reassurance! π
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