I went through this exact situation last year and understand your stress about needing the money quickly. Here's what worked for me: I did the online ID.me verification and it took about 25 minutes total. The key is having everything ready beforehand - your driver's license, the 5071C letter with the verification code, your tax return, and a phone that can receive texts for the 2FA. The facial recognition part can be finicky - make sure you have good lighting and hold your ID steady. If it fails multiple times, don't keep trying immediately as you might get temporarily locked out. Take a break and try again later. After I completed verification, it took exactly 16 days for my refund to hit my account. The "Where's My Refund" tool didn't update until day 14, so don't panic if it still shows "being processed" for the first couple weeks. One thing I learned: keep trying to verify as soon as possible because the IRS won't process your return at all until you complete this step. The sooner you verify, the sooner you get your money. Good luck!

I went through this exact same situation a few months ago and completely understand the stress when you really need that refund money! The 5071C letter is actually pretty routine - it just means they need to verify you're really the person who filed the return. I'd definitely recommend trying the ID.me online verification first since it's usually faster. Just make sure you have good lighting for the facial recognition part and all your documents ready (ID, the letter with verification code, your tax return). The whole process took me about 20 minutes. If the online route gives you trouble, don't waste too much time fighting with it. The phone verification works just as well, though you might have to wait longer to get through. After I completed verification, my refund was processed in about 2.5 weeks. The key thing is to verify ASAP because your return is basically frozen until you do this step. Once you verify, the processing timeline starts fresh. Don't stress too much - this is way more common than you'd think and once you get through verification, you should see your money pretty soon after!

I went through a very similar situation last year and can share some practical tips based on my experience. Your approach of filing Form 8919 with your original return was absolutely correct - it shows you only paid the employee portion of FICA taxes rather than the full self-employment tax burden. A few things that helped me during the waiting period: 1. Keep detailed records of all your communications, work arrangements, and evidence of employee vs contractor status. The IRS may request additional documentation during their review. 2. Don't stress too much about the timeline - 6-8 months is normal, and some cases take longer. The IRS is thorough because these determinations set precedent for how similar situations are handled. 3. You're right not to file a 1040X preemptively. Since you already included Form 8919, you've essentially told the IRS you believe you were misclassified. Let them complete their determination first. 4. When the determination comes back (assuming it's in your favor), the IRS will handle collecting the employer's share of FICA taxes directly. You won't need to chase your former employer for payment. The whole process is frustrating but the IRS takes worker misclassification seriously. Based on what you've described (scheduled hours, company equipment, employee offer letter), you have a strong case. Hang in there!

I went through almost the exact same situation about 18 months ago! Marketing agency, employee offer letter, then suddenly they wanted me to be a contractor when payment time came. It's so frustrating when companies try to pull this bait-and-switch. You absolutely did the right thing filing the SS8 and including Form 8919 with your original return. Based on what you've described - scheduled hours, company equipment, employee offer letter - you have a textbook case of misclassification. The IRS uses a three-factor test (behavioral control, financial control, and relationship type) and it sounds like you clearly meet the employee criteria on all fronts. My SS8 took about 7 months to process, and the determination came back strongly in my favor. The IRS was very thorough - they contacted both me and the employer for additional information, reviewed all the documentation, and issued a detailed letter explaining their reasoning. One tip: if you haven't already, make sure you have copies of everything - your offer letter, any emails about work schedules or expectations, evidence of company equipment usage, etc. The IRS may request additional documentation during their review process. Don't file a 1040X yet - you've already told the IRS your position with Form 8919, so just let the process run its course. The wait is nerve-wracking but worth it in the end!

This is such a timely discussion! I'm dealing with a similar situation with one of my clients who runs a consulting business from their home office. After reading through all these comments, I'm leaning toward recommending the accountable plan approach for them. One thing I'd add is the importance of getting the square footage measurements right from the beginning. I've seen taxpayers get tripped up by inconsistent measurements between their home office deduction calculations and their rental or reimbursement calculations. Make sure you're measuring the same spaces the same way year over year. Also, for those considering the accountable plan route, don't forget about the potential benefits during an audit. The IRS tends to view properly documented accountable plans more favorably than self-rental arrangements, especially when the rental rates might seem aggressive. The documentation trail is typically cleaner and easier to defend. Has anyone had experience with how state tax authorities handle these arrangements differently from the federal treatment? I'm particularly curious about states that don't follow federal S Corp elections.

This is an excellent thread with lots of practical insights! As someone who's dealt with similar S Corp home office situations, I wanted to add a perspective on the timing considerations for making this decision. If your client has been consistently using the Schedule E rental approach for several years, switching to an accountable plan mid-stream requires careful consideration of the tax implications. You'll want to look at the cumulative depreciation taken on Schedule E, as this affects the basis in their home and potential recapture issues down the road. One approach I've successfully used is to run both scenarios (continuing with Schedule E vs. switching to accountable plan) to see the net tax impact over a 3-5 year period, including factoring in potential sale of the residence. Sometimes the depreciation recapture issue makes it worthwhile to stick with the current approach, especially if the rental income has been minimal. For the 2023 correction question, I'd recommend calculating both methods and only amending if there's a significant benefit. The IRS tends to scrutinize frequent changes in methodology, so you want to make sure you're settling on the approach you'll stick with long-term. Also worth noting: if your client is planning to expand their business use of the home or potentially move the business out of their residence in the near future, that could influence which approach makes more sense from a long-term planning perspective.

This is such a comprehensive thread! As someone who just went through the LLC setup process last year, I want to add a few questions that saved me from major headaches: **Ask about record-keeping requirements:** How long do I need to keep receipts, bank statements, and tax documents? My CPA told me 7 years for most things, but some records should be kept indefinitely. **Discuss your specific industry:** Graphic design has some unique considerations - ask about copyright ownership when working with clients, how to handle work-for-hire vs. licensing agreements, and whether you need errors & omissions insurance. **Plan for growth:** Even though you're starting as a side hustle, ask what changes when you hit certain revenue milestones. When should you consider hiring contractors? What happens if you want to bring on a business partner later? **Emergency fund strategy:** Ask how much you should keep in business savings for tax payments, equipment replacement, and slow periods. I learned this the hard way when my main client delayed payment for 60 days! One more tip - bring a notebook to your CPA meeting and don't be afraid to ask them to repeat or clarify anything. This stuff is complex and you're paying for their expertise, so make sure you understand everything before you leave!

This thread has been incredibly helpful! I'm also setting up my first LLC (for a consulting business) and had no idea there were so many considerations beyond just filing the paperwork. One question I haven't seen mentioned yet - should I ask my CPA about operating agreements? I know single-member LLCs don't technically require them, but I've heard they can still be beneficial for liability protection and banking purposes. Also wondering about business insurance - should that be part of the CPA conversation or do I need to talk to an insurance agent separately? The advice about bringing a notebook and asking for a written summary is gold. I was planning to just wing it, but clearly there's way more to discuss than I realized. Thanks everyone for sharing your experiences!

23 Quick question - how big was this lump sum payment roughly? Because Social Security Disability payments are only taxable if your total income exceeds certain thresholds. For an individual, if your combined income (adjusted gross income + nontaxable interest + half of Social Security benefits) is under $25,000, then 0% of benefits are taxable.

This is such a stressful situation, and unfortunately your cousin got some really bad advice from whoever she spoke with at Social Security or the IRS. Large lump sum disability back payments can definitely trigger tax liability even when regular monthly payments aren't taxable. The good news is there are several options available. First, she should absolutely file the required tax return even if she can't pay - the penalties for not filing are much worse than for filing and not paying. Then she can pursue payment options like an installment agreement or potentially an Offer in Compromise if she truly can't afford the full amount. Most importantly, she might be able to use the "lump sum election" to allocate the back payments to the years they were originally intended for, which could significantly reduce the tax burden by spreading it across multiple years instead of having it all count as income in one year. I'd strongly recommend she contact the Taxpayer Advocate Service (they're free and specialize in hardship cases) or get help from a tax professional who understands disability payments. Don't let her ignore this - the IRS is actually pretty reasonable about working with people on disability who genuinely can't pay, but she needs to be proactive about communicating her situation to them.