I'm dealing with a similar situation with my restaurant's ERC claim. Paid 28% to a firm that promised "specialized expertise" but it turned out they just had me fill out basic forms and submit payroll records. The whole process took them maybe 3 hours total for a $45,000 claim. What's really frustrating is that I later discovered my CPA could have handled the entire filing for a flat $2,500 fee, but the ERC company made it sound like it required some kind of specialized tax law knowledge that only they possessed. I'm definitely interested in exploring legal options, especially after reading about the class action mentioned here. Has anyone found success getting partial refunds from these companies outside of lawsuits? I'm wondering if it's worth trying to negotiate directly with them first before going the legal route.

I'm in a very similar boat with my accounting practice - I've been helping several clients navigate the aftermath of working with these ERC mills. What I've seen consistently is that legitimate ERC claims typically require 8-15 hours of work when done properly, including eligibility analysis, documentation review, and form preparation. The problem is many of these contingency firms were essentially running claim factories, processing hundreds of applications with minimal individual attention. A 25% fee on a properly vetted claim might be reasonable, but not when they're just plugging numbers into software and hoping for the best. One thing I'd strongly recommend is getting a second opinion on your claim's legitimacy before your refund comes through. With the IRS crackdown, they're auditing a significant percentage of ERC claims now, and if your original firm cut corners on documentation, you could face penalties that far exceed any contingency fee dispute. I've been referring clients to services like taxr.ai for post-submission reviews to make sure everything is properly documented. Better to identify potential issues now than during an audit later.

The tax preparer might have been talking about creating an S-Corporation instead of staying as a sole proprietor. With an S-Corp, you pay yourself a "reasonable salary" which is subject to FICA taxes (Social Security/Medicare) and then can take the rest as distributions which aren't subject to self-employment tax. Some people do this to reduce their overall tax burden, but it only makes sense when you're making significant income. There are additional costs like incorporation fees, separate tax returns, payroll services, etc. For most contractors, just filing Schedule C and Schedule SE is perfectly fine and DOES contribute to your Social Security.

Just to add to this conversation - I've been a 1099 contractor for schools for 7 years now. Make sure you're tracking your quarters of coverage for Social Security! You need 40 quarters (10 years) of coverage to qualify for retirement benefits. For 2025, you need to earn $1,820 in a quarter and pay self-employment tax on it to get credit for that quarter. If you earn $7,280 or more for the year and pay your self-employment taxes, you'll get credit for all four quarters even if you only worked part of the year.

I completely understand your frustration - watching a huge chunk of your overtime pay disappear to taxes is painful! But as others have mentioned, claiming exempt when you don't qualify could get you into trouble. Here's a practical approach that worked for me in a similar situation: Pull out last year's tax return and look at line 24 (your total tax liability). If you've already withheld that amount or more this year with your $19K, you're protected by the safe harbor rule and can safely reduce your withholding significantly. The key is adjusting your W-4, not going fully exempt. On the new W-4 form, you can use Step 4(b) to enter a larger deduction amount that will reduce your per-paycheck withholding. It takes some math to figure out exactly what to enter, but you can reduce withholding by quite a bit while still having something taken out. I'd also recommend running your numbers through a withholding calculator first - either the IRS one or one of the third-party tools mentioned here. That way you can see exactly how much you can safely reduce without risking underpayment penalties. You'll likely still get a refund, just a smaller one, and you'll have that extra cash now instead of waiting until tax season!

I totally get the frustration of watching your hard-earned overtime get eaten up by taxes! But definitely don't go the exempt route - that's only for people who expect zero tax liability for the year, which clearly isn't your situation with $19K already paid. Here's what I'd recommend: grab last year's tax return and check line 24 (total tax). If you've already withheld that amount or more this year, you're in the safe harbor zone and can significantly reduce your withholding for these last checks without penalty risk. The trick is adjusting your W-4 properly rather than going exempt. You'll want to use Step 4(b) to enter a higher deduction amount that reduces your per-paycheck withholding. The math isn't straightforward with the new W-4 form, but you can often reduce withholding by 60-70% while still having something taken out. I was in almost this exact spot last year and ended up keeping about $600 more from my December overtime while still getting a small refund. Way better than waiting until February for that money back! Just make sure you're still withholding something reasonable - complete exemption could raise flags even if you're technically protected. Consider using one of those withholding calculators people mentioned to dial in the exact numbers. Better to do it right than guess and potentially create headaches later!

Anyone know if Qualified Terminable Interest Property (QTIP) trusts have different tax rules? My spouse and I are updating our estate plan and our attorney mentioned QTIP but I'm not sure about the tax implications.

One thing to consider that hasn't been mentioned much is the "throwback rule" for complex trusts. If a trust accumulates income for several years and then makes a large distribution to beneficiaries, the IRS can "throw back" that income to prior years and tax it at higher rates, plus add interest charges. This can create a nasty surprise for beneficiaries who receive distributions from trusts that have been accumulating income. Also, watch out for state tax implications - some states don't recognize grantor trust status and will tax trust income at the state level even if it's flowing through to you federally. Others have no state income tax on trusts at all. The state where the trust is established, where the trustee resides, and where beneficiaries live can all potentially create tax obligations. If you're thinking about funding the trust with appreciated assets, remember that trusts don't get a stepped-up basis like inherited property does. So if you put stock worth $100k (that you bought for $20k) into a non-grantor trust, and the trust later sells it, the trust pays capital gains tax on the full $80k gain.

As someone who's been getting Robinhood 1099s for years now, my advice: look at page 1 or 2 for the summary section. It should have totals for short-term gains/losses, long-term gains/losses, dividends, and interest. Those are the big numbers that affect your taxes. Don't get lost in the transaction details unless you need to verify something specific.

One thing I learned the hard way with my first Robinhood 1099 - make sure to check if you have any state tax implications too! Some states don't tax capital gains at all, while others tax them as regular income. Also, if you made estimated tax payments during the year, don't forget to account for those when calculating what you might still owe. The federal tax estimate is just part of the picture. I ended up owing way less than I thought because I had forgotten about the quarterly payments I made through my business. Good luck with your first investment tax filing - it gets easier once you understand the format!