I'm a tax preparer and want to add one important clarification that might help others in similar situations. While everyone is correct that employer-paid health insurance premiums aren't included in gross income, there's one specific scenario to watch out for. If you're a more-than-2% S-corporation shareholder-employee, the employer-paid health insurance premiums ARE included in your gross income (though you may be able to deduct them elsewhere on your return). This is a pretty niche situation, but since you mentioned being close to income thresholds, it's worth noting. For the vast majority of employees (W-2 wage earners), the employer health insurance contribution is completely excluded from gross income as everyone has explained. But if you happen to be a significant owner in an S-corp, the rules are different. Given that you mentioned a regular W-2 situation with $71,500 in income, you're almost certainly in the standard employee category where the health insurance exclusion applies. Just wanted to mention this edge case since precision matters when you're near income thresholds for tax credits!

As someone who's dealt with similar AGI calculations for tax credit eligibility, I can definitely confirm what everyone has said - employer-paid health insurance premiums are excluded from your gross income under Section 106 of the tax code. What really helped me understand this was looking at my actual W-2 when it arrived. Box 1 shows your taxable wages, and the employer's health insurance contribution simply isn't included there. You might see it in Box 12 with code DD (for informational purposes), but that doesn't affect your AGI calculation at all. With your $71,500 base salary, you're in excellent shape for staying under that $75k threshold. The $9,800 your employer pays for health insurance is completely invisible to the IRS for income purposes. Plus, if you're making any pre-tax contributions to health insurance, HSA, or other benefits through payroll deduction, those actually REDUCE your AGI below your base salary. I was in almost the exact same situation last year and successfully claimed the tax credit I was worried about losing. The key is trusting that the tax system has already built in these exclusions - you don't need to add back employer benefits when calculating your AGI. You should be well within the income limits for whatever credit you're pursuing!

I'm also dealing with a W-2 correction right now and this thread has been such a lifesaver! My former employer reported incorrect federal withholding amounts and I've been waiting about 7 weeks. Like so many others here, I was getting the runaround from HR about "waiting for IRS processing" when apparently I should have been demanding my W-2c copies weeks ago. It's really eye-opening to see how many of us have been stuck in the same unnecessary waiting loop. The consistent 8-12 week timeline everyone is sharing is actually somewhat reassuring - at least I know my situation isn't abnormally delayed. But the real game-changer is learning that we can file immediately once we have the W-2c copies rather than waiting for some mythical IRS approval that doesn't work the way employers make it sound. I'm calling my former employer tomorrow morning to specifically request copies of the W-2c for my records, federal return, and state return. No more sitting around waiting for phantom confirmations! Thanks to everyone for sharing your experiences and timelines - it's incredibly helpful to have this community knowledge when navigating such a confusing and poorly explained process.

I'm going through the exact same frustrating situation right now! My previous employer incorrectly reported my state income and I've been waiting about 9 weeks for what they called "IRS processing." Reading through all these responses has been incredibly enlightening - I had no idea that employers are legally required to provide W-2c copies directly to employees! Like so many others here, I was told to "wait for the IRS to report back" which apparently isn't even how this process actually works. It's frustrating how employers either don't understand the process themselves or make it sound way more complicated than it needs to be. The consistent 8-12 week timeline everyone is sharing gives me some peace of mind that my situation isn't unusually delayed, but more importantly, learning that I can file immediately once I have the W-2c copies is a total game-changer. I've been sitting here thinking I needed to wait for some official IRS confirmation that doesn't even exist! I'm calling my former employer first thing tomorrow to specifically demand my copies of the W-2c they submitted - one for my records, one for federal filing, and copies for state returns. No more waiting around for phantom approvals! Thanks to everyone for sharing their experiences and breaking down how this process actually works. This community knowledge is invaluable when dealing with such poorly explained procedures.

Not sure if this will help you, but make sure your suitability check is complete. I had a delay with my EFIN because my fingerprint cards weren't properly processed. If you submitted fingerprints, call and specifically ask if they were received and processed correctly. This is often a bottleneck. Also, have you considered using ProSeries or another tax software that might allow you to use their EFIN temporarily while yours is being processed? Some have programs for new preparers that might help you get through this tax season without losing clients.

I feel your pain - EFIN delays are incredibly frustrating when you're trying to build a business! In addition to the great suggestions already mentioned, here are a few more things that helped me when I was stuck in EFIN limbo: 1. Document EVERYTHING - Keep a detailed log of every phone call (date, time, representative name if they give it, what they told you). This creates a paper trail that can be helpful if you escalate. 2. Ask specifically about your "suitability determination" status. This is often where applications get stuck, and many phone reps don't volunteer this information unless you ask directly. 3. If you haven't already, make sure you have your Preparer Tax Identification Number (PTIN) active and up to date. EFIN processing sometimes gets delayed if there are issues with your PTIN. 4. Consider reaching out to your local VITA/TCE coordinator if you've done volunteer work with them before. They sometimes have direct contacts within the IRS e-file department. The combination of TAS (as Ava mentioned) and having detailed documentation of your hardship should definitely help move things along. Don't give up - once it's resolved, you'll have your EFIN for future seasons too!

Something to keep in mind is that even if your employer sets up SEP IRAs for eligible employees, they're not required to contribute every year - they just have to contribute the same percentage when they do contribute. So if your boss contributes to their SEP IRA one year, they must contribute the same percentage to all eligible employees that same year. But if they skip a year, nobody gets contributions. Also, the contribution limits for SEP IRAs are quite generous - up to 25% of compensation or about $70,000 for 2025, whichever is less. This makes them attractive for small business owners, but it also means the potential cost of covering all eligible employees can add up quickly. One more thing - make sure you understand the vesting rules. With SEP IRAs, contributions are immediately 100% vested, meaning any money your employer contributes belongs to you right away, even if you leave the company the next day.

I went through a very similar situation last year at my accounting firm. What helped me was doing some research on the IRS website first to understand the basics, then having a friendly conversation with my boss about retirement planning in general. I started by mentioning that I was trying to get more serious about retirement savings and asked if there were any company-sponsored options available. When he mentioned he had his own retirement account through the business, I was able to ask follow-up questions about whether that might be something other employees could benefit from too. The key was framing it as wanting to learn and plan better for my future, not as "you owe me this." My boss actually thanked me for bringing it up because he genuinely didn't realize the equal contribution requirements for SEP IRAs. We ended up getting accounts set up for all eligible employees within about 6 weeks. One tip - if your boss seems unsure about the rules, suggest they check with their accountant or tax professional. That way you're not putting yourself in the position of having to explain tax law, and they get authoritative guidance from someone they already trust.

This thread has been incredibly informative! I'm dealing with the same situation with my 15-year-old who's been helping with my online retail business - mostly product photography, inventory management, and packing orders. Based on everything I've read here, I'm definitely going to treat her as an employee rather than issuing a 1099. The tax advantages are compelling, especially the FICA exemption under 18 and the potential for her first $12,950 to be tax-free. One question I haven't seen addressed yet - how do you handle paying your child if your business income varies significantly month to month? Should I aim for consistent monthly payments regardless of business performance, or is it okay to pay them more during busy months when they work more hours? I want to make sure the payment structure looks legitimate to the IRS while also being practical for our seasonal business fluctuations. Also, has anyone dealt with setting up direct deposit for their teenager, or do most people just write checks from the business account? Thanks for all the great insights everyone has shared!

This has been such an educational thread! I'm in the exact same situation with my 17-year-old who's been helping with administrative tasks for my consulting business. Reading through everyone's experiences has really clarified the employee vs. contractor decision for me. What I found most valuable is learning about all the tax exemptions - the FICA exemption under 18 and FUTA exemption under 21 are huge savings I had no idea about. And the college financial aid considerations mentioned by @Yara Nassar are brilliant - I never thought about how student work income gets assessed differently than parent income on the FAFSA. One thing I'm curious about that I haven't seen mentioned - do any of you report this employment arrangement differently on your state taxes, or does it generally follow the same rules as federal? I'm in California and want to make sure I'm not missing any state-specific requirements for family employment. The documentation tips about timesheets and taking occasional photos of them working are really practical advice I'm definitely going to implement. Thanks everyone for sharing your real-world experiences with this!