One critical aspect that hasn't been fully addressed is the impact on your Social Security benefits calculation. As a W-2 employee, your employer reports your wages to Social Security, which counts toward your future benefits. With K-1 income, you'll need to make sure your self-employment tax payments are properly credited to your Social Security record. I learned this the hard way when I discovered a gap in my earnings history after my first year as a partner. The IRS had processed my self-employment tax payments correctly, but there was a delay in how they were reflected in my Social Security statement. It's worth checking your Social Security earnings record annually (you can do this at ssa.gov) to ensure your self-employment income is being properly credited. Also, consider the timing of when partnership distributions occur versus when you owe taxes on the income. You might owe taxes on your share of partnership income even if the partnership hasn't distributed cash to you yet. This is called "phantom income" and can create cash flow challenges if you're not prepared for it. Make sure you understand your firm's distribution policy and how it aligns with your tax obligations. The partnership should provide you with estimated K-1 information early enough in the year to make accurate quarterly payments, but not all firms are great about this timing.

As someone who made this transition 5 years ago, I want to emphasize something that might get overlooked - the psychological adjustment to being "self-employed" for tax purposes. It's not just about the numbers, though those are crucial. The biggest mindset shift was realizing that I now had to think like a business owner when it came to taxes. Every expense became a potential deduction opportunity, but also a documentation responsibility. I started tracking mileage for client visits, keeping receipts for business meals, and maintaining detailed records of home office usage - things I never had to worry about as a W-2 employee. Also, don't underestimate the quarterly payment stress in your first year. Even with perfect calculations, there's something unsettling about writing large checks to the IRS every three months instead of having taxes automatically withheld. I recommend setting up automatic transfers to a dedicated tax savings account on the same day you receive distributions - treat it like a non-negotiable bill. One practical tip: ask your firm if they can provide monthly or quarterly income estimates rather than waiting until year-end for K-1 information. This makes quarterly payment calculations much more accurate and reduces the anxiety of guessing. The transition is absolutely doable, but it requires a more active approach to tax management than most people are used to. The upside is you'll understand your tax situation much better than you ever did as an employee!

Don't panic! This happened to me last year and I was convinced they stole my refund lol. The $0 showing up is actually a good sign - it means your refund is in the final processing stage and about to be sent out. Usually takes 3-5 business days after you see the $0 for it to hit your account. Keep an eye on your bank and you should see it soon! 🤞

Welcome to the community! 👋 Just wanted to chime in as someone who's been through this exact same scare - that $0 showing up is actually the system's way of saying "we're about to send your money!" It's like when a package shows "out for delivery" but the tracking goes weird for a bit. I know it's nerve-wracking but you should definitely see your refund hit your account within the next few days. Ohio's system does this pretty regularly from what I've seen here!

I've been through this exact situation with my partnership and can tell you that Rev Proc 84-35 denials are frustrating but very fixable if you know what the IRS is actually looking for. The biggest mistake people make is thinking that simply stating "all partners filed timely and reported their income" is enough proof. The IRS wants documented evidence, not just your word. Here's what likely happened with your request: **Common reasons for denial:** - Missing specific partner documentation (Schedule E copies) - Vague language that doesn't precisely match Rev Proc 84-35 requirements - Incomplete partner information (missing filing dates, exact income amounts) - Not properly certifying each element of the relief requirements **What to do now with your CP504B:** 1. Don't panic - this is still very resolvable 2. Call immediately to request a collection hold while you prepare proper documentation 3. Prepare a much more detailed reconsideration package **Key documents for reconsideration:** - Schedule E from each partner's 1040 showing partnership income reported - Signed certification from each partner with their filing date and income amount - Cover letter specifically referencing "Rev Proc 84-35 relief under IRM 20.1.2.3.3.1" - Table summarizing all partner information in one place The good news is that partnerships who truly qualify for this relief almost always get it approved on reconsideration when they provide complete documentation. The IRS just wants ironclad proof you meet the requirements - give them that and you should be fine. Time is critical with a CP504B though, so start gathering documents immediately while you call about the collection hold.

@Mateo Gonzalez - I completely understand your frustration with this situation. As a fellow small business owner who went through something very similar, I can tell you that Rev Proc 84-35 denials are incredibly common on the first attempt, but they're usually fixable with the right approach. The CP504B escalation sounds scary, but don't let it panic you into making hasty decisions. Here's what I'd recommend doing immediately: **Step 1: Call the IRS today** Use the number on your CP504B notice and specifically request a collection hold while you prepare additional documentation for Rev Proc 84-35 relief. Be clear that you're not disputing that you owe penalties, but that you believe you qualify for statutory relief and need time to provide proper documentation. **Step 2: Identify what went wrong** Most Rev Proc 84-35 requests get denied because the IRS didn't receive adequate proof that ALL partners actually reported their partnership income on timely filed returns. They want concrete evidence, not just statements from your tax professional. **Step 3: Prepare a bulletproof reconsideration package** - Get copies of Schedule E from each partner's Form 1040 showing the partnership income was reported - Create a detailed table with each partner's name, filing date, and exact partnership income amount - Have each partner sign and date a certification statement - Reference "Rev Proc 84-35 relief per IRM 20.1.2.3.3.1" in your cover letter - Send everything certified mail with return receipt The good news is that partnerships who genuinely qualify for this relief almost always get it approved on reconsideration when they provide complete documentation. You just need to give the IRS ironclad proof you meet every requirement. Time is critical with a CP504B, but this is absolutely resolvable if you act quickly and thoroughly. Don't give up on the relief you're entitled to!

As a newcomer to this community, I'm really impressed by the depth of knowledge being shared here! This conversation has been incredibly enlightening about the nuances of luxury vehicle depreciation. From what I'm gathering, the key takeaways for Carmen's client seem to be: 1. The G Wagon CAN qualify for the heavy vehicle exception (over 6,000 lbs GVWR) 2. Bonus depreciation is possible on the business-use portion, but it's phasing down (80% in 2023) 3. The real challenge will be substantiating "100% business use" - this seems to be where most people get into trouble The documentation requirements sound intense, and the social media warning from Giovanni is particularly eye-opening. I hadn't considered how the IRS might use social platforms as audit evidence. It sounds like the client needs to have a very honest conversation about their actual intended use before making this purchase. A $150k+ mistake due to poor documentation or overstated business use could be financially devastating. Thanks everyone for sharing your real-world experiences - both the success stories and the cautionary tales. This has been a great education in tax planning complexities!

As a newcomer to this community, I've been following this discussion with great interest and wanted to add a perspective from someone who's dealt with similar client situations. Carmen, your cautious approach is absolutely the right call here. I've seen too many business owners get seduced by the "tax savings" of luxury vehicle purchases without fully understanding the compliance burden that comes with it. What strikes me most about this thread is how the conversation evolved from the technical tax rules (which, as others have noted, do favor the G Wagon due to its weight) to the practical realities of documentation and audit defense. That shift really illustrates where the real challenges lie. A few additional considerations for your client: - Even with legitimate business use, the optics of deducting a G Wagon can invite scrutiny - Insurance and registration records need to align with claimed business use - If they have employees, there may be fringe benefit implications if others drive the vehicle The resources mentioned here (taxr.ai for analysis, claimyr.com for IRS communication) seem valuable for getting ahead of potential issues. But ultimately, if your client can't honestly say this vehicle will be used primarily for legitimate business purposes with proper documentation, they should reconsider the purchase regardless of the tax benefits. Your instincts to push back on their expectations are protecting them from a much bigger problem down the road.

Has anyone actually successfully filed hobby income from a 1099-NEC as "Other Income" instead of on Schedule C using TurboTax or H&R Block? When I tried this last year, TurboTax wouldn't let me skip entering the 1099-NEC into their business section.

I've been dealing with this exact situation for three years now! After trying multiple approaches, here's what I've learned works best: The key is understanding that while the 1099-NEC gets issued to you, how you report it depends on the nature of your activity. For true hobby income (like product testing where you're not trying to build a business), you have two viable options: 1. Report it as "Other Income" on line 8z of Form 1040 and don't enter the 1099-NEC form itself into your tax software (to avoid doubling the income). Include a brief statement with your return explaining it's hobby income from product testing. 2. Use Schedule C but ensure your software asks about "profit motive" and answer that you're NOT engaged in this activity for profit. This should prevent self-employment tax from being calculated. The reason your current software only shows business options is because most basic programs assume all 1099-NEC income is business income. TurboTax and similar programs have this limitation. I'd recommend either switching to FreeTaxUSA (which handles this better) or using one of the specialized services mentioned above. Don't stress too much - this is a genuinely confusing area of tax law that even CPAs sometimes get wrong!