Great point about the mileage implications! I'm actually dealing with this exact scenario and want to make sure I understand correctly. If my home office qualifies as my principal place of business, can I deduct mileage for trips like: 1) Home → Client A → Client B → Home (multiple clients in one day) 2) Home → Office supply store → Client → Home 3) Client A → Client B (driving between clients without going home first) I'm tracking everything in a mileage app but want to make sure I'm not missing any deductible trips or accidentally claiming something I shouldn't. The difference between "commuting" and "business travel" seems to hinge entirely on whether my home office truly qualifies as my principal place of business. Also, does anyone know if there are specific IRS guidelines on how to document this properly? I want to make sure my records would hold up if questioned.

One thing that helped me clarify this situation was understanding that the IRS uses a "facts and circumstances" test when you have multiple work locations. The key question isn't just about time spent, but about the nature and importance of the activities performed at each location. Since you're doing administrative work, calls, and presentations at your home office, this sounds like it meets the "administrative or management activities" test that others have mentioned. The fact that you spend more total hours at client sites doesn't disqualify your home office - those are considered temporary work locations since you're not doing substantial administrative work there. I'd recommend keeping a detailed log for at least a few months showing: - Time spent at home office and what activities you did - Time at each client location and nature of work performed - Any administrative tasks that could only be done at your home office This documentation will be invaluable both for determining if you qualify and for supporting your deduction if ever questioned. The "principal place of business" determination can save you thousands not just in home office deductions, but also in mileage deductions for all those client visits!

This thread has been incredibly helpful! I'm a small business owner who's been dealing with S-Corp filings for a few years now, and I had no idea about the Schedule M-2 requirement regardless of income level. My accountant never mentioned this distinction between the $250k threshold applying to Schedules L and M-1 but NOT M-2. What's really concerning me after reading everyone's experiences is how common this mistake seems to be among accountants. It makes me wonder what other S-Corp requirements might be getting overlooked. For those who switched to new CPAs after discovering these errors - do you have any specific questions I should ask when interviewing potential replacements to make sure they really understand S-Corp compliance? I'm going to review our past filings this weekend to see if we've been missing Schedule M-2 as well. Better to catch this now than during an audit later!

As someone who's been preparing S-Corp returns for over 15 years, I can confirm that Schedule M-2 is absolutely required for ALL S corporations, regardless of income or asset levels. This is one of the most common misconceptions I see, and unfortunately, many CPAs get this wrong. The $250,000 threshold exemption only applies to Schedule L (Balance Sheets per Books) and Schedule M-1 (Reconciliation of Income). This exemption is clearly stated in the Form 1120-S instructions. However, Schedule M-2 (Analysis of Accumulated Adjustments Account) has no such exemption because the AAA tracking is fundamental to S-Corp taxation. The AAA is critical because it determines whether distributions to shareholders are treated as tax-free return of capital or taxable income. Without proper M-2 tracking from the beginning, you create a cascade of potential tax reporting errors that can affect shareholders' personal returns for years. Your accountant's advice was incorrect, and I'd recommend getting a second opinion on your other filings as well. This kind of fundamental error raises red flags about their S-Corp expertise. You should seriously consider filing amended returns to establish proper AAA tracking, especially if you've made any distributions to shareholders.

Hey Jackie! I'm relatively new to this community but wanted to chime in since I just went through this exact situation a few months ago. The "Enclosed" notation on your transcript means the IRS is definitely mailing you something - in my case, it was a CP2000 notice questioning some of my 1099 income from my freelance work. I totally get your anxiety about this, especially given your 2021 audit experience! What I learned is that "Enclosed" doesn't automatically mean bad news - it could be anything from a simple math correction to requesting additional documentation for your Uber/delivery expenses. The notice took about 10 business days to arrive after I first saw it on my transcript. Since you mentioned tracking your mileage and expenses carefully, you're probably in good shape if they do ask for verification. My advice: check your mail religiously for the next two weeks, and when the notice arrives, read it thoroughly before panicking. Most of these issues can be resolved pretty quickly if you have your documentation ready. Fingers crossed it's something simple and your refund gets processed soon!

Hi Jackie! I'm new to this community but wanted to share what I learned when I had "Enclosed" show up on my transcript last year. As someone who also does gig work (I drive for Lyft part-time), I completely understand your concern, especially after going through an audit before. The "Enclosed" notation essentially means the IRS is sending you a physical letter or notice in the mail. In my case, it was a CP05 notice requesting additional verification of my identity before they could process my refund - pretty common for returns with self-employment income. The letter took about 7-10 business days to arrive after I first noticed it on my transcript. Since you mentioned being careful about tracking your mileage and expenses (which is smart!), you're likely in a good position if they're asking for documentation. The key thing is to respond quickly once you receive whatever they're sending. I was able to complete my identity verification online and my refund was released about 2 weeks later. Try not to stress too much - "Enclosed" doesn't mean your refund is denied, just that they need to send you information or request something from you. Keep checking your mail daily and you should have answers soon!

As a newcomer to this community, I just want to say thank you all for this incredibly informative discussion! I've been in the exact same situation - filed 2/27, accepted 3/9, and have been obsessing over my transcript showing "as of March 22" with no updates for weeks. I honestly thought I was doing something wrong or that my return was lost in the system. The explanations here about the 'as of' date being just an internal IRS account marker rather than any kind of processing deadline or refund timeline have been a huge relief. I had no idea that's what it actually meant! It's also reassuring to learn about the weekly vs daily cycles and that checking on Fridays is the way to go for most of us. I've been checking multiple times a day like many others mentioned - definitely going to stop that now! This community has been so helpful in understanding what's actually normal processing versus what feels like delays or problems. Thanks for sharing all your experiences and knowledge!

As another newcomer who's been lurking and learning from this amazing community, I wanted to share my experience and thank everyone for the incredibly helpful explanations! I filed 3/3, accepted 3/11, and like so many others here, I've been stressing about my transcript showing "as of March 22" with no movement for weeks. I was convinced something was wrong with my return or that I'd made an error somewhere. The detailed breakdowns about what the 'as of' date actually means have been eye-opening - I had no clue it was just an internal IRS account marker! I was treating it like some kind of countdown timer or deadline, checking obsessively multiple times per day thinking I'd miss some important update. Learning about weekly vs daily cycles and that Friday morning is when most updates happen has already changed my approach. No more daily panic-checking for me! What really strikes me is how many of us are in identical situations with the same timeline and concerns. It's both comforting to know this is normal processing and frustrating that the IRS systems are so opaque that we all end up here trying to decode what should be straightforward information. Thanks to everyone who's shared their knowledge and experiences - this community is invaluable for understanding the reality versus the anxiety of tax season!

Quick heads up about electronic filing with ITIN employees - some payroll software struggles with ITINs even though they're formatted just like SSNs. When I tried to e-file with my first ITIN employee, our payroll system kept rejecting the number because it started with a 9. Had to call tech support and they had to make a special adjustment to accept the ITIN format. Might want to test your system with a dummy run before actual payday!

Just wanted to add something that might help - when you're setting up payroll for ITIN employees, double-check that you're not automatically enrolling them in Social Security benefits withholding if they're not eligible. Some payroll systems default to withholding Social Security and Medicare taxes for all employees, but the rules can be different depending on the employee's immigration status and work authorization. Also, keep really good records of the I-9 documentation process. I learned the hard way that you need to be extra careful about document verification when hiring anyone, but especially when dealing with different tax ID numbers. The Department of Homeland Security can audit these records, and you want to make sure everything is properly documented. One last tip - if your employee's ITIN expires (which can happen), they'll need to renew it to continue filing taxes. This doesn't affect their ability to work if they have proper work authorization, but it's something to be aware of for your tax reporting.