As a newcomer here, I really appreciate how clearly everyone has explained the PATH Act! I had no idea this existed and was wondering why my neighbor got her refund so much later than mine last year despite filing around the same time. One follow-up question - if someone accidentally claims EITC when they're not eligible (maybe miscalculating income), does that still trigger the PATH delay even though they'll ultimately have to pay it back? I'm asking because I want to make sure I'm calculating my business income correctly to avoid any unnecessary delays or complications.

One thing I haven't seen mentioned yet is how the PATH Act interacts with state tax returns. While the federal PATH Act only delays federal refunds for EITC/ACTC claims, many states have their own versions of these credits (like state EITC programs). However, state processing isn't bound by the federal PATH Act timing - so you might receive your state refund weeks before your federal refund if you're affected by PATH. This can be particularly relevant for business owners in states like California, New York, or Illinois that have robust state EITC programs. It's worth checking your state's specific rules, as some states do coordinate with federal PATH timing while others process independently. Just another layer to consider when planning your cash flow around tax season!

Has anyone considered the W-2 wage limitation for QBI? Since OP is in the 24% bracket with joint income, they might face QBI limitations if they don't have sufficient W-2 wages. The deduction could be limited to 50% of W-2 wages paid by the business. Also for 2023, did you take any money out of the business? If so, the IRS might reclassify those as constructive dividends which wouldn't qualify for QBI. The cleanest solution might be filing an amended S-corp return showing reasonable compensation.

You're in a tricky spot, but it's not insurmountable. Since you didn't run payroll in 2023, you'll need to address this compliance issue head-on with your accountant. The IRS expects S-corp owner-employees to receive reasonable compensation through W-2 wages before taking distributions. Without proper payroll, you risk having all $71.5k treated as wages subject to employment taxes, which would eliminate the S-corp tax advantages. For QBI, the deduction applies to the business income AFTER reasonable compensation is paid. So if you can establish that $49k salary retroactively (through amended returns or other corrective measures your CPA recommends), the remaining income could potentially qualify for QBI. One silver lining: since your combined income keeps you in the 24% bracket, you're below the taxable income thresholds where QBI gets limited by W-2 wages or depreciable property. This means if you can properly separate salary from business income, you should get the full 20% QBI deduction on the qualifying portion. Document everything about your reasonable compensation analysis - industry standards, time spent, responsibilities, etc. This will be crucial for your accountant to determine the best path forward, whether that's amended returns, late payroll filings, or other compliance solutions.

Had this exact same issue a few months back and it was maddening! Here's what finally got me through: First, definitely try that phone number Oliver mentioned but call right at 8am EST when they open - I got through in about 20 minutes vs the 3+ hour waits later in the day. Second, while you're waiting for ID.me to sort itself out, you can still get your transcripts other ways. The IRS2Go mobile app lets you check basic refund status without ID.me, and you can request transcripts by mail using Form 4506-T (just takes about a week). Also, if you're on Twitter/X, try messaging @IDmeSupport - their social media team actually responds way faster than email support. Hang in there, it's frustrating but you'll get through it! 🤞

Ugh, I feel you on this! ID.me suspended my account last year right when I needed to file an extension. What finally worked was a combo approach: I called their phone support at exactly 8am EST (way shorter wait), AND I also submitted a complaint through the IRS website about being unable to access my account. The IRS complaint seemed to light a fire under ID.me because they called me back within 24 hours to resolve it. Also, while you wait, you can still check your basic refund status using the "Where's My Refund" tool on irs.gov without needing ID.me - just need your SSN, filing status, and refund amount. Hope this helps!

This thread has been incredibly helpful! I'm dealing with the exact same issue - 4 years running with late K-1s from our S-corp. What's really frustrating is that I'm a 15% shareholder, so this significantly impacts my tax situation each year. After reading through everyone's experiences, I think I'm going to try a multi-pronged approach: 1) Request estimated K-1 numbers by March 1st like Leila suggested, 2) Document all my communications with the S-corp about K-1 timing as recommended by the IRS agent, and 3) Push our management to either get the accounting firm to prioritize earlier completion or find a new firm that commits to March 15th delivery. It's reassuring to know this is so widespread, but also frustrating that it seems to be accepted as "normal." Thanks everyone for sharing your solutions and experiences!

I've been lurking on this thread because I'm dealing with the exact same situation, but from a slightly different angle. I'm actually an enrolled agent who has several clients with S-corp interests, and I can confirm that late K-1s are unfortunately the norm rather than the exception. From a practitioner's perspective, here's what I've observed: about 70% of the S-corps I work with miss the March 15th deadline for K-1 distribution. The main culprits are usually: 1) accounting firms that are swamped during tax season and prioritize individual returns, 2) S-corps that wait until the last minute to provide their accounting firms with year-end information, and 3) complex S-corp situations (multiple states, unusual transactions) that require extra time to sort out. What I tell my clients is to set expectations early - assume you'll file an extension and plan accordingly. Make sure you're making adequate estimated tax payments throughout the year, and if possible, try to get involved with your S-corp's management to push for earlier deadlines with their accounting team. Some of the larger accounting firms have dedicated S-corp teams that work specifically on getting these done by March 15th, but you usually pay a premium for that service. The silver lining is that the IRS is very aware this is a widespread issue, so properly filed extensions due to late K-1s are rarely scrutinized.

Just wanted to add one important timing consideration that might help with your planning. You don't have to change the beneficiary immediately when your child is born. Since you're the account owner, you maintain control over when to make this change. This could be strategic from a gift tax perspective - you might want to wait until early in the tax year to make the change so you have the full annual exclusion available, or you could time it around other gifts you're planning to make to your child. Also, keep in mind that if your account values are substantial, you and your wife can each make separate gifts using your individual annual exclusions. So if you have $30,000 in the account, you could each gift $15,000 to stay under the annual limits (assuming 2023 limits), effectively doubling your gift capacity without needing to file Form 709. Congratulations on the upcoming arrival! It's great that you're thinking ahead about these tax implications.

One thing to keep in mind is that the growth in your 529 account since you opened it will also be considered part of the gift when you change the beneficiary. So if you originally contributed $20,000 but the account has grown to $25,000, the entire $25,000 would be treated as the gift amount, not just your original contributions. This is why timing can be particularly important if your accounts have performed well. You might want to consider making the beneficiary change sooner rather than later if you expect continued growth, since waiting could potentially push you over the annual exclusion limits. Also, don't forget that each parent can make separate gifts, so if you and your wife are both listed as account owners on separate 529s, you could potentially use both of your annual exclusions. Just make sure you're clear on which spouse is the account owner for each 529 to properly calculate the gift tax implications.