I think we're missing something obvious here. Maybe she just doesn't want to pay the fees or go through the hassle of the application? A friend of mine who's a tax preparer told me getting an EFIN requires fingerprinting, an in-person interview sometimes, and a bunch of documentation. Sounds like this lady might just be lazy and cutting corners rather than being unable to qualify.

This whole situation raises red flags about the quality and ethics of this tax preparer's practice. As someone who's dealt with tax compliance issues before, I can tell you that the IRS takes EFIN violations very seriously - it's not just a technical violation, it's a breach of the entire electronic filing system's integrity. What concerns me most is that clients may not even realize their returns are being filed under fraudulent credentials. When tax season gets busy, people often don't pay close attention to the technical details on their forms. But if the IRS discovers this arrangement and investigates, those clients could face delays in processing their refunds, additional correspondence, or even audits through no fault of their own. The fact that she's been operating this way for 3 years suggests this isn't an oversight or temporary arrangement - it's a deliberate choice to circumvent IRS requirements. Whether it's because she can't qualify for her own EFIN or just doesn't want to go through the proper process, either scenario should make potential clients think twice about trusting her with their financial information. I'd strongly recommend anyone considering using her services to verify that their preparer has their own valid EFIN before handing over their tax documents.

Great advice from everyone here! I'd also suggest asking the tax preparer about their professional liability insurance. Legitimate preparers typically carry errors and omissions (E&O) insurance to protect both themselves and their clients in case of mistakes. You can ask to see their insurance certificate or at least ask what company provides their coverage. If they don't have professional liability insurance or seem confused by the question, that's another red flag to consider. Also, be wary of preparers who guarantee huge refunds before even looking at your documents, ask you to sign blank forms, or want to deposit your refund into their own account. These are classic signs of fraudulent operations that having a valid PTIN won't protect you from. The strip mall location and lower prices really don't mean much - some of the best preparers I know operate small independent practices with very reasonable rates!

One more verification step I'd recommend - check with your state's licensing board if your state requires tax preparers to be licensed or registered at the state level. Some states have additional requirements beyond just the federal PTIN. For example, California requires tax preparers to register with the California Tax Education Council (CTEC), and Oregon has its own licensing system. You can usually search these state databases online to verify if someone is in good standing. Also, trust your gut feeling about the interaction. Legitimate preparers should be patient with your questions about credentials and verification. If someone gets defensive or pushy when you ask about their PTIN, EFIN, insurance, or credentials, that's a red flag regardless of what their paperwork shows. The fact that you're being this thorough about vetting them shows you're being smart about protecting your personal information. Better to spend time upfront verifying than dealing with identity theft or filing errors later!

This has been one of the most thoughtful discussions I've seen on this topic! As someone who's been grappling with similar questions about my tax contributions, I really appreciate how this conversation has evolved from a simple "am I paying more than I receive?" to a much deeper understanding of how our tax system actually functions. The lifecycle perspective that multiple people have highlighted is particularly enlightening. I never really considered how the public education I received, the roads my family used when I was growing up, and even basic services like police and fire protection were all investments made by previous generations of taxpayers. Now that I'm in my earning years, it's my turn to help fund those same foundational services for others. What really resonates with me is the shift from viewing taxes as a transaction to seeing them as participation in a system that builds prosperity over time. The research mentioned about economic multipliers - like early childhood education generating $7 in returns for every $1 invested - shows that public investments create value that extends far beyond what any individual directly receives. For the original poster earning $87k as a contractor, you're definitely contributing more than you're directly receiving right now. But more importantly, your ability to earn that income is built on a foundation of public investments in education, infrastructure, legal frameworks, and economic stability. Being a "net taxpayer" in your prime earning years isn't a burden - it's actually evidence that the system has worked for you and is continuing to work through your contributions. This discussion has completely reframed how I think about tax season. Instead of focusing on what I'm "losing" to taxes, I can appreciate that I'm helping maintain the systems that created opportunities for my success and ensuring they'll be there for future generations.

This has been such an incredibly insightful discussion to read through! As someone who's been wondering about this exact question, I really appreciate how everyone has moved beyond the simple calculation of "taxes paid vs. benefits received" to explore what it actually means to participate in our tax system. The lifecycle perspective that keeps emerging throughout this thread is so enlightening. I never really considered how much I benefited from public investments before I was earning enough to be a significant contributor - the 12+ years of public education, the roads and infrastructure that enabled my family's mobility and economic opportunities, the legal frameworks that protect contracts and property rights, even the basic research funded by government that led to technologies I use in my work every day. What really resonates with me is this reframing from "am I getting ripped off?" to "am I participating appropriately in a system that created the foundation for my success?" That shift in perspective makes tax season feel less like a burden and more like contributing to something meaningful and sustainable. The economic multiplier research mentioned by several people here is fascinating - if early childhood education generates $7 in economic returns for every $1 invested, then the whole concept of "net taxpayer" becomes much more complex and interesting than simple addition and subtraction. It's about participating in wealth creation that benefits society broadly over time. For anyone else earning in that $80-90k range and wondering where they stand, this discussion suggests we're likely net contributors right now, but more importantly, we're part of a system that's designed to invest in people across their entire lifetime. Being a "net taxpayer" during your prime earning years isn't evidence of unfairness - it's actually evidence that the system worked for you and is now working through you for others. Thanks to everyone who shared their expertise and perspectives here. This conversation has completely transformed how I think about my role in the tax system!

The distinction between AGI, MAGI, and taxable income is one of the most confusing parts of the tax code! It helps me to think of it like this: 1. Start with Gross Income (all income) 2. Subtract "above-the-line" deductions = AGI 3. Add back certain deductions = MAGI (varies by tax benefit) 4. Subtract standard/itemized deductions = Taxable Income So for your specific questions: - 401(k): Reduces Gross Income → reduces AGI → reduces most MAGI calculations - FSAs: Same as 401(k) - Pre-tax insurance premiums through employer: Same as 401(k) - Post-tax insurance premiums: Might be itemized deductions which DON'T reduce AGI/MAGI

This is such a great thread! I've been dealing with this same confusion for years. One thing that really helped me understand the practical impact was tracking how these deductions affected my actual tax situation over time. For anyone still confused about the AGI vs MAGI distinction, here's what I wish someone had told me earlier: focus on maximizing your pre-tax deductions first (401k, HSA, FSA, pre-tax insurance) because they help with almost everything - they reduce your AGI, most MAGI calculations, AND your current tax bill. The order I prioritize now is: 1. 401k up to employer match (free money) 2. HSA to maximum (triple tax advantage) 3. FSA for predictable medical/dependent care expenses 4. More 401k contributions 5. Then consider post-tax options like Roth IRA This strategy has helped me qualify for more tax credits and keep my income-based loan payments lower. The key insight from this thread is that these pre-tax deductions work across multiple tax benefits simultaneously!

You're absolutely right to be thinking about the installment method for your S Corp stock sale - it can be a great tax planning strategy. Since your S Corporation is privately held and not traded on any established market, you should indeed be eligible to use the installment method under Section 453. One thing I'd recommend is getting a professional valuation of your business before structuring the sale, especially since you mentioned the buyer is interested in eventually taking over completely. This will help establish a defensible sales price and ensure you're maximizing the benefit of spreading the gain over multiple years. Also, make sure your installment agreement includes appropriate interest provisions - the IRS requires imputed interest on deferred payments, so you'll want to use at least the applicable federal rate to avoid any complications. Since this is a significant transaction representing 30% of your business, I'd strongly suggest consulting with a tax professional who has experience with installment sales of closely-held business interests. They can help you navigate any potential complications and ensure all the documentation is properly structured.

Val, you're correct that private S Corporation stock should qualify for installment sale treatment since it's not traded on an established market. However, I'd recommend getting clarification on a few key points before proceeding: 1. **Basis calculation** - Make sure you have clear documentation of your adjusted basis in the S Corp stock, including any loans you've made to the company that might affect your basis. 2. **Payment structure** - The installment agreement needs to specify the total sales price, payment schedule, and interest rate (at least the applicable federal rate). Even though payments are deferred, the total consideration must be determinable. 3. **S Corp elections** - Verify that selling 30% won't inadvertently terminate your S election due to ownership restrictions, especially if the buyer isn't eligible to be an S Corp shareholder. 4. **State tax implications** - Some states don't conform to federal installment sale treatment, so you might face different timing for state taxes. Given the complexity and significant tax implications you mentioned, I'd strongly suggest consulting with a tax professional experienced in S Corp transactions before finalizing the structure. The potential tax savings from proper planning could far exceed the cost of professional guidance.