I've been through a similar situation with my S Corp and home office deduction. One thing that really helped was establishing a clear business purpose for why the office needed to be at my partner's location rather than my own home. In my case, it was due to better internet infrastructure and a more professional setup for client meetings. A few practical tips from my experience: - Document everything with photos and measurements showing exclusive business use - Keep detailed records of all expenses if going the accountable plan route - Have a formal written agreement regardless of which approach you choose - Make sure your salary as the sole employee meets "reasonable compensation" standards before optimizing other deductions The accountable plan approach worked well for us because my partner wasn't itemizing deductions anyway due to the higher standard deduction. This meant we weren't losing personal deductions they would have claimed, and the S Corp got the full business deduction for the reimbursed expenses. Whatever you decide, consistency in your approach and thorough documentation will be key if you ever face an audit. The IRS pays close attention to arrangements between related parties, so having everything properly documented and business-justified is essential.

This is a really thorough discussion! I wanted to add one more consideration that might be helpful - depreciation implications if you go the rental route. When your S Corp pays rent to your partner for business use of their home, your partner can claim depreciation on the business portion of the property. While this provides additional tax benefits in the short term, it creates a depreciation recapture situation when they eventually sell the house. They'll have to pay taxes on the depreciated amount at potentially higher rates. With the accountable plan approach, you avoid this depreciation recapture issue entirely since your partner isn't treating any portion of their home as rental property. For many people, especially if they plan to sell their home within the next several years, this can be a significant factor in deciding which approach to take. Also, don't forget about state tax implications - some states have different rules for S Corp deductions or rental income reporting that might influence your decision. Worth checking with a local tax professional who understands your specific state's requirements. The documentation advice everyone's given is spot-on. I've seen too many business owners get tripped up during audits simply because they couldn't prove the business purpose or exclusive use of their claimed deductions.

Just wanted to add my experience since I went through this same headache last year. The key thing that helped me was understanding that Box 14 is specifically for self-employment tax calculations - that's why your personal accountant won't touch your individual return until it's fixed. For a simple partnership like yours (selling stuff online), you'll most likely need to report your share of the partnership's net earnings in Box 14 with code "A". Since you mentioned $6,500 gross income and $6,000 expenses, your net earnings would be around $500, so each partner's Box 14 would show their respective share of that amount. I used TurboTax Business to handle my amendment and it was pretty straightforward. The software automatically calculated what needed to go in Box 14 based on the business income I'd already entered. Just make sure when you generate the new K-1s that both you and your partner get copies of the corrected versions for your personal returns. One tip: call the IRS processing center after you mail the amendment to confirm they received it. Mine got lost in the mail the first time and I had to resend everything.

I went through this exact same situation with my partnership last year! Here's what I learned: For Box 14, the allocation depends on your partnership agreement. If you don't have a written agreement specifying ownership percentages, the IRS generally assumes equal partnership (50/50 split). So if your net earnings are $500 ($6,500 - $6,000), each partner would report $250 in Box 14 with code "A". However, if you and your buddy agreed to different ownership percentages based on contributions, time invested, etc., you'd need to allocate based on those percentages. Just make sure whatever split you use is consistent throughout the entire return. For the IRS processing center, I called the general partnership line at 1-800-829-4933 and asked to be transferred to the processing center for my state. They were actually pretty helpful in confirming receipt of my amendment. You can also track it if you send via certified mail with tracking. One more tip: when you prepare the amendment, include a cover letter explaining exactly what you're changing ("Adding self-employment income information to Schedule K-1 Box 14 - no changes to income or expense amounts"). This helps avoid confusion and potential delays in processing. The whole process took about 6-8 weeks from mailing to receiving confirmation, so don't panic if you don't hear back immediately.

I went through this exact same situation last year with my dog walking side business! The good news is TurboTax makes it pretty straightforward once you know the steps. When you get to the business income section, you'll enter your 1099-K information using your SSN as the tax ID. TurboTax will automatically generate Schedule C for your self-employment income. The key thing is to make sure you enter the gross amount from Box 1a of your 1099-K - that's what Square reported to the IRS. One thing that really helped me was keeping a simple spreadsheet throughout the year tracking all my business expenses. Beyond the Square processing fees, don't forget about: - Hair styling tools and equipment - Products you use on clients - Any licensing or certification costs - Transportation to client locations - Even a portion of your home wifi if you use it to manage bookings Also be prepared for the self-employment tax hit - that caught me off guard my first year. You'll owe both regular income tax plus the additional 15.3% for Social Security and Medicare on your net profit. Setting aside about 25-30% of your side business income throughout the year helps avoid a big surprise at tax time. The most important thing is just being honest and thorough with your reporting. The IRS isn't trying to trick you - they just want to make sure the income matches what was reported by Square.

Just wanted to add something important that hasn't been mentioned yet - make sure you're keeping detailed records of ALL your cash transactions too, not just what shows up on the 1099-K! The 1099-K from Square only reports your electronic payments, but if you're doing haircuts and styling, you probably also receive cash tips or some clients might pay cash directly. The IRS expects you to report ALL your income, not just what's on the 1099-K form. I learned this the hard way when I got audited for my massage therapy side business. Even though my 1099-K showed most of my income, the auditor asked for records of any cash payments too. Now I keep a simple log of every service I provide, whether paid by card through Square or cash. Also, since you mentioned you didn't set up the tax settings correctly in Square, you'll want to be extra careful about sales tax if your state requires it for personal services. Some states exempt personal services like haircuts from sales tax, but others don't. You might need to file separate sales tax returns depending on your location. TurboTax won't help with state sales tax obligations - that's usually handled through your state's department of revenue. Worth looking into before you file your income taxes!

Yes, there are still some forms that require original signatures! Form 2848 (Power of Attorney) and Form 8821 (Tax Information Authorization) typically still need original signatures, not scanned copies. Also, certain international forms and some estate/trust documents may have stricter signature requirements. For most business returns like 1120S, 1065, and 1120, scanned signatures are fine. But it's always worth double-checking the specific form instructions because the IRS does make exceptions for certain specialized forms where they want to ensure authenticity. The general rule is: if it's a standard business return being filed electronically or on paper, scanned signatures are acceptable. If it's a power of attorney, authorization form, or involves international tax matters, you might need originals.

I've been dealing with this exact scenario more frequently since the pandemic, and I can confirm that scanned signatures are absolutely fine for 1120S returns. The IRS updated their policies significantly and these changes have stuck around. One thing I'd add though - since your client is already filing late, make sure you've prepared and included Form 7004 if they didn't already file for an extension. Even though it's past the deadline, filing it with the return can sometimes help minimize penalties (though it won't eliminate them entirely since it's late). Also, double-check that all required signatures are captured in the scan - sometimes the signature fields at the bottom of pages get cut off when people scan hastily. I learned this the hard way when a return got rejected for an incomplete signature page! Your stress about this situation is totally understandable, but you're good to go with the scanned signatures. File it and be done with this difficult client!

Has anyone used the "substantially equal periodic payments" (SEPP) method to withdraw from a SEP IRA? I'm considering this to avoid the 10% penalty since I'm only 52.

This is a really complex situation that highlights why SEP IRAs can be tricky for people who transition from business to personal contributions. Based on what others have shared here, it sounds like you have a few different issues to untangle: 1. Tax withholding on withdrawals - as mentioned, SEP IRA distributions will have taxes withheld regardless of how you contributed 2. Missed deductions - if you contributed from personal funds after closing your business but didn't claim tax deductions, you may have double-taxed that money 3. Potential amended returns - you might be able to recover some of those missed deductions if you're still within the filing window Given how complicated this has gotten, I'd strongly recommend getting professional help to sort out your contribution history and determine exactly what your tax situation is before making any withdrawals. The stories others shared about using services like taxr.ai or getting through to actual IRS agents via Claimyr sound like they could be really helpful for someone in your position. Don't let this drag on - the longer you wait, the fewer options you'll have for recovering those missed deductions.