I'm a bit late to this thread but wanted to add something important - if you do decide to file separately, be aware that BOTH spouses must take the standard deduction or BOTH must itemize. You can't have one person itemize while the other takes the standard deduction. With your income levels, this could be significant depending on whether you have major itemizable deductions like mortgage interest, state taxes, and charitable contributions.

One thing I haven't seen mentioned yet that could significantly impact your decision - the Net Investment Income Tax (NIIT). At your combined income level of $405k, you're well above the $250k threshold for married filing jointly where the 3.8% NIIT kicks in on investment income. If either of you has significant investment income (dividends, capital gains, rental income, etc.), this could affect whether filing jointly vs. separately makes more sense. When filing separately, each spouse gets their own $200k threshold before NIIT applies. Also, don't forget about the Additional Medicare Tax of 0.9% that applies to wages over $250k for joint filers ($200k for separate filers). Your husband's $324k income will definitely trigger this regardless of filing status, but the thresholds are different. I'd strongly recommend running actual calculations with your real numbers rather than relying on general advice. Every situation is unique, especially when you're dealing with higher income levels where various phase-outs and additional taxes come into play. The student loan consideration that Lilly mentioned is particularly important if applicable to your situation.

This is incredibly helpful timing for this post! I'm one of those people who's been dragging their feet on filing 2024 taxes and suddenly realized I'm running out of time with the shutdown approaching. I have a question about the professional preparer route - when you say e-filing through professionals ends "next week," does that mean this coming week or the week after? I'm trying to figure out exactly how much time I have to get an appointment scheduled. Also, for anyone who's worked with tax pros during this crunch time before the shutdown - do they typically charge rush fees for last-minute clients, or are their rates pretty standard? I'm weighing whether it's worth paying extra to get this handled properly versus just paper filing myself and dealing with the longer wait. The penalty information from the tax professionals here is definitely motivating me to stop procrastinating. I had no idea the failure-to-file penalty was so much worse than the failure-to-pay penalty. Thanks for breaking that down so clearly!

As someone who just went through this exact situation last year, I can't stress enough how important it is to act quickly if you owe taxes. I made the mistake of thinking "a few more weeks won't matter" and ended up paying an extra $800 in penalties. The paper filing route really is painful - I submitted mine in December and didn't get confirmation it was processed until April. Meanwhile, my friend who waited and e-filed in January got her refund by Valentine's Day. One thing I learned that might help others: if you're scrambling to get documents together this week, don't panic if you're missing a form or two. You can file with the information you have and then amend later when you get the missing documents. It's better to get something submitted before the shutdown than to wait and let penalties accumulate. Also, for anyone considering the "wait until January" approach - keep in mind that tax preparers are absolutely slammed once e-filing reopens. If you can get your return prepared now (even if they hold it for January e-filing), you'll skip that January rush and probably get better attention to your specific situation. The shutdown period is frustrating, but it's predictable. Plan around it and you'll save yourself money and headaches!

As someone who works in tax preparation, I want to add that there's also IRC Section 6013(a)(3) which allows the IRS to treat a return as jointly filed even if one spouse didn't sign, provided certain conditions are met. This includes situations where one spouse is unable to sign due to disease or injury. The key is proper documentation and following the correct procedure. You'll need: 1. Medical documentation of the condition 2. Evidence of the pattern of joint filing in prior years 3. A detailed explanatory statement attached to the return 4. Consider filing Form 8379 (Injured Spouse Allocation) if there are any potential issues with refunds or liabilities For your case study, the husband should definitely pursue formal guardianship or POA as others mentioned, but in the interim, the IRS does have provisions for these exact circumstances. The letter explanation needs to be very thorough and reference the specific IRC section and any applicable revenue procedures. Also worth noting - if this gets rejected, they have options to appeal or request a private letter ruling from the IRS for clarification on their specific situation.

This is a really complex area of tax law that trips up a lot of students! You're absolutely right to be cautious about filing jointly without proper legal authority. One thing I'd add to the excellent responses here is that the IRS has become much stricter about these situations in recent years. While IRC Section 6013(a)(3) and Revenue Procedure 2013-34 do provide some pathways, the IRS will scrutinize the documentation very carefully. For your case study analysis, I'd recommend looking at the distinction between "temporary" vs "permanent" incapacity. The IRS tends to be more flexible with temporary situations (like someone in a coma who might recover) versus permanent conditions like severe dementia or psychiatric conditions. Also consider the timing issue - if the wife's condition developed after they normally would have filed, that creates additional complications compared to a situation where the incapacity existed at the time of filing. From a practical standpoint, even if they could technically file jointly with proper documentation, the safest recommendation is still to pursue formal guardianship. The cost of establishing guardianship is usually much less than the potential penalties, interest, and legal fees if the IRS rejects the return and treats it as improperly filed. Good luck with your case study - tax law intersecting with family law and mental health issues is genuinely one of the trickiest areas to navigate!

Does anyone know if OP would have to pay the employer portion of payroll taxes too for 2023? That's an extra 7.65% the business would owe on top of the employee portion that would be withheld from their reasonable compensation, right?

I went through this exact situation last year and can share some practical insights. First, don't panic - late S corp elections are more common than you think and the IRS has established procedures for this. Here's what worked for me: I filed Form 2553 with a detailed reasonable cause statement explaining that as a first-time business owner, I misunderstood the filing deadline. The key is being honest and providing documentation of when you originally intended to make the election (emails to CPAs, research you did, etc.). For the payroll mess, yes you'll need to establish a reasonable salary and file quarterly 941s retroactively. I used a payroll service to help calculate everything properly - trying to do it manually was a nightmare. The penalties were significant but not business-ending, and I was able to get first-time penalty abatement on some of them. The math worked out in my favor - even with penalties, I saved about $4,000 in self-employment taxes compared to staying as an LLC. Just make sure you run the numbers before committing because every situation is different. One tip: when you submit your reasonable cause statement, be specific about your research efforts and include any documentation showing you were actively trying to comply. The IRS likes to see good faith effort, not just "I didn't know.

This whole situation sounds extremely suspicious to me. I work in payroll administration and have processed employment verifications for hundreds of employees over the years. Never once has any legitimate client or contractor requested full 1040 tax returns for employment verification purposes. The standard process is always: employment verification letter stating dates of employment, position held, and salary (if authorized), plus sometimes W2s if income verification is specifically needed. That's it. Your 1040 contains way too much irrelevant personal information that no employer has any business seeing. I'm honestly wondering if this is either: 1) A fishing expedition to see your complete financial picture (maybe they're concerned about financial stress, side businesses, or other employment), 2) Someone at your company doesn't understand proper verification procedures, or 3) This isn't actually coming from a legitimate client requirement at all. My advice: Stand firm, offer the standard alternatives (W2s, employment letters, references), and if they keep pushing, ask them to put their specific requirement in writing along with the client contract language that mandates tax returns. I bet they can't produce it.

This is absolutely not normal or acceptable. I've been working in tax compliance for over a decade and have never seen a legitimate business case for demanding complete 1040 forms just for employment verification. Your employer is essentially asking to see your entire financial life - spousal income, investment returns, medical expenses, charitable deductions, business losses, everything. The "client requirement" excuse sounds like complete nonsense to me. Real client contracts specify employment verification through standard channels: employment letters, W2s, or professional references. No sophisticated client would require full tax returns because they create massive liability issues for everyone involved. Here's what I suspect is really happening: either your employer wants to snoop on your complete financial picture (maybe they're worried about financial stress, competing business interests, or just being nosy), or someone in management fundamentally misunderstands employment verification procedures. My strong recommendation: refuse politely but firmly, offer standard alternatives (W2s, employment verification letters, references), and demand to see the specific contract language requiring tax returns. When they can't produce it (because it doesn't exist), you'll have your answer about their true motivations. Document everything in writing and consider consulting your state labor department if they retaliate. This is a major privacy red flag.