I think everyone is overcomplicating this. Our LLC accountant told us to just record it as "Due to Member" on the books, then when the LLC pays us back, it's recorded as reducing that liability. Simple journal entries, no loan docs needed, and the LLC still gets the deduction while member repayment isn't taxable income. Worked for us with no issues.

Great question! I went through something similar when starting my LLC. The confusion about reimbursements vs deductions is really common, but here's the key point: the LLC can absolutely still deduct legitimate business expenses even if members initially paid for them personally. The critical thing is documentation. You need to clearly establish that these were business expenses paid on behalf of the LLC, not personal expenses. Keep all receipts and create a clear paper trail showing the business purpose of each expense. You have a few options for how to handle the accounting: 1. Treat the payments as capital contributions (increases your basis in the LLC) 2. Document them as loans to the LLC (allows for formal repayment) 3. Set up an accountable plan for reimbursements The loan approach is often preferred because it gives you the most flexibility - the LLC gets the deductions, you can be repaid without it counting as taxable income to you, and it doesn't affect ownership percentages if members contributed different amounts. Just make sure you document everything properly from the start. The IRS wants to see clear business purpose and proper substantiation for any deductions.

I've been tracking adoption credit processing patterns for a few years now. The key factors affecting processing time are: 1) When you file (earlier = longer wait, counterintuitively), 2) Whether you paper file or e-file (paper is significantly slower), 3) Whether you're claiming other credits simultaneously, and 4) The completeness of your documentation. Are you e-filing or paper filing? And are you claiming any other credits besides the adoption credit?

I went through this exact situation in 2023 with our special needs adoption. Filed February 15th, got the dreaded 570 code by early March, and didn't see our refund until May 8th - almost 3 months! The IRS requested additional verification of our state's special needs determination even though I included it with the original filing. What really helped was calling the Taxpayer Advocate Service around week 10 when it became clear this was affecting our ability to pay for our child's therapy appointments. They expedited the final review and we had our refund within 2 weeks of that call. Don't hesitate to reach out to TAS if you're experiencing financial hardship due to the delay - that's exactly what they're there for.

This is a really comprehensive discussion with lots of great advice! I wanted to add one more consideration that might be helpful - timing your conversation strategically within your remaining time at the company. Since you mentioned you're getting laid off at the end of the month, I'd suggest having this conversation as soon as possible, but also being prepared for the possibility that your employer might accelerate your departure if they feel threatened by potential liability issues. Some employers unfortunately react to these conversations by immediately terminating the relationship to avoid further exposure. That said, since you're already being laid off anyway, you don't have much to lose by bringing this up now rather than waiting until after you leave when you'll have much less leverage. I'd also suggest keeping detailed records of your current work arrangement before you have the conversation - things like emails showing you report to a supervisor, any company handbook materials you received, records of using company equipment or software, etc. Having this documentation ready will be valuable whether your employer is cooperative or if you end up needing to file formal complaints later. The unemployment benefits angle really is the best starting point since it's immediate and doesn't require your employer to admit fault or navigate complex tax procedures. Good luck with your conversation - you've got a lot of good strategies to work with here!

I've been following this thread and wanted to share my experience from the employer side. I run a small business and had a similar situation come up last year when one of my contractors approached me about classification concerns. Honestly, I was initially defensive because I thought they were trying to create problems or get more money. But once they explained it using the collaborative approach that several people mentioned here - focusing on "making sure we're both protected" - I realized they were actually trying to help me avoid a much bigger headache. We ended up using the VCSP program that Rhett mentioned, and while it did cost me some money upfront, it was way less expensive than what an audit would have been. The IRS was actually pretty reasonable to work with through that process, and now I have much clearer guidelines for classifying workers going forward. My advice to Danielle would be to emphasize that you're trying to protect the business relationship, not attack it. Most small business owners genuinely don't understand the classification rules and are just doing what they think is normal. If you approach it as education rather than accusation, you're much more likely to get cooperation. Good luck with your conversation - it sounds like you've got a solid plan and lots of good backup options if needed!

I've been through this same transition and want to add one more thing that might help - if you're having trouble locating Form 6251 in your old TurboTax returns, try searching the PDF for "6251" or "Alternative Minimum Tax" using Ctrl+F. Sometimes these forms are buried deep in the document and easy to miss when scrolling through manually. Also, if you discover that your AMT prior depreciation amount is significant (like several thousand dollars), double-check your math by comparing it to your rental property's total accumulated depreciation. The AMT depreciation difference shouldn't exceed your total depreciation claimed over the years - if it does, you might have the wrong number. One last tip: once you complete your 2025 return in FreeTaxUSA, print out or save a copy of your new Form 6251. Next year you'll need the updated AMT prior depreciation amount from this year's return, and you'll know exactly where to find it. Breaking the cycle of software dependency feels great, and the money you save adds up fast!

Just wanted to chime in as someone who made this exact switch last year! The AMT prior depreciation hunt is definitely frustrating, but don't let it discourage you from making the switch - the savings really are worth it. One thing I haven't seen mentioned yet is that if you've been filing with TurboTax for several years, you might want to check if your rental property depreciation was calculated using the same method consistently. Sometimes TurboTax switches between MACRS and straight-line depreciation methods automatically, which can affect your AMT calculations. Also, if you're really struggling to find the information even after downloading the full returns, consider reaching out to the IRS directly. They keep records of your filed returns and can provide copies that include all the forms and schedules. It takes a few weeks, but it's free and sometimes clearer than what you can access through TurboTax. I've now saved over $300 in the two years since switching, and this year's filing was much smoother since I already had all my carryover amounts properly transferred. Stick with it - you'll be glad you made the switch once you get past this initial hurdle!

I went through something very similar last year. The key thing I learned is that the IRS wants to see a clear connection between your financial hardship and how you used the withdrawal funds. For documentation, keep everything that shows your timeline: - Bank statements from 2-3 months before the withdrawal showing negative balances or inability to cover expenses - Your mortgage statements showing you were current but at risk of falling behind - Any communication with your mortgage company about payment difficulties - Clear records of how the $27K was actually spent (bank transfers to mortgage company, receipts for medical expenses) Since you mentioned you withdrew enough to cover "several months" of mortgage payments, make sure you can show those payments were actually made with the withdrawn funds. The IRS has gotten stricter about people claiming foreclosure prevention but then using the money for other purposes. One tip: create a simple timeline document showing the withdrawal date, your financial situation at that time, and exactly how each dollar was used. This makes it much easier to explain to an auditor if needed. The fact that you had extra taxes withheld shows good faith, which helps your case.

Based on my experience helping clients with hardship withdrawals, you're on the right track with selecting "Other" and specifying foreclosure prevention. The IRS Publication 590-B specifically allows penalty exceptions for distributions to prevent eviction or foreclosure of your principal residence. For audit documentation, focus on creating a clear narrative with supporting evidence: **Essential Documentation:** - Monthly bank statements for 3-6 months before withdrawal showing negative cash flow - Mortgage statements proving you were current but at risk of falling behind - Documentation of how withdrawal funds were actually used (bank transfers, canceled checks, receipts) - Any correspondence with your mortgage company about payment concerns **Pro tip:** Create a simple one-page summary document that tells your story chronologically - when the financial hardship began, when you took the withdrawal, and how each dollar was spent. This makes it much easier for an auditor to understand your situation. Since you mentioned medical expenses as part of your withdrawal reason, make sure you can document those as well. The IRS expects the funds to be used for the stated hardship purposes within a reasonable timeframe. The fact that you had extra taxes withheld shows good faith planning, which auditors generally view favorably. Just make sure your documentation clearly supports that the withdrawal was necessary to prevent foreclosure of your primary residence.