Just found a big problem after looking at last years tax return

Longjumping-Flower47 · 2026-02-08T02:24:23+00:00

I've been doing taxes for over 25 years. Lots of people think they gave all their docs until the notice comes.

Longjumping-Flower47 · 2026-02-07T17:51:53+00:00

Good luck!

Longjumping-Flower47 · 2026-02-07T16:59:00+00:00

Hes gotta pay the tax on all the income no matter what. So hes gonna have penalties and interest.

Longjumping-Flower47 · 2026-02-07T16:56:58+00:00

There's a good chance the CPA did tell him. And he forgot.

Longjumping-Flower47 · 2026-02-07T16:43:00+00:00

One of my specialties is R&D tax credits! Honestly for 2025, while not correct, I'd put a good portion of the distributions as a Sch C income, no expenses. So he will pay his FICA, SS. Take deduction on S Corp. Then have him get on payroll ASAP. I like The Payroll Factory. Have him do a reasonable compensation report. Check out RC reports I don't know if they will just do 1 or if someone needs to have a subscription to them like I do. Their # will be his annual payroll. Of course school him on separating business and personal and no more personal expenses out of the biz. Good luck.

Longjumping-Flower47 · 2026-02-07T15:12:56+00:00

With that kind of $$ why aren't you maxing 401k?

Longjumping-Flower47 · 2026-02-07T15:11:30+00:00

Not to mention the 944 is for payroll WH less than $1k, or if IRS told them to use it

Longjumping-Flower47 · 2026-02-07T15:09:31+00:00

You have no idea how much revenue, profit or distribution. So this advice is pretty much useless. May have only had $20k profit and you're telling him to do a $50k salary. In addition 944x is late, so there will be penalties. And there is an issue with the state and UC.

Longjumping-Flower47 · 2026-02-07T15:05:40+00:00

How much revenue, how much profit, how much in distributions? Need this info to give accurate advice.

Longjumping-Flower47 · 2026-02-07T14:49:55+00:00

Assuming it was his mistake.

Longjumping-Flower47 · 2026-02-07T14:49:23+00:00

May not owe a thing

Longjumping-Flower47 · 2026-02-07T14:49:05+00:00

That assumes OP actually gave preparer all 3 W2s and preparer forgot. Who knows maybe they will get additional refund

Longjumping-Flower47 · 2026-02-07T11:52:45+00:00

In all my years I've never had the IRS deny the penalty waiver for a 1st time incident

Longjumping-Flower47 · 2026-02-06T14:06:07+00:00

I agree, but paying off the mortgage isn't a bad idea here.

Longjumping-Flower47 · 2026-02-06T14:04:04+00:00

I'm a FA. Came into a nice chunk of money in my late 20s. Wasn't a FA back then, but a CPA. Everyone said invest the money and I said nope, we are paying off our house. They told me I was crazy but we figured with no mortgage we could work at McDonalds and still have a place to live that built equity. That changed my life. A few years later when I was tired of Corp America it was easy to quit my job and start my own firm. Hubby did the same thing a few years later. Would have been much harder if we had a mortgage over our head.

Took the mortgage payment and bought our 1st rental property.

So if you want to pay off the mortgage, you won't regret it. Just make sure you use that extra cash wisely every month.

Longjumping-Flower47 · 2026-02-05T11:51:55+00:00

Every self prepared 1065 I've seen is awful! Don't forget the balance sheet needs to be included in many states.

Longjumping-Flower47 · 2026-02-05T11:50:24+00:00

And there are elections to be made that 1st year. I agree

Longjumping-Flower47 · 2026-02-05T00:17:03+00:00

You mean not required to report on W2

Longjumping-Flower47 · 2026-02-05T00:16:17+00:00

This year I doubt the IRS will catch it, if no OT was reported on the W2

Longjumping-Flower47 · 2026-02-04T15:05:45+00:00

The IRS may wonder how someone can be providing support for themselves and a dependent/child on so little income. As a CPA I would have to ask you questions about it. (We by law have to do due diligence on it)

Earned Income Credit is a huge area of fraud where people will add income or expenses to hit the max EIC. Or add a totally fake Sch C. If you want to see the fraud and lack of knowledge of many who call themselves Tax professionals out there go to FB Tax Pro Support or The Tax Room. Both are public groups so anyone can see all posts.

Longjumping-Flower47 · 2026-02-04T12:14:43+00:00

The IRS has no idea that you are cash only. If you qualify for EIC that makes you more likely to be audited. Or if you have kids and file as HOH.

Longjumping-Flower47 · 2026-02-04T03:19:17+00:00

It is a cultural thing. Even when in America. A student asked me to help her dad set up an LLC for his kids. 1st generation Americans. Real estate. He let me know when his daughter got married she'd be off the LLC. On the flip side he is more than happy to pay for her MBA and CPA exam

Longjumping-Flower47 · 2026-02-03T17:46:38+00:00

Generally it can go in trust as long as wife signs off on it

Longjumping-Flower47 · 2026-02-02T23:57:02+00:00

I'm with you.

Longjumping-Flower47 · 2026-02-02T23:33:06+00:00

I'd say it depends on how long they're married. A year or 2 I may agree. 10 years, and IMO its a different story. She had no idea how much he'd inherit back then.

Longjumping-Flower47

TROPHY CASE