Has anyone had a similar issue but in reverse? I filed my state taxes first with a local company but need to do federal separately now...

Just went through something very similar last month! Here's what worked for me: You're absolutely right that you can't withdraw the Cash App federal filing once it's been accepted by the IRS. The good news is this is totally fixable. Go back to FreeTaxUSA and look for their "state only" filing option. You'll need to manually enter all the same federal information from your Cash App return (AGI, withholdings, deductions, etc.) so the state return matches perfectly. FreeTaxUSA should detect that your federal was already filed elsewhere and only submit the state portion. Make sure to have your Cash App federal return pulled up while you're doing this - you want those numbers to match exactly. The whole process took me maybe 30 minutes once I had all my Cash App info ready. No amendments needed, just file the state separately and you're all set!

This is a complex transaction that requires careful documentation and planning. In addition to the excellent points already raised about appraisals, AGI limitations, and private inurement, I'd strongly recommend your client consider getting a formal legal opinion on the conversion structure. One thing I haven't seen mentioned is the potential impact on any existing S Corp elections or tax attributes. If the S Corp had NOL carryforwards, suspended losses, or other tax attributes, these would typically be lost in the conversion process. Also, make sure the conversion was done properly under state law - some states have specific procedures for converting profit entities to non-profits that must be followed exactly. The IRS has been increasingly scrutinizing these types of conversions, especially when substantial value is involved and the former owner maintains control. I'd also suggest reviewing Revenue Ruling 2004-51 and the regulations under Section 501(c)(3) regarding private benefit restrictions. Given the complexity and audit risk, this might be worth bringing in a specialist in exempt organization law for a second opinion.

Great discussion here! I'd like to add one more critical consideration that could significantly impact the charitable deduction calculation - the timing of when the S Corporation election was terminated versus when the actual conversion to non-profit status occurred. The IRS requires that the charitable contribution be valued at the time the donor relinquishes dominion and control over the donated property. If there was any gap between terminating the S Corp status and completing the non-profit conversion, this could affect both the valuation date and the character of what's being donated. Also, don't forget about potential state-level implications. Some states don't automatically recognize federal charitable deductions or have their own limitations that could reduce the overall tax benefit. And if the business operates in multiple states, each jurisdiction may have different requirements for the conversion process itself. Given all the complexities mentioned in this thread - from appraisal requirements to private inurement concerns to state law compliance - I'd strongly recommend engaging both a tax specialist experienced in exempt organizations AND legal counsel familiar with entity conversions in your state. The potential audit exposure and penalties for getting this wrong far outweigh the cost of professional guidance upfront.

As a tax professional, I want to emphasize a few critical points that haven't been fully addressed: 1. **S Corp Owner-Employee Status**: As a single-member S Corp owner, you're considered an employee of your corporation. This means HSA contributions made through payroll are treated as employer contributions, which is exactly what you want for maximum tax benefits. 2. **Documentation is Key**: Make sure your S Corp formally adopts an HSA plan document and maintains records showing the contributions are part of your employee benefits package. This protects you if the IRS ever questions the treatment. 3. **Timing Considerations**: If you just formed your S Corp in 2025, verify that your S Corp election was properly filed (Form 2553) and accepted by the IRS. You can only use the employer contribution method for months when you were actually an S Corp employee. 4. **Comparison vs. Sole Proprietorship**: If you were previously a sole proprietor, the FICA savings alone make the S Corp structure worthwhile for HSA contributions. As a sole proprietor, you'd pay 15.3% self-employment tax on the same income that would fund your HSA. The payroll method through ADP is definitely the right approach - just make sure all your corporate formalities are in order first. The tax savings are substantial and completely legitimate when structured properly.

This thread has been incredibly educational! As someone who's been considering converting my sole proprietorship to an S Corp, the HSA angle adds another compelling reason to make the switch. One question I haven't seen addressed: what happens if you have employees in your S Corp besides yourself? Does offering HSA contributions as an employer benefit need to be extended to all employees, or can you limit it to owner-employees? I'm thinking about potentially hiring someone part-time later this year and want to understand the implications before I set up the HSA payroll structure. Also, @Jamal Harris mentioned board resolutions even for single-member S Corps - is this something that needs to be done annually, or is a one-time resolution sufficient to establish the HSA benefit policy? I want to make sure I'm covering all the corporate formality bases from the start. The tax savings really are substantial when you consider both the FICA savings and the income tax deduction. Thanks to everyone who shared their experiences - this has saved me from making some costly mistakes!

One more piece of advice - make sure to keep copies of EVERYTHING you send to the IRS, and send your response via certified mail with return receipt requested so you have proof of when they received it. Also, if the January 18th deadline is too tight, you can call and request a 30-day extension, which they usually grant. That would give you more time to get the proper documentation from the restaurant group.

I've been through a very similar situation with a payment processor issue, and I want to emphasize something that hasn't been mentioned yet - document EVERYTHING about your employment relationship with the restaurant group. In addition to your W-2, gather any emails, text messages, or other communications that show: 1) You were asked to set up the Square account as part of your job duties 2) You never had control over the funds (they went directly to business accounts) 3) You were acting as an employee, not an independent contractor Also, since the restaurant group was sold to a parent company, try to get documentation of that sale/transfer. This can help establish the business relationship timeline and show the IRS that this was clearly a business operation, not your personal income. If the current accountant doesn't follow through, consider reaching out directly to the parent company's finance department. They may be more responsive since this could affect their tax compliance too. One last tip - when you write your response letter, be very specific about dates, amounts, and the business purpose of each transaction. The more detail you can provide about how this was clearly business income that was misreported, the stronger your case will be. Good luck, and don't let this stress you out too much - these payment processor mix-ups are incredibly common and the IRS has seen it all before!

I used to work as a paralegal at a tax firm. One thing to consider - ask if they can give you a cap on research hours or a flat fee package. Most tax attorneys will be willing to set some limits once they've had an initial consultation and understand the scope. Otherwise, those research hours can add up quickly! Maybe something like "After 5 hours of research, we'll reassess and give you an updated estimate before continuing.

As someone who went through a similar situation with international gift tax complications, I'd suggest getting a second opinion before committing to those rates. While $625/hr isn't completely unreasonable for specialized international tax work, the combination of high hourly rates plus $800 per form seems excessive. I ended up working with a US-based tax attorney via video calls who charged $350/hr and included form preparation in their hourly rate. The time zone difference was manageable, and I saved over $3,000 compared to local quotes. Many US practitioners are very experienced with expat gift tax situations and can work efficiently since they handle these cases regularly. Also consider asking for a detailed scope of work upfront. "Substantial research" can mean different things, and you want to know exactly what they're researching before the clock starts ticking at $625/hr.