I went through this exact situation last year with my business partner. We had also mistakenly filed our EIN as a single-member LLC when we were clearly operating as equal partners from day one. After researching extensively and consulting with a tax attorney, here's what we learned: Your new accountant is absolutely correct about needing to file Form 8832. The IRS requires this formal election to change your tax classification from a disregarded entity (single-member LLC) to a partnership. The key thing to understand is that even though you've been operating as a partnership in practice, the IRS only knows what you told them on your EIN application. Without Form 8832, there's a mismatch between your actual business structure and your tax classification that could cause problems down the road. We filed Form 8832 with a detailed explanation of our mistake, and it was processed without any issues. The form allows you to make the election retroactive to when you first started operating as a multi-member LLC, which should align your tax treatment with your actual business operations from the beginning. Don't try to just file partnership taxes without correcting the classification first - it will likely trigger correspondence from the IRS asking for clarification, which will delay your filing and potentially create more complications.

This is such a common issue that catches so many new business owners off guard! I went through something similar with my consulting LLC about 6 months ago. The advice about filing Form 8832 is definitely correct, but I wanted to add one thing that really helped us: before filing the form, we spent time documenting everything that proved we'd been operating as a true partnership from day one. This included not just our operating agreement, but also meeting minutes, email chains about business decisions, bank records showing equal capital contributions, and contracts where both partners were listed. Having this documentation package ready made the whole process much smoother. We attached the key documents to our Form 8832 filing, and it seemed to help the IRS understand that this was genuinely just an EIN application mistake rather than us trying to change our business structure after the fact. One other tip: when you're preparing your explanation letter for the reasonable cause, be very specific about the timeline. We included the exact date we formed the LLC, when we applied for the EIN, and when we discovered the error. The IRS seems to appreciate that level of detail when reviewing these corrections. Good luck with getting this sorted out! It's stressful when you're dealing with it, but it's definitely fixable with the right paperwork.

Just wanted to add one more important detail that I learned the hard way - make sure you understand what qualifies as a "first-time homebuyer" for IRS purposes. It's not just about never owning a home before. You (and your spouse if married) must not have owned a principal residence during the 2-year period ending on the date you acquire your new home. So if you owned a home 18 months ago, you wouldn't qualify yet. Also, the $10,000 is a lifetime limit per person, so if you're married, you and your spouse can each use up to $10,000 from your respective IRAs for a total of $20,000. But if you're single, you're stuck with the $10,000 limit across all your accounts combined. Make sure to keep detailed records of everything - when you withdrew the money, what you used it for, and proof that you meet the first-time homebuyer requirements. The IRS can be pretty strict about documentation if they audit you later.

Important clarification about married couples and the $20K limit! Each spouse can only withdraw up to $10,000 from their own IRA accounts - you can't have one spouse withdraw $20K from their single account just because they're married. The benefit only applies if both spouses have their own retirement accounts. So if you're married and only one of you has an IRA, you're still limited to $10,000 total for the first-time homebuyer exemption. Both spouses need to have their own IRA accounts to get the full $20,000 benefit ($10K from each person's accounts). Also worth noting that the "qualified acquisition costs" this money can be used for include more than just the down payment - you can use it for closing costs, financing fees, and other expenses related to buying or building the home. Just make sure to keep receipts for everything since the IRS may ask for documentation later.

Has anyone dealt with the California Franchise Tax Board in a situation like this? I had a similar issue last year, and while I resolved the federal part, the state side was a whole separate nightmare.

I went through something very similar two years ago when my preparer was caught in a scheme affecting dozens of clients. Here's what I learned that might help: Document EVERYTHING from now on. Create a timeline of your relationship with this preparer - when you started using them, what documents you provided, any red flags you might have missed. This becomes crucial evidence that you were acting in good faith. Contact the IRS Taxpayer Advocate Service (1-877-777-4778) - they have special procedures for victims of preparer fraud. They can sometimes pause collection activities while you sort things out and may expedite your case review. Don't ignore the audit notice deadline, but you can request an extension by calling the number on the notice. Explain your situation - they're usually understanding when there's documented preparer fraud involved. One thing that really helped me was getting a "verification of non-filing" letter from the IRS for the tax year in question, which shows what they have on file versus what was actually submitted. Sometimes fraudulent preparers file completely different returns than what they show you. The good news is that victims of preparer fraud often qualify for penalty relief, and the IRS has gotten better at handling these cases. It's stressful, but you're not automatically liable for everything just because it was filed under your name.

Has anyone actually had a payment get "lost" when paying before the balance shows up online? I'm in the same situation with my 4549 and worried about this.

I went through this exact situation last year and can share what worked for me. I paid immediately using IRS Direct Pay even though no balance was showing online, and it was the right call. The key is to be very specific with your payment details - I selected "Form 1040" for the tax form, chose the correct tax year, and most importantly selected "Other" as the reason and typed "Form 4549 Agreed Assessment" in the description field. Make sure to include your Letter 525-T control number somewhere in the payment notes if possible. I also kept detailed screenshots of the payment confirmation page and printed everything out for my records. The interest did continue to accrue for about 5 weeks until they officially posted the assessment, but paying early prevented any additional delays on my end. My payment was properly applied once they processed everything, and I had peace of mind knowing I'd done everything I could to minimize interest charges. One tip: if you're really concerned about the payment being applied correctly, consider making the payment and then calling the IRS a few days later to confirm they received it and that it's properly tagged to your examination case. Having that confirmation can save you stress later.

I'm surprised no one mentioned the ITIN option. Instead of putting "NRA" for your spouse, you can apply for an Individual Taxpayer Identification Number (ITIN) for your spouse using Form W-7. This would allow you to e-file as Married Filing Separately without issues.

I went through this exact situation last year! As a tax preparer, I see this scenario frequently with clients who have spouses abroad waiting for immigration approval. You absolutely should NOT file as "Single" - this could create serious complications with both the IRS and USCIS. Your marital status is documented across government systems, and inconsistencies can raise red flags during the immigration process. Here's what I recommend for your situation: 1. **File as Married Filing Separately** - This is the correct status for your situation 2. **Paper file only** - Write "NRA" where your spouse's SSN would go 3. **Include a statement** explaining your spouse is a nonresident alien with no US income 4. **Consider the timing** - If your education credits are substantial, you might want to explore the 6013(g) election to treat your spouse as a resident, but only if his foreign income is minimal For the education credits issue: You mentioned you're working on your Master's with a research stipend. Depending on your exact situation, you might still qualify for the Lifetime Learning Credit even with MFS status, or potentially the Tuition and Fees Deduction (though that's been on and off in recent years). The paper filing is definitely a pain, but it's the safest approach for your first year. Consider getting an ITIN for your spouse for next year's filing to make the process smoother going forward.