Just to add a data point here - I had this exact situation last year. LLC with S-corp election, filed 1120-S about 75 days late. I can confirm 100% that the IRC-6699 S-corporation penalties applied, not the LLC penalties. I tried to argue with the IRS that since my business is "technically" an LLC, the LLC penalty structure should apply (which would have been less in my case). They shut that down immediately. Once you elect S-corp taxation, you're treated as an S-corp for ALL tax purposes, including penalties. The good news is I was able to get a partial abatement based on reasonable cause (I had documentation showing my accountant had a family emergency). They reduced my penalty by about 40%.

One thing nobody has mentioned yet - there's a difference between late FILING penalties (Form 1120-S) and late PAYMENT penalties. If you've been making your estimated tax payments as shareholders, you might only be dealing with the late filing penalty. The IRC-6699 penalty ($220 per shareholder per month) applies to late FILING of the 1120-S. But if you also have unpaid taxes at the shareholder level (on your 1040s), that's a separate penalty structure. Just something to keep in mind when calculating what you might owe.

What about using Form 5213 (Election to Postpone Determination)? I've heard this gives you protection if you have to estimate business vs hobby income which seems similar to your situation.

I've been dealing with this exact same nightmare for three years running with my partnership interest. Here's what I've learned from trial and error: First, Lucas is absolutely right that Form 8082 isn't the solution here - it's for when you're intentionally reporting something different from your K-1, not for when you don't have one yet. My experience has been that filing an extension is usually the cleanest approach, but I get the refund timing issue. If you do decide to file with estimates, here are some practical tips: 1. Document EVERYTHING - keep records of any informal communications from the partnership about expected income/losses 2. Use conservative estimates rather than optimistic ones - better to owe a small amount than have a big refund clawback 3. Consider the partnership's historical patterns - if they usually have similar year-over-year numbers, that's a reasonable starting point One thing nobody mentioned: if your partnership has significant swings in income, you might want to consider making estimated quarterly payments based on last year's tax liability to avoid underpayment penalties, regardless of when you file. The whole system really is frustrating - we shouldn't have to choose between timely filing and accurate reporting because partnerships get until September to provide essential information!

Has anyone used any specific tax software that makes reporting partial rental income easier? I'm in a similar boat renting my finished basement to my brother for $350/month and trying to figure out the best way to handle it on my return.

I'm in a very similar situation - renting out my spare bedroom to my niece who just started college nearby. I've been stressing about the tax implications too, especially since I'm only charging her $300/month when I could easily get $600+ from a non-family member. From what I've learned reading through all these responses, it sounds like the key points are: 1) Yes, we need to report the income even though it's family and below market rate, 2) We can deduct expenses but they might be limited to the amount of rental income we receive since it's not viewed as profit-seeking, and 3) It goes on Schedule E as passive income, not subject to self-employment tax. The part I'm still unclear on is how to calculate the percentage of home expenses I can deduct. Do I base it on square footage of just the bedroom, or should I include shared spaces like kitchen and bathroom access? Also, should I keep separate records of utilities during the rental period to show the actual increase in costs?

Has anyone else had issues with farm startup costs? I'm in a similar situation (40 acre property, making money from online content but not actual farm products yet), and my tax software keeps flagging my equipment purchases saying I need to depreciate instead of taking Section 179. So confused about what's allowed in the first year.

This is a really interesting situation that's becoming more common! I'm dealing with something similar - I have a small organic vegetable operation that I'm documenting on TikTok and Instagram, and the social media income is actually outpacing my produce sales right now. From what I've researched and discussed with my accountant, keeping them separate (Schedule C for content, Schedule F for farm) seems to be the safest approach. The IRS likes clear distinctions between different types of business activities. Even though your YouTube content is about the farm, the income source is fundamentally different - you're being paid by Google for ad revenue, not by customers for farm products. One thing I'd add is to make sure you're tracking any equipment or expenses that serve both businesses. For example, if you buy a tractor that you use 80% for actual farming and 20% for filming content, you'll need to allocate those costs appropriately between the two schedules. Same goes for things like your phone if you're using it to film and manage both businesses. Also, don't worry too much about the farm showing losses initially - that's completely normal for startup agricultural operations. Just make sure you have a solid business plan showing how you intend to generate farm income in the future. The fact that you're actively working the land and making investments shows business intent rather than hobby activity.

I've been through this exact situation! Had code 570 for about 8 weeks last year and it was torture waiting. What helped me stay sane was setting up a weekly check routine instead of obsessively looking every day. The IRS usually updates transcripts on Fridays, so I'd check then and try to forget about it the rest of the week. In my case, it turned out they were just double-checking my filing status since I switched from married filing separately to jointly. Once they cleared it, I got my refund within 2 weeks. Hang in there - I know it's easier said than done when you're counting on that money!

I'm going through the exact same thing right now! Filed in mid-January and got hit with code 570 about 10 days ago. It's so stressful not knowing what they're reviewing or how long it'll take. I've been trying not to check my transcript every day but it's hard when you're expecting that refund money. Reading everyone's experiences here is actually pretty comforting - seems like most people do eventually get it resolved, even if it takes longer than we'd like. Has anyone had success calling the IRS to get more info, or do they just give you the same vague "additional processing time needed" response?