That's interesting - I hadn't considered switching to an S corp. Would I lose any benefits by making that change? And would it affect how I handle the two different income streams?

You wouldn't lose the liability protection benefits, but you would lose the ability to retain earnings at the corporate level at the 21% rate. All income would flow through to your personal return regardless of whether you take it out of the business. For handling the two income streams, there's no difference - both producing and consulting still qualify as personal services. You'd still want to maintain clear records separating the different business activities, but the S corp can absolutely handle both streams. The main benefit is avoiding potential double taxation, especially if you need to take most of the income out as compensation anyway.

There's actually an opportunity there depending on your overall income situation. With a C corp PSC, you could potentially recognize those monthly payments as corporate income when received, then time your salary distributions strategically based on your personal tax situation each year. Gives you more flexibility than if you were receiving those payments directly as an individual.

That's a great point I hadn't thought about. I'm definitely interested in knowing if there are smart ways to handle the timing of those monthly payments to optimize my tax situation.

Can you get these transcripts right away or is there a waiting period after filing?

There's a processing time of about 2-3 weeks after you file before the current year's transcripts become available. Prior years are available immediately. The "account transcript" will update faster than the others and will show your payment, so that's the best one to check first if you're concerned about whether your payment was properly applied.

That "no news is good news" thing is so stressful though! Like, can they not send a simple "yep we got it, you're good" email in 2025?? The government is so behind on technology.

Is this different if the practice is an LLC taxed as a partnership rather than an S-corp? Our veterinary practice is set up this way and I'm now wondering if we're doing things correctly.

Yes, it's a bit different for LLCs taxed as partnerships. In that case, you wouldn't receive a W2 - you'd get a K-1 instead. The health insurance premiums would be reported as guaranteed payments on your K-1, and you'd still be eligible for the self-employed health insurance deduction. The key difference is the reporting method (W2 vs K-1), but you can still take the deduction either way if you're a partner. Just make sure the premiums are properly included in your income first.

This is super helpful, thank you! Between this discussion and the documents I've been reading, I think I finally understand how to handle this for my optometry practice. I need to talk to our practice manager about correcting our W2s.

Thank you for this insight! Do you have any suggestions for how I might approach the conversation with the CEO again? Is there specific regulatory guidance I could reference to help clarify the distinction between reporting requirements and payment structure?

I'd suggest approaching the conversation by acknowledging their regulatory concerns first, which shows you understand the importance of compliance. Then, bring up that many financial institutions separate personal board service from compensation arrangements. Ask if their concern is based on a specific regulation or internal policy. For reference materials, the FDIC's "Pocket Guide for Directors" and the OCC's "Director's Book" both discuss board responsibilities but don't prohibit compensation to business entities. You might also want to have your CPA prepare a short memo explaining the tax structure and confirming your personal liability remains unchanged. Having something in writing from a professional often helps overcome institutional resistance.

Good point! From my experience as a board member who uses an S-Corp, you'll still need to pay yourself a reasonable salary from the S-Corp for your board service. The tax advantage comes from only a portion of the income being subject to employment taxes, not eliminating them entirely.

What about liens? I heard they can put a lien on your house or property if you don't pay. How long before they do that?

Liens are definitely a possibility, but they typically don't happen immediately. The IRS generally sends multiple notices before filing a tax lien. Usually, you'll receive several billing notices over a period of months. If you've set up an installment agreement and are making your payments on time, the IRS typically won't file a lien. However, if you owe more than $10,000 and don't set up a payment arrangement, a lien becomes much more likely. The timeline varies case by case, but it's usually not something that happens within the first couple months of non-payment.

I completed an Offer in Compromise last year. It's legitimate but NOT easy to get approved. They do a thorough financial analysis of your assets, income, and expenses to determine your "reasonable collection potential." They only accept offers that are equal to or greater than what they think they can collect from you. I owed about $22k and settled for $9k, but I had to prove genuine financial hardship and limited assets. The application process took almost 9 months and required extensive documentation. Those "pennies on the dollar" ads you hear are very misleading.