Thanks for bringing this up - I hadn't even thought about the corporate formalities aspect. Do you think it's still possible to create those minutes retroactively without it looking suspicious? And would a regular business attorney handle this or does she need someone who specializes in tax issues?

Creating retroactive minutes is actually a common practice when catching up on corporate formalities. The key is to be honest about the dates - you're creating the documentation now, but accurately reflecting when decisions were made. You want to document major business decisions like officer appointments, banking authorizations, major purchases, etc. A regular business attorney who works with small corporations should be fine for this - you don't need a tax specialist for the corporate formalities aspect. Many attorneys will even provide templates for these minutes to make it easier. The important thing is showing a good faith effort to comply with requirements going forward while documenting the history as accurately as possible.

Is there a safe formula for what counts as "reasonable salary" for an S-Corp owner? I've heard everything from 30% to 70% of profits should be salary vs distributions.

Is there a minimum amount of contractor income before you have to file Schedule C? I just started doing some small side gigs and wasn't sure if I need to bother with all this.

There's no minimum threshold for filing Schedule C if you're self-employed. Even if you only make $400 in contractor income for the year, you need to report it. That's also the threshold where you have to pay self-employment tax. It seems like a pain for small amounts, but it's way better than getting a letter from the IRS later. Plus, reporting even small self-employment income creates a work history for Social Security purposes, which can be important for your benefits later in life.

I use QuickBooks Self-Employed and it's been a lifesaver. You can link your bank accounts and it automatically categorizes expenses. It also tracks mileage if you drive for work. Around $15/month but worth every penny for the time it saves.

Could you clarify if there's a specific income limit for dependents? My daughter made about $14k last year from her part-time job while in college, but I still pay for her tuition, housing and most expenses. Can I still claim her?

For a qualifying child (which includes full-time students under 24), there is no income limit. Your daughter can earn any amount and you can still claim her as long as you provide more than half her total support and she lives with you for more than half the year (with exceptions for temporary absences like college). The income limit ($4,700 for 2023) only applies to qualifying relatives who aren't your children. This is a common misunderstanding that causes a lot of problems. So yes, you can absolutely claim your daughter as a dependent even with her earning $14k, as long as that money isn't covering more than half of her total expenses.

I used TurboTax for a similar situation. Since it was a rejected return that was never officially filed, I was able to just go back into my TurboTax account, access the return, fix the issue with my dependents, and resubmit. But since it had been more than 45 days since the rejection, their system wouldn't let me e-file again, so I had to print and mail it.

Thanks for the info! I'll check if I can still access my old return in TurboTax. 45 days have definitely passed for me too, so I'm guessing I'll have to mail it in as well. Did you need to include any special notes or forms explaining that it was a resubmission of a rejected return?

Thanks for this suggestion! I do work full-time though and make about $38k per year, so I don't think I'd qualify as his dependent? We split all expenses pretty evenly.

You're right - with that income level, you definitely wouldn't qualify as a dependent. The income limit for a qualifying relative in 2023 is $4,400, and you're well above that. And since you split expenses evenly rather than him providing more than half your support, that would disqualify you anyway. Thanks for the additional info! It's always good to explore all possibilities, but in this case, it looks like neither of you will get tax benefits from your living arrangement.

This! I work in property management and we definitely notice when someone is living in a unit who's not on the lease. Maintenance visits, neighbors mentioning things, security cameras in common areas, etc. The tax stuff is probably the least of your concerns.

Thanks for the organization tips! Did you include explanations directly on the cover sheet or separate explanation pages for each question? And did you use any particular format that seemed to work well? I want to make this as painless as possible for both me and whoever reviews my case.

I created a master cover sheet listing all questions and what was included for each, then for complex items I added separate explanation pages with more detail. For example, "Question 12: Home Office Deduction - See floor plan on page 5, utility bills on pages 6-8, and explanation of business use on page 9." The format that worked best was using a clear numbering system matching their questions exactly. I used dividers between sections and paper-clipped related documents together. I also highlighted relevant information on bank statements or lengthy documents. The agent who handled my last audit specifically mentioned that my organization made their job easier, which I think contributed to a favorable outcome!

Yes! I appealed an audit decision and won about 70% of what they initially disallowed. The key was providing additional context that showed why those expenses were actually ordinary and necessary in MY specific industry. I included articles about standard practices in my field and letters from colleagues confirming these were normal business expenses for our type of work.