16 I'm in the exact same situation and my accountant advised something different than what others are saying here. He told me that since I own more than 2% of the S-Corp, health insurance has to be handled as additional compensation on my W-2, then I deduct it as self-employed health insurance on my personal taxes. He said S-Corps can't use QSEHRA for owners with >2% ownership. Is this right??

As someone who's been through this exact scenario, I can confirm what others have mentioned about the >2% shareholder rules. The key thing to remember is that even though the reimbursements have to go through your W-2 as taxable wages, you still get the tax benefit through the self-employed health insurance deduction on Line 16 of Schedule 1. One thing I'd add that hasn't been mentioned - make sure you keep detailed records of the actual premium amounts your spouse's employer deducts from their paychecks. The IRS may want to see that the reimbursements from your S-Corp don't exceed the actual premiums paid. Also, the reimbursement timing matters - you generally need to reimburse in the same tax year the premiums were paid. The formal plan documentation is absolutely critical. I learned this when helping a friend who got audited - the IRS disallowed all their health insurance deductions because they couldn't produce the required corporate resolutions and plan documents, even though they had been reporting everything correctly on their tax returns.

Hey Diego! I totally get the frustration with that CPA consultation - sounds like you got the classic "it's complicated, pay me more" response without any real help. Here's the thing about sales tax for artists: everyone makes it sound way scarier than it needs to be when you're starting out. You're in Florida, so let's keep this super practical: **Step 1**: Register for your Florida sales tax permit online at the Department of Revenue website. It literally takes 15-20 minutes and costs nothing. **Step 2**: For sales to Florida customers - collect 6% state sales tax on physical artwork. Digital downloads are tax-free in Florida (lucky you!). **Step 3**: For out-of-state customers - don't collect anything until you hit $100,000 in sales to that specific state in a year. **Step 4**: File quarterly returns in Florida (even if you owe $0). That's it to start! Use a platform like Etsy, Shopify, or even Square that automatically calculates the right tax rates including local taxes. They handle all the math so you don't have to figure out Orlando's specific local rates. The "nexus" stuff your CPA mentioned only becomes relevant once you're doing serious volume in other states. Right now, focus on getting Florida right and actually making those sales happen. You can always layer on complexity later when your income justifies hiring better help. Don't let tax anxiety kill your artistic momentum - you've got this! 🎨

Diego, I completely understand your frustration! I went through the exact same thing when I started my handmade ceramics business a few years ago. That feeling of being ready to sell but totally lost on the tax side is so stressful. Here's what I learned after making some mistakes and finally getting it right: Start with the absolute basics and don't try to solve every possible scenario upfront. Since you're in Florida, here's your immediate action plan: 1. Go to Florida's Department of Revenue website and register for a sales tax certificate (DR-1) - it's free and takes maybe 30 minutes 2. For Florida customers buying physical art: collect 6% + local sales tax (platforms like Shopify handle this calculation automatically) 3. For Florida customers buying digital art: no tax needed (Florida doesn't tax digital products) 4. For customers in other states: don't collect anything until you hit significant sales volume there The key insight that changed everything for me: you're not expected to be an expert on all 50 states' tax laws from day one! Focus on doing Florida correctly, keep detailed records, and expand your tax compliance as your business actually grows into other states. I use Shopify for my online sales and it handles all the tax calculations, collection, and even provides reports that make quarterly filing much easier. The small monthly fee is absolutely worth not having to manually calculate tax rates for every sale. Don't let tax confusion delay your art business launch - you've got customers waiting! Set up Florida properly and start selling. You can always refine the process as you grow.

Watch out for state tax issues too with your LLC sale! Federal is only part of it. Some states treat these sales differently and you might face surprising state tax bills. I sold my LLC in California and got hammered with state taxes I hadn't planned for because my accountant only focused on federal. Double check your state's treatment of goodwill and intangible assets before finalizing anything.

This is such a complex area that really deserves careful planning. One thing I'd add to the excellent advice already given - make sure you get a professional business valuation done before finalizing your sale structure. This isn't just helpful for negotiations, but it's crucial documentation if the IRS ever questions your asset allocation on Form 8594. A formal appraisal can help support the value you're assigning to goodwill versus tangible assets, which directly impacts whether you're paying capital gains or ordinary income rates. The cost of a good business appraiser (usually $3k-8k depending on complexity) is often a fraction of what you could save in taxes with proper allocation. Also, timing matters more than people realize. If you're close to a year-end, consider whether pushing the sale into the next tax year might help with your overall tax situation, especially if you have other capital gains or losses to consider. The interplay between federal and state taxes that others mentioned is real - I've seen people save five figures just by timing their sale strategically.

This thread has been incredibly helpful! I'm dealing with a similar situation but from a different angle - my parents want to gift me money for a house down payment, and they're talking about doing it from their joint account. After reading all these responses, I'm realizing I should probably ask them to document who contributed what to their joint account over the years. It sounds like the key takeaway is that joint account ownership doesn't automatically mean 50/50 gift attribution if one spouse contributed significantly more to the account. I'm wondering if there's a safe harbor rule or presumption the IRS uses for long-established joint accounts where tracking individual contributions would be practically impossible? Also, for those who used the services mentioned here (taxr.ai for documentation and Claimyr for IRS contact), did you find the costs reasonable compared to hiring a tax professional? I'm trying to help my parents navigate this properly without breaking the bank on professional fees if we can handle it ourselves with the right tools.

This is such a comprehensive discussion! As someone who works in tax preparation, I want to add a practical tip that might help future gift-givers: consider making gifts early in the year and from clearly documented sources. If you're planning a large gift from a joint account, one strategy is to first transfer the intended gift amount from each spouse's individual income source into the joint account, wait for those transfers to clear, then make the gift. This creates a clear paper trail showing the proportional contributions. For example, if you want to gift $34,000 and you both earn similar amounts, each spouse could transfer $17,000 from their individual accounts (or paychecks) into the joint account, then make the gift a few days later. This makes the 50/50 split indisputable and keeps both spouses under the annual exclusion. I've seen too many clients get stressed about gift tax reporting after the fact when a little planning upfront could have avoided the whole issue. The IRS appreciates clear documentation, and you'll thank yourself later if you ever face an audit or need to reconstruct the transaction details.

I'm right there with you on this CP05 journey! Got my notice on March 11th, so I'm at about 4 weeks now. Filed on February 9th and was really counting on that refund to help with some unexpected car repairs that popped up last month. The "income verification review" language absolutely terrified me at first too - I thought I was getting audited! My return was super straightforward (single W-2, standard deduction, small charitable donation), so I couldn't figure out what needed "verifying." This thread has been such a relief for understanding this is just routine now, not something we did wrong. I set up transcript access after reading everyone's advice here (seriously, you all are lifesavers!) and I'm doing weekly checks on Friday mornings instead of the daily obsessing I started with. That 570 hold code just sits there mocking me each week, but seeing all your success stories keeps me hopeful. What really gets me is how they can hold our money for months with zero updates while expecting us to file perfectly on time every year. The complete radio silence during this process is honestly worse than the waiting itself! But knowing most people here get their full refund in that 45-65 day window gives me hope we'll all see those magical 571 codes soon. Thanks for keeping each other sane during this awful waiting game! 🤞

I'm about 2.5 weeks into my CP05 experience and this thread has been absolutely essential for my peace of mind! Got my notice on March 24th after filing on February 18th. Like so many of you, I was initially terrified by that "income verification review" language - spent hours re-checking my simple W-2 return wondering what I could have possibly done wrong. What's been most helpful is setting up transcript access (thank you all for that tip!) and seeing that 570 hold code that everyone mentions. I'm checking every Sunday morning instead of the daily obsessing I was doing at first, which has definitely helped my stress levels. I was counting on my refund to help with some overdue medical bills, so the financial stress is real. But reading everyone's timelines and seeing that most people eventually get their full refund in that 45-65 day window gives me hope. It's frustrating how the IRS can hold our money for months with zero communication, but at least this community provides the real information their website doesn't! Thanks to everyone sharing their experiences - it's amazing how much more helpful this is than any official IRS resource. Here's hoping we all see those 571 codes soon! 🤞