As a new member of this community, I'm blown away by the wealth of practical information and support being shared here! I'm currently navigating my first Schedule C paper filing situation after e-filing issues forced me to mail my return on February 25th. Reading through everyone's real-world timelines and experiences has been incredibly valuable for setting realistic expectations and planning my business cash flow. I particularly appreciate the specific resources mentioned - Form 3911 for refund tracing, Form 911 for economic hardship, and the various financing alternatives while waiting. One thing I'd like to add based on my research this week: I discovered that the IRS also has a "Taxpayer Assistance Centers" (TAC) locator on their website where you can sometimes schedule in-person appointments to get status updates on paper returns. While availability is limited, it might be another option for those facing urgent business deadlines. I'm planning to try the online account tracking and Form 3911 route first, but it's good to know about multiple pathways for getting information. Thank you all for creating such a supportive environment - it's made dealing with this stressful situation much more manageable knowing others are going through similar challenges!

As a new community member dealing with my first Schedule C paper filing experience, I'm incredibly grateful for all the detailed information and real-world timelines shared here! I submitted my paper return on March 3rd after encountering e-filing issues with my business expenses documentation. Based on everyone's experiences, it sounds like I should expect anywhere from 6-12 weeks for processing, with potential additional delays due to Schedule C complexity. I've already set up my IRS online account for tracking and plan to explore the Form 3911 option after the 28-day mark. One question I haven't seen addressed - has anyone had success with reaching out to their state representatives' offices for assistance with federal tax processing delays? I've heard they sometimes have dedicated staff for constituent services that can interface with the IRS on urgent business matters. Also planning to research the bridge financing options mentioned by several members here, since I have some equipment purchases that can't wait much longer. Thank you all for creating such a supportive and informative community - it's made this stressful process much more manageable!

I did exactly what you're considering - started a business and included my brother for tax advantages. We went with the multi-member LLC but soon regretted it because: 1) Had to file partnership returns which were way more complicated than I expected 2) Splitting profits fairly became an issue when he wasn't doing equal work 3) Couldn't make business decisions quickly because we needed mutual agreement We ended up dissolving that and forming separate single-member LLCs instead. Now I hire his LLC for specific services when needed. Much cleaner arrangement. Whatever you decide, seriously consider the practical business relationship aspects, not just the tax benefits!

Great question about business structures! As someone who's helped family members navigate this exact situation, I'd suggest starting simple and evolving as your business grows. For your immediate needs, a multi-member LLC is probably your best bet. It allows both you and your dad to share in business deductions proportional to ownership percentage, and the tax filing (Form 1065 + K-1s) isn't too overwhelming for a small business. Just make sure you have a solid operating agreement that clearly defines roles, responsibilities, and profit/loss sharing. The key thing the IRS looks for in family businesses is that the arrangement serves a legitimate business purpose beyond just tax savings. If your dad brings capital, expertise, connections, or other valuable contributions, then his ownership stake is justified even if he works fewer hours than you. I'd avoid the two-LLC structure initially - it creates unnecessary complexity and paperwork. You can always restructure later as the business grows. And don't worry about S-Corp election until you're consistently profitable - the additional administrative burden usually isn't worth it for smaller operations. One practical tip: document everything from day one. Keep records of each member's contributions, time spent, and business decisions. This protects you if the IRS ever questions the legitimacy of your family business arrangement.

Did anyone actually tell you it was an IRA distribution? Because it makes a huge difference if it was a regular inherited IRA vs. a beneficiary IRA that was set up after the grandparent's death. Each has different tax consequences and requirements.

Just wanted to add some perspective from someone who works in estate administration. The tax withholding you're seeing is actually required by law in many cases - financial institutions are obligated to withhold taxes on IRA distributions unless the beneficiary specifically elects out of withholding (which most people don't know they can do). The 12.5% withholding rate suggests this was likely a traditional IRA. However, depending on your combined income and tax bracket, you might still owe additional taxes beyond what was withheld, or you might get some back as a refund. The key is that this gets reconciled when you file your 2025 return. One thing to consider: if there are multiple distributions planned from the estate, you might want to consult with a tax professional about timing and tax planning strategies. Sometimes spreading distributions across tax years can help minimize the overall tax burden, especially if it keeps you out of higher tax brackets.

Ok dumb question maybe but where exactly on the 1065 does the 1099-NEC income go? Is it line 1 (gross receipts) or somewhere else? Our business got about $45,000 in 1099-NEC income last year and I want to make sure it goes in the right spot.

Just wanted to chime in as someone who went through this exact confusion last year with my marketing consultancy LLC. The advice here is spot-on - the 1099-NEC issued to your partnership name gets reported on Form 1065, not on your personal returns. One thing I learned the hard way: make sure you're consistent with how you report the income category. If the 1099-NEC is for services (which it sounds like yours is), it should match how you categorize that same income in your books. Don't overthink it - the 1099 is just documentation that the IRS uses to verify you're reporting all your income. Your accountant should be able to handle this easily once they have your complete P&L. The key is that this income flows through the partnership return to your individual K-1s, so you and your partner will each report your share on your personal returns via Schedule E. Keep the physical 1099-NEC for your records, but you won't need to attach it anywhere.

As someone who just went through this exact situation, I wanted to share what worked for me. I had the same zero W-2 wages problem with my S Corp and was terrified about getting audited. What really helped was being methodical about the correction process. I gathered all my 1099s, bank statements, and business expense records first. Then I used the BLS Occupational Employment Statistics to research what graphic designers in my metro area actually earn - not just national averages, but specific to my region and experience level. The key insight my CPA shared was that "reasonable compensation" doesn't have to be the full amount of business income if you can document that some of the profit represents return on business investment, equipment, and entrepreneurial risk. For my design business, we justified about 45% of net income as reasonable salary, with the rest as distributions. One thing that surprised me - when I called the IRS (using one of those callback services mentioned earlier), the agent actually seemed relieved that I was proactively fixing it. She mentioned that S Corps with legitimate business operations who self-correct usually get much more favorable treatment than those caught during audits. The amended returns took about 3 months to process, and while I did owe back payroll taxes plus some interest, there were no penalties under the First Time Abatement program. The peace of mind was absolutely worth addressing it head-on rather than hoping it would never come up. Don't let the anxiety paralyze you - this is totally fixable, and you're being responsible by addressing it now rather than waiting!

I've been following this thread as someone who went through a very similar S Corp situation last year. Reading through everyone's experiences has been both reassuring and educational - it's clear this reasonable compensation issue affects way more small business owners than most people realize. One thing I wanted to add that hasn't been mentioned yet is the importance of documenting your decision-making process when you calculate reasonable compensation. When I amended my returns, I didn't just look at salary data - I also created a simple spreadsheet showing how I allocated my time between actual client work versus business administration, marketing, and other activities that an employee would typically handle. This was particularly relevant for freelance/consulting work where you're not just doing the technical work, but also running the entire business operation. The IRS recognizes that owner-employees often wear multiple hats, so documenting these various responsibilities helped justify the salary calculation. Another point about timing - if you're going to amend, I'd recommend doing it sooner rather than later. Interest continues to accrue on unpaid payroll taxes from the original due dates, so every month you wait costs more money. Plus, as others mentioned, proactively correcting shows good faith compliance. The anxiety around this is totally understandable, but based on what I've seen from this community and my own experience, addressing it head-on is definitely the right approach. You're taking responsibility and fixing a common mistake - that's exactly what the IRS prefers to see from taxpayers.