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.

Make sure you're entering Form 5498-SA information in the right place in TurboTax! I had this exact issue. When you get to the HSA section, there's a question that asks something like "Did you make contributions to your HSA outside of payroll deductions?" Answer yes to that. Then it should ask for contributions not reported on your W-2. That's where you enter the amount from the 5498-SA that isn't shown on the W-2. TurboTax will calculate the deduction for you on Form 8889.

I went through this exact same confusion last year! The key thing to understand is that HSA contributions can be made in different ways, and each affects your tax forms differently. If your wife's HSA contributions don't show up in box 12 of her W-2, it's likely because either: 1. She made direct contributions to her HSA (not through payroll), or 2. Her employer made the contributions directly as a benefit For TurboTax, you need to navigate to the HSA section under "Deductions & Credits" and look for something like "HSA contributions not on W-2" or "Did you make HSA contributions outside of payroll?" This is where you'll enter the amount from her 5498-SA form. The 5498-SA shows all contributions made to the HSA during the year, but only certain types need to be claimed as deductions. If they were direct contributions (not through payroll), you can deduct them. If they were employer contributions, they're already tax-free and don't need to be deducted. Check her paystubs to see if HSA amounts were deducted from her paycheck. If not, they were likely either direct contributions she made or employer contributions. This will help you determine how to handle them in TurboTax.

Don't forget that there's a $10,000 cap on the total state and local tax (SALT) deduction. This includes state income taxes (or sales taxes if you choose that instead) PLUS your property taxes from both 5b and 5c combined. So if you're already over $10k with just your state income tax and real estate taxes, finding more to add to line 5c won't help your federal return. This is especially important if you live in a high-tax state like NY, CA, NJ, etc.

The $10,000 SALT cap is still in effect for 2025 - there hasn't been any legislation passed to change it yet. The cap was set to expire after 2025 under the original Tax Cuts and Jobs Act, but Congress would need to act to either extend it, modify it, or let it sunset. Some proposals have been floating around to raise the cap to $15,000 or $20,000, or to eliminate it entirely, but nothing has been finalized. Given the political dynamics, it's unlikely we'll see changes before the 2025 filing season. So for now, if you're in a high-tax state and already hitting the $10k limit with income tax and property tax, adding personal property taxes won't provide additional federal benefit - though it's still worth tracking for potential future changes and for state return purposes if your state allows itemized deductions.

This is a really common confusion point that I see all the time! You're absolutely right to report the $5,400.66 as your net gambling income, but there's an important distinction in how the IRS wants you to report it. You'll actually need to report your TOTAL winnings of $33,862.41 as income on Form 1040 (line 8b for gambling winnings). Then, if you choose to itemize deductions on Schedule A, you can deduct your gambling losses of $28,461.75 (but only up to the amount of your winnings). Your $4,100 in deposits are NOT considered losses - they're just the money you transferred to play with, similar to exchanging cash for chips at a casino. The actual gambling losses are the $28,461.75 from bets you lost. So your tax impact depends on whether you itemize: - If you itemize: You report $33,862.41 in winnings and deduct $28,461.75 in losses, netting to taxable income of $5,400.66 - If you take the standard deduction: You report $33,862.41 in winnings with no offset, so you pay tax on the full amount Make sure to keep all your FanDuel transaction records well-organized by session as you've done - that documentation will be crucial if you're ever audited. The session method is perfectly valid and much more practical than tracking individual bets!

I went through something very similar with my DraftKings records last year and want to emphasize a few key points that might help: First, you're absolutely correct that your deposits ($4,100) are NOT gambling losses - they're just money transfers to fund your account. Your actual gambling activity resulted in $33,862.41 in winnings and $28,461.75 in losses, giving you $5,400.66 in net gambling income. For tax purposes, you'll report the FULL $33,862.41 as gambling winnings on your Form 1040. The losses can only be deducted if you itemize on Schedule A, and only up to the amount of your winnings. Your session method is perfectly valid - I used the same approach grouping by calendar day since tracking hundreds of individual bets was impractical. Just be consistent and document your methodology. One thing to watch out for: make sure you're not mixing different tax years in your calculations. If some of your gambling activity was in late 2022 or early 2024, only include 2023 sessions in this year's filing. Also, double-check that you haven't received any W-2G forms from FanDuel for large wins - those amounts should already be included in your $33,862.41 total to avoid double-counting. Keep all those FanDuel transaction records organized by session for at least 3 years in case of an audit. The IRS takes gambling income seriously, but with proper documentation you'll be fine!