My husband owned a business that closed at the end of 2024. It was a sole-member LLC with employees. He paid himself via W2. He did not know that elect as a S-corp on a W9 did not automatically classify the business as that.
Additionally, I recently discovered a F1120 was never filed. The business never made a profit. He only made the wages reported via W2.
Does it make more sense to file F2253 and request retroactive status? Then file the F1120-S.
Or amend all the federal returns to remove his income and amend our personal tax return to include a 1040 schedule C?
I know this all massively messed up. It wasn’t done intentionally – take this as a cautionary tale about handling small business taxes. I’m trying to figure out the best way to rectify this issue. I also have limited access to the bookkeeping software that was used to record job revenue, so trying to do the calculations will be rough either way. I’m trying to see if I can gain access to the service platform again.
Any advice is appreciated. I just want to clean up this mess before it becomes a bigger problem.
Posted by oldschoolwitch
2 Comments
This is definitely a problem that requires too many facts to properly analyze here on Reddit. Additionally, there are payroll tax considerations as well, inferred from the W-2, which can be especially tricky. You’ll also need to consider calculations for possible penalties as well.
I would highly recommend getting an experienced tax pro involved. This is definitely a mess that requires expert help. I’d recommend reaching out to a qualified CPA or EA to make the highly fact-specific judgment call.
Your CPA was this incompetent or you suddenly thought you were as good as a CPA and could handle all yourself?