Honestly, I have zero interest in studying the IRS software. I’m really not sure where you got that idea from. If the people working at the IRS don't know how to do their jobs yet they're still sitting there behind the desk, that truly isn't my problem. Besides, you always talk as if we live in some kind of hyper-regulated state where every single auditor is just sitting around waiting to catch a mistake. That couldn't be further from the truth. Mistakes happen, and mistakes exist to be corrected. So what if someone gets flagged as "high risk"? If we do our work properly and the company operates legally, there is absolutely nothing to fear. They can look at the books and that's that. I'm actually curious when they decide someone is a risk, because I saw plenty of those ridiculous claims in the manuals years ago—obvious nonsense that nobody ever bothered to verify with a single document. On the contrary, companies get shut down due to account freezes (I personally know of a couple in the last year or two), and not once did anyone from the agency request a single piece of paperwork or even pick up the phone before wiping them out. They just delete the business, no questions asked. Look, despite everything we handle in accounting, the idea of pretending to be a programmer and overanalyzing how an agent processes forms, how they fix them, or how their specific software functions never crosses my mind. It's simply not my lane. And since you seem to feel the need to lecture every forum member who tries to help by explaining "how things actually work" in our industry—giving advice based on practical reality while you pivot from simple questions to these elaborate tangents—well, since you aren't actually working in the field (just like those politicians), I won't be posting under these topics anymore. Ever since devil arrived, this place has become ridiculous; it feels like we are constantly arguing with someone who has no clue about real-world practice. You can tell the difference immediately because the other person is actually in our profession, whereas you just talk and talk without giving anyone any concrete instructions on what to do. It's obvious you've worked with people who have no connection to this field. If anyone actually wants to ask me something, I'll always be happy to help via private message, as some members already know. But I'm losing the will to write anything more here because it always devolves into debating things that no one even asked about. I'm done responding, and there's no need to quote me because I've said my piece. Thanks, have a good one everyone.
Whenever we have to file an amendment—which is obviously necessary if you spot a significant error—we just submit a new version. As soon as the IRS agent pulls up the updated form, the old one is automatically voided. I don't know how the backend logic of their software works, nor do I care to, since I’m certainly not one of their programmers, but I am very familiar with the workflow because we've handled this plenty of times. The agents basically tell you that the easiest way is to just send the correction. There is a remarks section where you can explicitly type "amendment," but even if you leave that blank, they pull the latest filing and the previous one gets wiped from the record. It essentially overwrites the old data.
Just resubmit the corrected form; that should effectively override the old one. However, I’d suggest giving your case officer a quick call once you've sent it over just to make sure they manually select the updated version so it doesn't get overlooked. Though, if I recall correctly, the system usually triggers a notification light for the representatives whenever a new submission comes through.
Edward Stewart said:I appreciate the help, I really do, and I have actually tried, but I haven't hit "submit" just yet because it feels completely counterintuitive to use this new version for the 2019 tax year. I am struggling to grasp what exactly is being levied here; is the amount for 2019 supposed to be calculated based on the income reported from 2018? I haven't been able to find a clear explanation anywhere. Since I haven't been required to file under this specific classification since 2020 (specifically activity 6209 at a rate of 0.102%), does that mean I'll still be making a payment in 2020 based on my 2019 figures? It is a relatively small sum, so I would honestly prefer to just settle it all at once rather than dealing with monthly installments.
It isn't illogical; even though it is the 2019 form, it also includes the section for your new monthly assessment for 2020, which is why you have to file a new one. If you are ceasing your status as a taxpayer, you simply enter the data for 2019: total income for 2019, the tax rate, the total liability for 2019, and then the difference—whether that results in a payment due or a refund. You should leave the new monthly installment field at 0.00 since you won't be an active taxpayer anymore. If you owe a balance for 2019, you'll just pay that difference in a lump sum during 2020, and that will be that. Once the IRS processes the form, they will cancel your 2020 assessments. They tend to keep billing you for January and February until they see the form confirming that you are no longer on their books.
Edward Stewart said:I am currently attempting to figure out the most efficient way to complete and submit the standard form for the 2019 tax year. It appears that since the new legislation took effect on January 1st, the IRS has already implemented a revised version—it’s now labeled the TZ-1 and can be found nested within the corporate income tax section of the online portal. The complication arises because the layout looks quite different; specifically, the various fields now cite entirely different sections of the tax code, even though the underlying logic remains largely identical (you’re still dealing with total revenue, location-based rates depending on the business sector, the grand total, and those monthly installments, which are just the sum divided by twelve).
In an attempt to save some time, I tried opening my previous filing from 2018 and simply adjusting the figures for 2019, but the system keeps throwing an error message stating that such a filing cannot be submitted in its current state.
Does anyone happen to know the proper procedure for handling this transition?
Why don't you just enter the data directly into the IRS e-file portal? A lot of third-party accounting software hasn't been updated with this new version yet and isn't set up for submission, but you can always log into the official IRS site and input everything manually. It’s pretty standard procedure; just leave that bottom section for monthly obligations blank if you haven't been a taxpayer since 2020. If you aren't comfortable filling it out yourself because of the varying tax rates or if you're just feeling unsure, let us know. We can help walk you through the manual entry process.
stormyangler12 said:To lease some state-owned farmland, they’re demanding clean tax records—basically proof that I don't owe the IRS any back taxes or fees. I managed to handle that part by generating payment slips through the IRS website and getting them settled. Now, all I need is an official certificate confirming I have zero outstanding debts. I’ve been scouring the IRS portal, but I can't find an option for that specific document. Either I'm missing something obvious, or I'm just blind. Will I actually have to drag myself down to a local IRS field office in person to get this done?
Thanks
You can pull an official certificate under the "Requests" section—just go to "file a request," select "Request for Tax Certification," and then you can pick the exact type of document you need.
Keith Martinez5 said:Hey everyone! I’m really hoping there are still some folks following this thread who might be able to point me in the right direction... So, here's the situation: I'm under 30, currently working on a fixed-term contract—specifically a 12-month stint—and I'm receiving some employment support from the IRS aimed at helping people get their footing without prior work history. My big question is: what should the designations be for "dependent" versus "income"? Also, does Social Security tax apply in this scenario? Thanks in advance to everyone... Brenda Chase3 is truly hoping for some guidance here! 🙂
If we are talking about someone with absolutely no prior work history—essentially their very first job—then you would use dependent code 0002 and income code 0001, with a duration set for one year. As for payroll taxes, they aren't assessed in this scenario. 😉
Look, my point was simply that she *can* have one. I was sharing my own experience of getting tangled up with the IRS twice because of tax credits and all that mess when a small business owner fails to report a dependent. I never said she MUST have one; I just meant she’s entitled to those same dependent credits that any other employee would get. I was specifically responding to what urbanwalker72 said: "If this guy is just a sole proprietor keeping books under income tax law without a set salary (just business income), then he doesn't even need an exemption certificate, let alone a credit." It sounded like you were implying a sole proprietor is barred from claiming credits, which isn't true. That's why I clarified that she can claim them—if you file the paperwork, the IRS will issue the credit regardless of whether you're running a business or working a 9-to-5. At the end of the day, you're an individual, and you have the right to hold an exemption certificate whether you strictly "need" it for your current setup or not. Honestly, we're all saying the same thing; it's just a classic case of how easily things get misread when we're typing things out in forum posts. We basically reached the same conclusion: there's no absolute requirement to have it, but we really ought to train the agents at the IRS to use a bit more common sense. They shouldn't be making life difficult by refusing to recognize valid credits on a tax return just because a sole proprietor holds an exemption certificate without updating every single detail on it.
cosmictinker24 said:Let me jump in on this dilemma regarding the small business owner's W-4. When I log into IRS Online and click on W-4, I enter the SSN and get a message saying "Taxpayer has no W-4 form or the W-4 is closed". But when I go to Requests and click on Issuing/modifying a W-4 under that SSN, it pulls up a W-4 right there... which is why I'm so confused. Either way, I'll list her as a dependent for 10 months on the annual tax return... and maybe I'll request a W-4 change and note under dependents that as of November 1st, she isn't one anymore. At least the Police Department can see everything since she's employed by her dad now and can't qualify for the deduction anymore.
Hmm, I'm not quite sure. I went ahead and checked my own freelancers on the IRS Online site just now. For every single one of them, it opens up their individual W-4. I go through the IRS Account section, type in their SSN, and it displays the W-4 along with all the data and listed dependents. If I head over to Requests, it takes me right back to the card where I can modify the dependent information. I honestly don't understand why it tells you there's no form available while simultaneously letting you access the page to change things.
urbanwalker72 said:That's what happens when you try to memorize the rules instead of understanding how they actually work.😁
As you pointed out, a business owner has full access to their funds—they basically use what we might call an advance on their earnings.
Their total tax liability for the year is determined through the annual tax return that you file for them. In that filing, you include the children as tax credits if they qualify and if the owner chooses to claim them as dependents.
The withholding certificate doesn't actually impact that process.
That document is strictly used to calculate standard deductions for employees or retirees receiving steady income. It functions on a monthly basis during payroll or pension distributions. On an annual basis, everything relies solely on the tax return (whether it's the simplified version for individuals or the standard one for contractors and freelancers).
A withholding certificate (like a W-4) is a form that tracks data regarding standard deductions (the non-taxable portion of income), local municipality residency, and other essential details for an employee, retiree, or any individual receiving income from employment, which allows an employer or payer to calculate the correct amount of income tax withholding during payroll or pension disbursements.
Standard deductions, municipal residency, and other variables used to determine withholding for non-self-employed income are recognized and established exclusively through the withholding documentation held by employers, payers, or the taxpayers themselves.
An independent contractor who keeps formal business books is not tied to those specific withholding forms under the federal tax code, as the regulations clearly show.
In my experience, anything can happen in practice; you see people who have worked for twenty years without ever having a formal withholding setup, yet their accountant has been applying standard deductions to their pay for their entire career.
Now we see the opposite happening, where people are setting up withholding files they don't even need.
I honestly can't wrap my head around what you're actually doing with that withholding paperwork for a business owner; I fail to see its purpose here. 😁
As for me, I have absolutely no idea what I would even do with his business card... I certainly wouldn't be walking around with it in my purse. ☕
What you’re describing just doesn't hold up in the real world at the IRS. I remember one instance where we were working with two different small business owners—each filing separately—and when we entered a dependent deduction on their tax return that wasn't reflected on their official W-4, the local IRS office in the suburban neighborhood and Chicago wouldn't budge. They insisted the business owners come in personally to update their W-4 forms first. Now, I am kindly asking you to explain how it is even possible for tax authorities to operate this way. Of course, we didn't get into a heated argument with them; it was simply more efficient to just follow their lead and change the paperwork so we could wrap up the filing as quickly as possible. Given that the tax officials here don't seem to have any answers themselves when you ask them nicely, they clearly just make it up as they go along. That’s why we take the "better safe than sorry" approach and demand that all updates be made to the W-4 as well. Look, none of us are stupid here. It’s not like I’m hiding their W-4 under my pillow or playing games with them; I'm simply pointing out the kind of situations that actually happen at the IRS. For me, it’s much safer to ensure everything is updated correctly rather than trying to debate the business owners or the tax agents, which would inevitably require drafting formal letters and dealing with all that red tape. As for the idea that deductions should be calculated for people who haven't submitted a W-4, that is utter nonsense, though I know it happens. If someone fails to provide their W-4, they don't get the standard deduction, and I truly cannot fathom the laziness involved in an employee failing to just pull their own documentation together. In many cases, I play it extra safe and request documents more often than strictly necessary. The IRS office handling my account always tells us to submit everything perfectly, like total perfectionists, because I know there is someone there who will stare at a single piece of paper like it's a foreign language and demand every detail be drawn out perfectly. That is why I sometimes advise clients based on the hurdles I've personally hit within the system. Besides, why should it be such a struggle for a business owner to put a W-4 in a folder with the rest of their files? It isn't like the paper weighs a ton and won't fit in a binder. Everything you mentioned is valid, but it doesn't apply to every single agent at the IRS. It seems they blindly follow whatever their software spits out; I have no idea what specific logic drives their programming, nor do I have the time to sit around studying their internal workflows.
urbanwalker72 said:🤔 If this individual is simply a sole proprietor filing taxes under standard income rules without drawing a regular W-2 salary, then he wouldn't even utilize an IRS withholding certificate, let alone claim a dependent through one.
An IRS withholding certificate exists solely to facilitate the application of standard deductions during payroll or pension calculations; it serves no other administrative function.
However, if she was previously listed as a dependent, a withholding certificate cannot be issued for her until that status officially ends, so everything seems to be in order.
One would just need to verify whether the business owner even requires such documentation if he isn't receiving a formal salary or pension. If he does, then it is fine.
Of course a small business owner can claim child tax credits and maintain their own tax withholding profile with their children listed. I personally know people with at least five kids where all those credits are applied because their business income is treated as their "pay," and for the sake of these credits, a business owner is treated just like any other employee on their tax filings. That’s why when you file your annual return, there’s a specific section to list dependents and credits. Small business owners have their own withholding profiles under their names, just like any standard employee.
From what I’ve been able to gather through the IRS portal, an employer can’t just request a new W-2 for someone who doesn't have one on file, simply because the employer isn't considered an authorized signatory for that individual's tax records. I noticed that while you can tweak certain details on an existing W-2, I’m still not entirely convinced there's a way to actually trigger the creation of a brand-new one for an employee—at least, I haven't stumbled upon a method to do it myself. If it were that easy, anyone could just start generating tax documents for people who don't even realize their paperwork is a mess. That said, please double-check my logic; don't take my word as gospel. I’m just recounting my own experience where I tried to find a workaround and hit a dead end. Usually, we just advise our staff to handle their own filings through the official channels, which seems standard to me. As employers, we just wait for the documents to show up in our digital inbox via the IRS system.
Keith Martinez5, I’ve included two links here that provide some context on how this works, though you can certainly find more information via a quick Google search. Essentially, the baseline remains a 40-hour workweek. The total monthly hour pool will naturally fluctuate depending on how many days are in the month according to the calendar, but the weekly threshold is what matters most. Whether an employee works a standard Monday through Friday, 8-hour shift, or follows a schedule of seven hours Monday through Friday plus five hours on Saturday, they are still hitting that exact 40-hour mark. In neither scenario would you be looking at overtime pay. You should feel free to report your actual hours worked, provided you don't cross that 40-hour weekly ceiling. For instance, if someone worked 7 hours on June 1st instead of their usual 5, they would hit 167 hours for the period, which would trigger 2 hours of overtime. However, 165 hours is simply the standard monthly allotment for employees working a six-day week who stay within their 40-hour weekly limit. 😉
Keith Martinez5 said:Thanks, >. One of my colleagues mentioned that this approach might be wrong—she suggested we should strictly stick to the standard labor pool and then log anything beyond that as overtime, or perhaps just "adjust" the hours to match the pool exactly. So, just to be absolutely clear—if I continue tracking hours this way and don't pay out any time exceeding the designated pool as overtime, am I technically staying within the rules?
I have to disagree with your colleague there. The 40-hour workweek is the baseline, but naturally, that means the total number of hours in a monthly pool will fluctuate depending on the calendar. If you worked exactly 40 hours a week, recording 165 hours without any overtime is perfectly accurate. In fact, both of those tables are pulled from professional HR journals that clearly illustrate how the hour pools differ depending on the specific scenario. "Adjusting" the numbers like she’s suggesting isn't legal; you shouldn't be logging arbitrary hours that don't reflect what was actually worked.
Keith Martinez5 said:Hey everyone! It’s absolutely sweltering out there today, and the forum seems pretty quiet—probably because everyone is hiding from the heat—but I figured I’d throw this question out there anyway, just in case anyone happens to be lurking. 🙂 I’m looking for some clarity regarding our timekeeping and scheduling... Here’s how we run things: we work a standard Monday through Friday schedule plus a 5-hour shift on Saturdays, which brings us to a total of 40 hours per week. The hiccup I'm running into involves those working Saturdays; specifically, in June, I ended up with 5 extra hours on my record. This is because the standard monthly hour requirement for June was set at 160, but with my Saturday shift included, I hit 165. I’m wondering what the best way to handle this is—is it better to just log it as a straight 5x8 schedule without the Saturday, or should we just let the employee take some time off once they've met their required hours? Also, how should we approach months where the required hours aren't quite met? For instance, the target for July is 184 hours, but based on my current track, I’ll only be at 181. I'd really appreciate any insights or explanations you all might have...
For employees on your specific schedule (7 hours Mon-Fri plus 5 on Saturday), the monthly hour requirement is actually 165. That means you aren't actually overworking or hitting an "excess" of hours; you are simply fulfilling your specific contract. You shouldn't compare your totals to the standard 160-hour quota used by people who work a straight 8-hour day, Monday through Friday. Your baseline is 165, so you should track your records against that number.
neonsurfer13 said:Can someone please walk me through how I actually go about selling long-term assets? Honestly, all I need to know right now is if I need to attach any extra paperwork to this sale immediately, or if I just issue an invoice like I would for any other merchandise and call it a day. Does everything else just get sorted out later on my annual tax return using the standard IRS forms?
Just issue a standard invoice, exactly like you would for any other business transaction. If you're registered for sales tax, you'll just need to enter the amount in the "Sale of Fixed Assets" section on the second page of your sales tax return. You don't need to file any special additional paperwork at the time of the sale. At the end of the year, you'll simply record the date of disposal (the sale date) on your annual tax filings.
Keith Martinez5 said:Hey everyone, I was hoping to pick your brains for a bit of advice regarding how to book credit card sales. Up until now, my process has looked like this: the invoice $33 is paid via card and recorded as a sale. Then, when the payment from the processor $32 hits my bank account, I record that as a receipt—and then I record the processing fee $1.75 as an in-kind receipt. At the end of the month, once I get the merchant statement for those fees, I record $1.75 the merchant's invoice and mark $1.75 the fee as an expense. Does this sound right to you all? If I’m off base, what’s the proper way to handle this? I know that under tax compliance laws, card transactions are treated just like cash, but according to IRS regulations, an invoice isn't technically "paid" until the funds are actually settled. It gets especially tricky for me when dealing with things like Diners Club installment plans, where I might be waiting 30 days for the money to land. Since I'm running a small sole proprietorship... Thanks in advance!
I follow the exact same workflow, and whenever I file my annual tax return, I include a formal letter explaining it just like this:
"To whom it may concern,
In our tax filings, we have listed only physical cash receipts under the cash income section because we were instructed that, per IRS regulations, card payments are not considered cash receipts, even though they are handled that way under tax compliance laws. While these card sales are recorded through our POS system, they are reported as bank deposits in our filings since the funds are actually collected via wire transfer, much like any other electronic transaction.
We kindly ask that you keep this in mind when reconciling our cash receipts against our POS records. "
That is how my tax advisors told me to handle it; they always asked for an explanation regarding the discrepancy, so I just proactively write this to save myself the headache of being contacted about it every single year."
Alright, I’m going to need you to walk me through the mechanics here. If we are labeling this an "incorrect payment," how exactly would you record that in Ira's ledger, and on what date? From what I can see, they didn't just leave it sitting there; they applied it toward the subsequent invoice. However, because of that, the customer ended up underpaying the next bill by that exact same amount. The "incorrect payment" hit in February, and then the March invoice was shorted by whatever that original error was. In your view, how does that flow through the cash receipts and disbursements journal? I'm genuinely curious about your bookkeeping approach—since you tend to focus on the theoretical side of things, I'd love to see how you would actually execute this in practice. How would you handle the entries right now? Thanks.