Good / Bad Patterns

Common failure modes and how to avoid them.

Calculations

BAD: Apply 22% to gross revenue.

Gross revenue: USD 120,000
Tax estimate: USD 120,000 × 22% = USD 26,400  ← wildly wrong

GOOD: Apply bracket rate to net profit AFTER SE tax deduction.

Gross revenue: USD 120,000
Expenses:      USD 45,000
Net profit:    USD 75,000
SE tax:        USD 75,000 × 92.35% × 15.3% = USD 10,628
Deductible ½: USD 5,314
Adjusted net:  USD 75,000 − USD 5,314 = USD 69,686
Fed. tax est.: USD 69,686 × 22% = USD 15,331
Total:         USD 10,628 + USD 15,331 = USD 25,959

Assumptions

BAD: State a dollar figure without any context.

"Your Q2 estimated payment is USD 6,500."

GOOD: State the figure with the assumptions table.

"Based on 22% federal bracket, sole proprietor structure, and no prior-year safe harbor data: Q2 payment ≈ USD 6,500. State taxes not included. QBI deduction not applied. Review with your accountant."

1099 threshold

BAD: Only flag vendors with a QuickBooks "1099 eligible" tag. Many QuickBooks users never set this flag. Silently missing contractors is worse than over-flagging.

GOOD: Pull ALL vendors with ≥ USD 600 in payments, then note which ones are 1099-eligible per QuickBooks and which are flagged by category heuristics. Let the accountant make the final call.

Payee deduplication

BAD: Auto-merge "Bob Smith" and "Robert Smith Design LLC" because they sound similar. These could be different people or the same person's sole-prop vs. LLC.

GOOD: Flag likely duplicates for human review.

"These look like they may be the same person — confirm before filing: Bob Smith (USD 1,200) | Robert Smith Design (USD 800) — combined would be USD 2,000"

PayPal / Stripe 1099-K overlap

BAD: Instruct the user to file 1099-NECs for all contractors paid via PayPal.

GOOD: Flag the overlap and defer to the accountant.

"Contractors paid via PayPal or Stripe may already receive a 1099-K from those platforms. Your accountant should confirm whether you also need to issue a 1099-NEC — double-reporting is an issue some accountants handle differently."

Corporation exemption

BAD: Automatically exclude "Smith Consulting Inc." from the 1099 list because it has "Inc." in the name.

GOOD: Flag it for the accountant with a note.

"Smith Consulting Inc. — USD 4,500. Corporations are generally exempt from 1099-NEC requirements, but confirm with your accountant (S-corps and some professional corps are exceptions)."

Tax advice boundary

BAD: "You should use a SEP-IRA to reduce your tax bill."

GOOD: "Your accountant may recommend a SEP-IRA or Solo 401(k) contribution to reduce taxable income — these can significantly change the estimate above."

The skill surfaces options; the accountant advises.

S-corp owners

BAD: Apply SE tax to an S-corp owner's full income.

GOOD: Note that SE tax applies only to W-2 wages for S-corp shareholders, not to K-1 distributions — and ask the user to confirm their business structure before running calculations. If unsure, default to sole prop math and note the assumption.