Good / Bad Patterns

Common failure modes and how to avoid them.

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Calculations

**BAD:** Apply 22% to gross revenue.

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

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

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

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Assumptions

**BAD:** State a dollar figure without any context.

"Your Q2 estimated payment is $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 ≈ $6,500**. State taxes not included. QBI deduction not applied. Review with your accountant."

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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 ≥ $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.

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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 ($1,200) | Robert Smith Design ($800) — combined would be $2,000"

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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."

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

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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.

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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.