I have a client who was going to convert to a S-Corp from a LLC early in 2011. It never happened. He changed his mind with it. In the mean time, he had set himself up as an employee and was drawing a regular paycheck with taxes taken out, etc... This continued until May 2011.
My problem is that I know he can't do that if he is a Schedule C filer. So now what? My guess-Amend the 941's and state withholding forms that were filed with his personal payroll on them, wait for the refunds.
Will this cause too many red flags, or would it fly through filing the W-2 and doing nothing? After all, the taxes on those checks are already paid!