I just went through this exact scenario a few months ago and it was definitely confusing at first! When your employer pulls the excess distribution from your Roth 401(k) portion, you're right that the treatment is different from traditional pre-tax money. The key thing to understand is that since Roth contributions are made with after-tax dollars, the principal amount of your excess contribution won't be taxed again when it's returned to you. However, any earnings that accumulated on that excess amount during the time it was in your account would be taxable income in the year of distribution. Your employer should have provided you with a breakdown showing how much of the distribution was the original excess contribution versus earnings. If they didn't separate this out, definitely contact them to get that calculation - you'll need it for accurate tax reporting. Also, make sure to check the distribution code on your 1099-R when you receive it. For excess deferral corrections, it should show code "P" in box 7. If it shows something else like code "1" or "J", that could cause problems and you may need to request a corrected form. The good news is you caught this early and got it resolved through your employer, which is exactly the right approach! Just make sure all the paperwork is correct before filing your return.

I dealt with this exact situation last year and it's definitely tricky! The key insight that helped me was understanding that excess deferrals from Roth 401(k) accounts get special treatment because you've already paid taxes on those contributions. When the excess is returned from your Roth portion, you won't be taxed again on the principal amount - only on any earnings that accumulated while the excess was in your account. Your plan administrator should calculate these earnings based on the investment performance from when the excess contribution was made until it was distributed. However, I ran into the same issue you're describing where my employer just pulled a flat amount without separating the earnings calculation. I had to call their benefits department and specifically request the earnings breakdown. Most don't automatically provide this, but they're required to calculate it for proper tax reporting. Also, double-check your 1099-R when it arrives - it should have distribution code "P" for excess deferral correction, not "1" or "J" which would indicate a regular early distribution. If the code is wrong, you'll want to get a corrected form to avoid potential penalties. The IRS treats excess deferrals differently from regular distributions, so even though it came from your Roth bucket, you'll still need to report it properly on your return. The taxable portion (earnings only) would go on line 1h, but the principal portion should not be taxed again.

Hi Lena! 👋 As another newcomer to this amazing community, I just wanted to add my voice to the chorus of reassurance here! I had my first Code 971 experience about two months ago and went through the exact same panic spiral you're probably in right now. After finding this community and getting help from all these knowledgeable folks, I learned that 971 is honestly one of the most routine codes you can get. What really helped me was understanding that the IRS transcript system is designed to log EVERYTHING - even the most mundane administrative actions. So a 971 code isn't them raising red flags about your return; it's literally just their computer system saying "we're printing a letter to send to this person." With three kids, you're dealing with multiple tax credits and deductions that the IRS routinely double-checks. It's actually a good sign that they're being thorough! In my case, the notice turned out to be a $23 adjustment to my Child Tax Credit because I had made a small calculation error in my favor - they actually INCREASED my refund! The waiting is definitely the hardest part, but based on everything I've learned here, you can breathe easy. This community has been such a lifeline for navigating tax season stress, and I'm so glad you found your way here too! Keep us posted when your notice arrives - I have a feeling it's going to be wonderfully boring! 😊

Hi Lena! 👋 As a newcomer to this wonderful community, I just wanted to add to all the great advice you've already received about Code 971! I'm a single parent of two, and I remember my first encounter with mysterious IRS codes - it's absolutely nerve-wracking! But after lurking in this community for months and learning from all these experienced members, I can tell you that Code 971 is actually one of the GOOD codes to see. Here's what I wish someone had told me when I first saw it: **The Reality Check:** - Code 971 appears on roughly 1 in 3 tax returns (super common!) - It's literally just the IRS saying "we're mailing you something" - With three kids, you're probably looking at Child Tax Credit or EITC verification - The IRS computer systems flag returns with multiple dependents for routine review **My Personal Experience:** Last year, my Code 971 turned out to be a notice saying they corrected a small math error on my Child and Dependent Care Credit - and they actually INCREASED my refund by $47! The notice arrived exactly 6 days after the transcript date. **What's Probably Happening:** The IRS is just being extra careful with returns claiming multiple children (which is actually reassuring - it means they're doing their job!). They're likely verifying that your three kids are eligible for all the credits you claimed. I know juggling kids' schedules while decoding IRS mysteries feels impossible, but this community has taught me that 99% of the time, these "scary" codes end up being totally routine. You've got this, mama! 💪 And please update us when your notice arrives - I have a feeling it's going to be wonderfully anticlimactic! 😊

I'm going through this exact same issue right now and it's incredibly frustrating! Filed my 2024 return in early February owing $14,200, but my IRS online account has been showing $0.00 for over 8 weeks now. The anxiety has been overwhelming knowing that penalties are likely accumulating while I can't even see my balance. After reading through everyone's experiences here, I realize I've been making a costly mistake by waiting for their system to update. The math is stark - at 0.5% per month, I'm potentially throwing away $71+ every month I delay just because their website can't display my balance correctly. What really hit home was realizing that the penalty system runs independently from their account display. Of course they're not going to pause penalties just because their IT systems are behind! I've been treating this like I need to wait for a "bill" when I already have the official document (my tax return) showing exactly what I owe. I'm done letting their technical problems cost me money. Going to make a payment through IRS Direct Pay today based on my filed return amount. Even if I can only pay $8,000 initially, that'll stop penalties from accruing on that portion while I work on paying the rest. Thanks to everyone who shared their experiences - sometimes you need to hear from people who've actually been through this to realize you're overthinking a solvable problem. Don't let the IRS's broken website cost you hundreds in avoidable penalties!

I'm dealing with this exact same frustrating situation right now! Filed in March owing $15,800 and my online account has been stuck at $0.00 for over 5 weeks. The stress has been killing me because I can see from everyone's experiences that penalties are definitely accumulating behind the scenes. Reading through all these responses has been such an eye-opener - I had no idea this was such a widespread issue during filing season. The penalty math really drives it home though. At 0.5% per month on my balance, that's potentially $79+ every month I wait for their system to catch up. That's money I could be putting toward the actual tax bill instead of throwing away on avoidable penalties! I've been paralyzed by the fear of making a payment when I can't see the balance online, but everyone's experiences show that the Direct Pay system works fine for matching payments to your account via SSN and tax year. My tax return IS the official document showing what I owe - I don't need to wait for some broken website to validate that. I'm going to stop overthinking this and make a payment through Direct Pay today. Even if I start with $10,000 while I arrange financing for the rest, that'll stop penalties from piling up on the majority of my balance. Thanks everyone for sharing your stories - it's clear that waiting for the IRS to fix their display issues just costs us money while their penalty system keeps running in the background. Time to take action based on what I actually filed, not what their glitchy website shows!

For TurboTax specifically, they'll ask if you have self-employment income. Say yes, and then you'll be guided to the "Business Income" section. Enter your Patreon/Buy Me A Coffee as a sole proprietorship business. You can use your own name as the business name if you don't have a formal business name.

One important thing to remember is keeping track of your expenses throughout the year, not just at tax time! I wish someone had told me this when I started my Patreon. Set up a simple spreadsheet or use an app to log art supplies, software subscriptions, equipment purchases, and even things like packaging for rewards you send to patrons. Also, don't forget about the home office deduction if you have a dedicated workspace for your art. Even if it's just a corner of a room that you use exclusively for creating content, you can potentially deduct a portion of your rent/mortgage, utilities, and other home expenses. TurboTax has a simplified method that lets you deduct $5 per square foot up to 300 square feet, which is much easier than calculating actual expenses. The key is being organized from day one rather than scrambling to reconstruct everything come tax season!

I'm also stuck in the 0805 cycle and it's been 6 weeks since I filed! Filed on January 28th, got the 0805 code by February 14th, but still no direct deposit date. My transcript shows a "150 Transcript" with cycle code 20240805 but no 846 refund issued code yet. I've been checking WMR daily and it just says "still being processed." Starting to wonder if there's a systematic issue with certain 0805 returns this year. Has anyone tried calling the practitioner priority line or is that only for tax professionals?

I'm also in the 0805 cycle and experiencing the same delays. Filed on February 5th, transcript updated with cycle code 0805 on February 21st, but still no refund after 5 weeks. What's particularly frustrating is that WMR just keeps saying "still being processed" with no additional information or timeline. I've been checking daily and there's been zero change in status. My transcript shows the same pattern others have mentioned - the 150 code but no 846 refund issued code. It seems like there's definitely a larger issue with 0805 cycle codes this season. I claimed the Child Tax Credit and Earned Income Credit, which might be contributing to the delay based on what others have shared. At this point I'm just hoping it resolves itself soon since calling the IRS seems nearly impossible to get through to an actual person.