I went through almost the exact same situation! My divorce took 18 months to finalize and I was so confused about filing status. Here's what I learned from my tax preparer: Since you're still legally married on Dec 31st, you have to choose between Married Filing Jointly or Married Filing Separately. Given that you don't trust your ex with finances (totally understandable), I'd strongly recommend filing separately even if it costs more in taxes. When you file separately, you're only responsible for your own tax return and any issues that come up. With joint filing, you're both liable for the entire tax bill AND any problems like unreported income or questionable deductions your ex might have. A few things to watch out for when filing separately: - If one spouse itemizes, both must itemize (you can't mix standard deduction with itemizing) - You lose some credits like the Earned Income Credit - Student loan interest deduction is limited - You can't claim education credits But honestly, the peace of mind of not being tied to his tax issues was worth paying a bit extra. During divorce proceedings, protecting yourself financially should be the priority. You can always file amended returns later if needed, but you can't undo the liability issues that come with joint filing if things go sideways.

I was in a very similar situation a few years back - divorce proceedings dragging on forever while trying to figure out tax filing. One thing that really helped me was understanding the "abandoned spouse" rule that some people don't know about. If you've been living apart for the last 6 months of the tax year AND you have a qualifying child who lived with you for more than half the year, you might be able to file as Head of Household even while still legally married. Since you mentioned your kids are grown though, this probably doesn't apply. Given your situation where trust is completely broken down, I'd definitely go with Married Filing Separately. Yes, you'll likely pay more in taxes, but you'll sleep better at night knowing you're not on the hook for any surprises your ex might have hiding in his finances. During my divorce, my ex had some side income he "forgot" to mention - if we had filed jointly, that would have been my problem too. The most important thing is to keep meticulous records of everything and consider getting a tax pro who specializes in divorce situations. They can help you navigate the timing issues and make sure you're claiming everything you're entitled to while protecting yourself from liability. Good luck with everything - this phase will pass!

Has anyone actually had success getting their credits back after filing Form 8862? My credits were denied two years ago, I filed 8862 last year, and still got rejected again with no clear explanation.

I went through something similar with my brother's return last year. The IRS reduced his refund and he needed to file Form 8862 the following year. One thing that really helped was getting a copy of his account transcript from the IRS website - it shows much more detail about exactly what they adjusted and why. The transcript has specific transaction codes that explain the adjustments, which is way more informative than the basic notice they send. Also, make sure your sister keeps excellent records going forward. The IRS tends to scrutinize returns more closely once someone has been flagged for these credits. Things like school enrollment records, medical appointments, and utility bills in her name at the same address as the kids can all help establish that the children lived with her for more than half the year. The good news is that filing Form 8862 doesn't prevent you from claiming the credits again - it just requires extra documentation and verification. Just be thorough and honest when completing it.

Great question about sole proprietorship dissolution! I went through this exact situation last year when I closed my home-based bookkeeping business. One thing that really helped me was keeping detailed records of the original purchase dates and costs of all my business assets. Since you mentioned $15,000 worth of equipment over 3 years, make sure you have documentation showing when each item was placed in service and what depreciation method you used. For your specific situation with the woodworking tools, if you've been depreciating them using MACRS (Modified Accelerated Cost Recovery System), most of your equipment likely falls under the 7-year recovery period. This means items purchased in your first year might be getting close to full depreciation, while newer purchases could trigger recapture if converted to personal use. The delivery van is particularly important to handle correctly since it's listed property. You'll want to calculate what percentage was used for business versus personal use in your final year of operation. If you've been claiming 100% business use but plan to use it for family trips, that conversion needs to be reported properly. I'd recommend creating a spreadsheet listing each asset, its original cost, accumulated depreciation, and current fair market value before making any final decisions. This will help you see which items are already fully depreciated (no tax consequences) versus which ones might create tax liability.

One thing I haven't seen mentioned yet is the impact on your self-employment tax obligations when closing a sole proprietorship. Since you've been filing Schedule C, you've likely been paying self-employment tax on your net business income throughout the years. When you close the business, make sure you understand how this affects your Social Security credits. The self-employment tax you paid on your woodworking business income counts toward your Social Security work history, so you'll want to ensure your final year is properly reported. Also, if you have any outstanding quarterly estimated tax payments scheduled for this year, you'll need to adjust those with the IRS since your self-employment income will drop to zero. You can use Form 2210 to request a waiver of any underpayment penalties if your income changes significantly due to the business closure. Don't forget to keep all your business records for at least 3 years after filing your final Schedule C (or 7 years if you claimed any losses). This includes receipts for all those tools you'll be converting to personal use, in case the IRS has questions about the depreciation calculations later.

This thread has been absolutely life-saving! I just discovered this exact same message on my account yesterday and immediately thought I was facing some kind of IRS enforcement action. Reading through everyone's experiences has completely transformed my understanding - it's incredible how universally we all panic at what is actually protective language. What really stands out to me is how this represents a perfect example of government communication gone wrong. The IRS has somehow managed to make "we're temporarily protecting your account from automated collections while we process your case" sound like "DANGER: LEVY PROGRAM ACTIVATED." It's almost impressive how backwards that is! In my case, I had filed a Form 4868 extension and made an estimated payment about 3 months ago, then later filed my actual return showing I owed a bit more. I've been wondering why I hadn't received any notices about the additional amount due, but now I suspect this protective block appeared around that time while they reconcile everything. The pattern here is so clear: amended returns, payment plans, penalty requests, extensions - basically any time the IRS needs human review, this block automatically protects taxpayers from their own automated systems. It's actually a pretty smart safeguard, just communicated in the most anxiety-inducing way possible. Thank you to everyone who shared their stories here. This community resource is more helpful than hours of trying to decode official IRS publications. You've probably saved thousands of people from unnecessary panic attacks!

As a small business owner who just went through this exact situation, I can definitely confirm what everyone is saying - this is actually PROTECTIVE, not punitive! I saw this same message about 8 months ago and immediately thought I was in serious trouble. In my case, it appeared after I had called the IRS to report a change in my business address. What I didn't realize is that any time you make changes to your account information, they often place this block while they verify and update their systems. The whole process took about 6 weeks, and during that time I was completely protected from any automated collection actions. The most frustrating part is that nowhere in their system do they explain that this is actually a GOOD thing. It's like getting a notification that says "Your account is temporarily shielded from automated enforcement" but instead they use language that makes it sound like you're about to be audited by a SWAT team! What I learned is that this block is essentially the IRS saying "a human is handling your case right now, so we've turned off all the scary robot collection systems." Once everything was processed and updated, the message just disappeared on its own. This thread should honestly be required reading for anyone dealing with IRS account messages. The community knowledge here is so much more helpful than their official documentation!

Try calling the IRS early in the morning like 7:30am eastern time. Less wait time and they can pull up your wage info in their system even if you dont have your W2. Worked for me last year when my W2 got lost in the mail!

For anyone else dealing with unresponsive employers and missing W-2s, here's what I learned from my own nightmare situation last year: First, document EVERYTHING - keep records of all your attempts to contact your employer (emails, call logs, etc.) because the IRS may ask for proof you tried to get your W-2. Second, don't panic about the estimate on Form 4868. The IRS understands that estimates aren't perfect. As long as you make a good-faith effort based on available information, you won't face massive penalties. I used my final December paystub to calculate what my annual withholdings probably were, then cross-referenced with my bank deposits to estimate total income. Third, if your employer continues to be unresponsive after the deadline, you can file Form 4852 (Substitute for W-2) with your actual tax return. Just make sure to keep detailed records of your income and estimated withholdings to support the numbers you use. The key is not to let the missing W-2 stop you from filing the extension - it's much better to file with reasonable estimates than to miss the deadline entirely!