I can relate to your stress about that confusing message! I received the exact same notification from Input Correction ERS/Rejects about 6 weeks ago and had the same panic thinking they denied my refund. But "return closed" actually means they completed whatever review or correction was needed on your return - it's good news, not bad! The ERS department handles returns flagged for manual review, so this message indicates they resolved the issue and your return is moving forward in the system. The late night timing (8:59 PM) is completely normal - their automated system processes these updates 24/7 whenever they finish reviewing cases. I ended up getting my refund deposited 9 days after receiving that message. Since they specifically said not to respond, just don't reply and keep checking Where's My Refund every few days. Your refund should show up within the next week or two! 🙏💰

Hey Chloe! I totally get why you're freaking out - that message is super confusing and scary when you first get it. But honestly, you can breathe easy now! I got that exact same "return closed" message from Input Correction ERS/Rejects about a month ago and was having a full panic attack thinking they denied my refund. Turns out it's actually GOOD news! When they say "closed the return" they mean they finished fixing whatever issue was holding up your return - not that you're denied. The ERS team (Error Resolution System) handles returns that need manual review or corrections. So this message basically means "we found the problem, we fixed it, and now your return can move forward for processing." The 8:59 PM timing is totally normal too - their system sends these automated updates whenever they complete their review, even super late at night. Mine came at like 11:30 PM and I thought that was sus too lol. I ended up getting my refund deposited exactly 13 days after getting that message. Don't reply since they said not to - just keep checking Where's My Refund every couple days and your bank account. Your money is definitely coming! The waiting sucks but you're actually in the home stretch now 💰🙏

Don't panic! This is actually a very common situation and you're likely in good shape. Since you lived in the home as your primary residence for exactly 5 years, you definitely qualify for the Section 121 exclusion. With a $255,000 gain and assuming you're married filing jointly, you're well under the $500,000 exclusion limit, so you shouldn't owe any capital gains tax. The IRS letter is basically their automated system saying "we saw you sold property but didn't report it on your return." They're not accusing you of anything - they just want the paperwork to show why no tax is due on the sale. You can respond to the letter with the completed Schedule D and Form 8949 showing the sale and the exclusion. Make sure to include any improvement costs in your basis calculation (like that $30k in renovations mentioned by another poster) as this reduces your gain even further. The letter should have specific instructions on what forms to include and where to send them. This is much simpler than filing a full amended return, and once they receive your response showing the exclusion applies, they'll typically send a letter closing the matter with no additional tax due. I've seen this exact scenario dozens of times - it's routine correspondence, not a red flag for audits or anything to worry about long-term.

I went through this exact same situation last year! Got the dreaded IRS letter about forgetting to report my home sale and was convinced I was in serious trouble. Turns out it's incredibly common and the IRS just wants the paperwork to match their records. Since you lived there for 5 years as your primary residence, you're golden for the Section 121 exclusion. With your $255k gain, you're well under the limits whether you're single ($250k exclusion) or married filing jointly ($500k exclusion). I responded to the letter with just the Schedule D and Form 8949 showing the sale and exclusion - didn't need to file a full amended return. Make sure to include any home improvements in your cost basis calculation to reduce the gain even more. The whole process took about 6 weeks from when I mailed my response to getting the "case closed" letter from the IRS. The key is responding promptly with the right forms. Don't ignore the letter, but also don't panic - this is totally routine and you'll likely owe nothing once they see the exclusion applies!

Does anyone know if jury duty pay that you give to your employer counts as an above the line deduction? My company requires us to turn over jury duty pay but still pays our regular salary while serving. I thought I saw somewhere this was deductible above the line.

Great question! Above the line deductions are definitely worth understanding, especially with your side business. The key thing to remember is that these deductions reduce your Adjusted Gross Income (AGI), which is line 11 on Form 1040, and you get them regardless of whether you itemize or take the standard deduction. For your situation specifically: Yes, your self-employed health insurance premiums, IRA contributions, and student loan interest are all above the line deductions. Since you have a side business, you'll also want to look into the qualified business income (QBI) deduction under Section 199A - it can be huge for small business owners. One thing people often miss is that your business expenses from the side gig go on Schedule C and reduce your business income before it even gets to your main tax return. Then any remaining self-employment tax gets a 50% deduction above the line. The "above vs below the line" terminology comes from where these appear on your tax return - above the line means they reduce your AGI, while below the line deductions (like itemized deductions) only reduce your taxable income after AGI is calculated. Lower AGI can help you qualify for more credits and deductions that phase out at higher income levels.

Yall are overthinking this. Just keep good records, pay your quarterly estimates based on last year's income (100% of prior year tax is safe harbor to avoid penalties), and let your CPA sort it out at tax time. The 30% rule is fine if you're making decent money, might be overkill if you're just starting out. Use the rest to grow your biz!

As someone who went through this exact same situation when I started my partnership two years ago, I completely understand the stress! The 30% rule felt crushing when we were barely breaking even. Here's what I learned: that percentage includes federal income tax, self-employment tax (15.3%), and potential state taxes. But the actual amount you'll owe depends heavily on your business expenses and personal tax situation. A few things that helped us reduce our tax burden: - Maxing out business expense deductions (software subscriptions, office supplies, professional services) - Setting up a SEP-IRA for retirement contributions (big tax deduction) - Keeping meticulous records for vehicle use, client meals, and home office space - Timing major business purchases strategically Our first year we set aside the full 30% and ended up with a nice refund. Now we're more comfortable with 23-24% because we have a better handle on our deduction patterns. The key is working with your CPA to project your specific situation rather than relying on generic advice. Every partnership is different based on profit splits, other income sources, and expense levels. Good luck with your call tomorrow!

Has anyone ever had success getting the withholding returned directly from the IRA custodian instead of waiting for tax filing? I had a similar situation last year with Fidelity and after enough complaining they actually reversed the transaction completely and reprocessed it correctly as a return of contribution with no withholding.

This is a frustrating situation but definitely fixable! You're right that this should have been processed as a return of contribution rather than a regular distribution. The 20% withholding was unfortunate but standard procedure when custodians process regular withdrawals. A few key points to help you navigate this: 1. **Timing matters**: Since this was a same-year contribution and withdrawal, you have a good case for treating it as a return of contribution, which would avoid the 10% early withdrawal penalty. 2. **Documentation is crucial**: When you file your 2025 return, include a clear statement explaining that this was intended as a return of excess contribution made in the same tax year. Be specific about the dates of both the contribution and withdrawal. 3. **Check your 1099-R**: Look at Box 7 for the distribution code. If it shows "1" (early distribution), you might want to contact your IRA custodian to see if they can issue a corrected form with code "8" (return of contribution). This could save you headaches later. 4. **The withholding will come back**: You'll get that $1,400 back when you file your return - it will be credited as taxes paid, likely resulting in a larger refund. The silver lining is that this is a common enough situation that tax software and preparers know how to handle it properly. Just make sure to document everything clearly!