I'm dealing with a similar situation right now! My CPA also told me Schedule M-2 wasn't required for our small S-Corp, but after reading all these responses, I'm realizing that was incorrect. What's really concerning me is that we've made several distributions to shareholders over the past two years without proper AAA tracking. Based on what everyone is saying here, this could mean we've been reporting these distributions incorrectly on our personal returns. Has anyone here actually gone through the process of reconstructing the AAA balance for multiple years? I'm wondering how complicated it gets and whether the IRS typically assesses penalties for this kind of oversight, especially when you can demonstrate you were following professional advice. I'm definitely going to need to have some difficult conversations with our accountant about this, but I want to understand the full scope of what we're dealing with first.

I've been following this thread closely as someone who recently went through a similar situation with my own S-Corp. Just wanted to add that if you're dealing with missing Schedule M-2 filings, don't just focus on the AAA tracking - also make sure to review how your distributions were reported on your personal returns. When I discovered my accountant had been skipping M-2 for two years, we found that some distributions that should have been treated as tax-free return of basis were incorrectly reported as taxable income on my 1040. This actually resulted in me overpaying personal income tax those years. The reconstruction process that others mentioned is definitely doable, but I'd suggest also having your personal returns reviewed once you get the corporate side straightened out. You might be entitled to refunds if distributions were misclassified. The IRS allows you to file amended personal returns up to 3 years back, so there's still time to recover any overpaid taxes. It's frustrating when professional advice leads you astray, but at least these kinds of errors are fixable with some patience and attention to detail.

One thing to note - FreeTaxUSA charges for state filing while federal is free. H&R Block sometimes includes one state free with certain packages. Depending on your state's tax situation, that might affect the total price comparison.

Great breakdown of the pricing differences! I went through a similar comparison last year and was shocked at how much I was overpaying with the big-name services. One thing I'd add is to watch out for the upselling tactics during the filing process. H&R Block and TurboTax are notorious for starting you on their "free" tier and then gradually pushing you toward premium features you probably don't need. FreeTaxUSA is much more upfront about what costs extra, and their base paid tier covers most situations without the constant upgrade prompts. The only scenario where I might consider paying more is if you have a really complex tax situation with multiple rental properties, foreign income, or complicated business structures. But for the vast majority of people filing standard W-2s with some basic investments and deductions, you're absolutely making the smart choice going with the cheaper option.

I'm so sorry you're dealing with this stressful situation. The 45-day review process is unfortunately quite common, especially during peak filing season, and I know how frustrating it is when you're depending on that refund. From what you've described, this sounds like a routine verification rather than anything you did wrong. The fact that you filed the same way as previous years and your state refund went through without issues are both good signs. These reviews often get triggered by automated systems that flag returns for various reasons - sometimes it's just random selection, income verification, or confirming credits like the Child Tax Credit or EITC. A few things that might help while you wait: - Set up an IRS online account to view your transcript if you haven't already. It often shows more detailed codes than the "Where's My Refund" tool - Most of these reviews resolve much faster than 45 days - I've seen many people get their refunds in 2-4 weeks - If it does take longer than 45 days from your filing date, the IRS will automatically add interest to your refund The different explanations from phone reps are normal - they often don't have access to the specific details of why your return was flagged and are working from general scripts. Try not to read too much into the conflicting information. Hang in there - the vast majority of these reviews end with the refund being released without any issues. You're going to get through this!

I completely feel your pain and frustration - went through this exact nightmare in 2023 and it was absolutely devastating for my mental health. Filed early February, state came through fine, then federal got stuck in that awful 45-day review black hole. What really helped me cope was understanding that this happens to WAY more people than you'd think - the IRS just doesn't advertise how common these reviews are. In my case, it turned out they were verifying my dependent information even though I'd claimed the same dependents for years without any issues. The most important thing I learned is that the phone reps genuinely don't have access to the specific details of your case. They're looking at the same basic codes you can see in your transcript and giving you their best guess based on limited information. That's why you're getting different stories - it's not that they're lying, they just don't have the full picture. My review took exactly 28 days and my refund was deposited with no changes to the amount. The waiting was horrible but it did work out. Since you mentioned you have kids and really need this money, you might want to look into local emergency assistance programs or food banks to help bridge the gap while you wait. Check your transcript weekly for updates (code changes usually happen on Fridays), and try to remember that no news is usually good news with these reviews. You're going to get through this, and your refund will come. Hang in there!

Don't forget about the primary residence exclusion! If this was your brother's primary residence for at least 2 of the 5 years before the sale, he might qualify to exclude up to $250,000 of gain from his income (or $500,000 if married filing jointly). Based on what you described, he lived there for about 2 years before moving out 2 years ago, so he might just barely qualify if the timing works out exactly. This could potentially eliminate any tax liability from the sale, even if he has to report it.

This is definitely a tricky situation that requires careful documentation. From what you've described, your brother needs to report the sale even though he didn't receive proceeds from the actual sale, because he was still legally on the deed. The key is treating this as a two-part transaction: (1) the original buyout he received when they split up, and (2) the formal sale that just happened. On Schedule D, he should report the sale with his cost basis being the original purchase price plus improvements, and his proceeds being only the buyout amount he received years ago (not the recent sale proceeds). You'll definitely want to include a detailed explanation with the return describing the situation. Also, try to get documentation of the original buyout agreement if possible - this will support your position if the IRS has questions. One important thing to check: make sure you understand whether he received a 1099-S form. If he did, the IRS will be expecting to see this sale reported. If the ex-girlfriend also reports part of the sale, you want to make sure there's no double-reporting of the same income.

Has anyone used tax software to file casualty losses? I'm trying to use TurboTax for mine but it's not very clear on how to enter all this information.

I went through this exact situation after tornado damage to my property last year. One thing that really helped me was creating a detailed inventory with photos for each damaged item or area. For your basement flooding, document everything that was damaged - flooring, drywall, electrical work, etc. - and get separate repair estimates for each category. Since you mentioned you have receipts for $15,700 in repairs, make sure you're separating these by casualty event if the IRS requires it (your two separate storms). Each storm event gets reduced by $100, so you might want to check if combining them or keeping them separate gives you a better deduction. Also, don't forget that you can deduct costs for things like temporary housing, storage, or cleanup that were necessary because of the disaster. I missed claiming some of these expenses initially and had to amend my return. Keep every receipt related to the disaster - even seemingly small expenses can add up! The key thing I learned is that "fair market value" doesn't have to be a formal appraisal for most residential property. Your repair costs, contractor estimates, and before/after photos are usually sufficient documentation for the IRS.