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I've been dealing with reference number 1242 for weeks now! The key is persistence - keep calling back until you get through. I found that calling right at 7 AM when they open gives you the best chance. Also, make sure you have ALL your documents ready: your tax return, Social Security card, and any previous correspondence from the IRS. Don't give up - it's frustrating but you will eventually get through to someone who can help resolve this. The wait times are brutal but it's worth it once you finally connect with a representative who knows what they're doing.
Thanks Emily! This is really helpful advice. I'm new to dealing with IRS issues and reference number 1242 has been such a headache. The 7 AM tip is great - I hadn't thought about calling right when they open. I've been trying during lunch breaks and always getting busy signals or long holds that eventually disconnect. Did you find that having your Social Security card physically in hand made a difference, or was just knowing the number enough? Also, how long did your calls typically last once you got through to someone who could actually help?
@Emma Swift Just knowing the SSN was fine for me - they don t'need to see the physical card over the phone. My successful calls usually lasted 15-20 minutes once I got a knowledgeable rep. The key was staying calm and organized with my info. Also, if you get someone who seems confused about reference number 1242, politely ask to be transferred to someone more experienced with these cases. Some reps are more familiar with this particular issue than others. Good luck!
I'm dealing with reference number 1242 as well and wanted to share what finally worked for me after weeks of trying. Instead of calling the main number repeatedly, I used the automated callback feature which saved me hours of waiting on hold. You can request a callback through the IRS website or by staying on the line when you call - they'll call you back when an agent is available rather than making you wait. Also, I discovered that having your Adjusted Gross Income (AGI) from your prior year ready is crucial - they use this to verify your identity before discussing reference number 1242. The whole process took about 3 callback attempts over 2 weeks, but each callback was successful in reaching an actual person. Hope this helps others who are struggling with the same issue!
@Amara Adebayo Great point about allowing unknown numbers! I actually had my reference number 1242 case fully resolved through the callback system after 2 attempts. The first callback, the rep said they needed to escalate it to a specialized department, then the second callback about a week later was from that department and they were able to clear everything up. Turned out it was just a routine verification like others mentioned - they confirmed my identity, asked a few questions about my filing, and then released my refund within 10 business days. The whole thing was much less scary than I initially thought. For anyone still dealing with this, definitely stick with the callback system and be patient - it really does work better than trying to stay on hold for hours!
@Yara Khalil That s'so encouraging to hear that you got it fully resolved! I m'currently on my first callback attempt after reading all these helpful tips. It s'reassuring to know that reference number 1242 is often just routine verification rather than something serious. I was really stressed thinking there was a major problem with my return. Quick question - when they released your refund after resolving the reference number 1242 issue, did you get any confirmation letter or explaining what the hold was for? I m'curious if they provide any documentation about what triggered the review in the first place. Also, did your refund amount end up being exactly what you originally expected, or were there any adjustments? Thanks for sharing your successful experience - it gives the rest of us hope that this will get resolved!
Has anyone used those "inherited annuity specialists" that advertise online? I'm in a similar situation with an inherited annuity from my uncle, and I've been getting bombarded with emails from companies claiming they can help minimize taxes. Not sure if they're legit or just trying to sell me something else.
I met with one of those "specialists" after inheriting my grandma's annuity. Total waste of time - they were just insurance salespeople trying to convince me to roll the money into a new annuity they sold (which would have given them a big commission). They kept emphasizing "tax advantages" but wouldn't give straight answers about the fees. Go with a fee-only financial advisor instead who charges by the hour and doesn't sell products. I paid $300 for a 90-minute session that saved me thousands in potential mistakes and gave me a clear plan.
I'm sorry for your loss, Jasmine. Dealing with inherited annuities can be overwhelming, especially during a difficult time. Based on what you've shared, you're looking at about $77,500 in taxable income from the gain portion of your inheritance. Given that you have a stable government job with a pension and 457b, plus you're already contributing to a Roth IRA, you seem to have a good foundation for retirement planning. For your situation, I'd lean toward the stretch payments over 5 years rather than the lump sum for a few reasons: 1. It will likely keep you from jumping into a higher tax bracket in any single year 2. You can potentially time the distributions to coordinate with your other tax planning (like maximizing your 457b contributions in high-distribution years) 3. It gives you more flexibility to adjust based on changes in your income or tax situation Since you work for the government, you might also have access to an Employee Assistance Program that offers free financial counseling - worth checking if your employer provides this benefit. When you do consult with a professional, make sure they're fee-only and not trying to sell you additional products. The key is to run the numbers based on your current tax bracket and projected income over the next 5 years. Keep detailed records of whatever you choose, and don't let anyone pressure you into rolling this into a new annuity product.
This is really helpful advice, Nathaniel. I'm actually just starting to navigate a similar situation myself after my grandmother passed last month. The Employee Assistance Program tip is something I hadn't thought of - I work for a municipal government and I'll definitely check if we have financial counseling available. One question about the stretch payments - do you know if there's typically a minimum amount you have to take each year, or can you really customize the distribution schedule however you want as long as everything is out by year 5? I'm trying to figure out if I could take smaller amounts in the first couple years while I get my bearings and then larger distributions later. @Jasmine - I know this is all so overwhelming when you're grieving. Take your time with the decision and don't let anyone rush you into anything. The 5-year window gives you some breathing room to make the right choice for your situation.
I'm completely new to dealing with tax transcripts and just discovered I have a 570 code too! Filed my return on February 22nd and the code showed up about a week ago. Reading through all these experiences has been incredibly reassuring - I had no idea this was so common! It sounds like most people's situations resolved within 2-3 weeks without needing to take any action, which is such a relief. I was worried I'd made some major error on my return. Quick question for those who've been through this - did anyone's "Where's My Refund" tool change at all while you had the 570 code, or did it just stay on "still processing" the entire time until it resolved? Also, when it did resolve, did your refund come pretty quickly after the code disappeared? Thanks so much to everyone sharing their experiences - this community is amazing for helping newcomers like me understand what's going on!
Hi Emily! I'm super new to this whole tax transcript thing too, so I can totally relate to the confusion and worry! From what I've been reading in this thread, it sounds like the "Where's My Refund" tool typically just stays stuck on "still processing" the entire time you have a 570 code - it's like the system pauses your status updates until the hold gets resolved. I filed around the same time as you (February 25th) and just noticed my 570 code a few days ago, so we're probably on very similar timelines! It's so reassuring to see that most people here had their codes clear up automatically within 2-3 weeks. I'm definitely going to try to be patient and not check obsessively (though let's be honest, I'll probably still check way too often!). Really hoping both of our situations resolve soon - the waiting is definitely nerve-wracking when you're new to all this!
I'm also completely new to understanding tax transcripts and just found out I have a 570 code! Filed on February 20th and noticed the code appeared on my transcript just two days ago. This thread has been such a lifesaver - I was honestly panicking thinking I'd made some huge mistake on my return. It's incredibly reassuring to read that this is actually pretty common and that most people's codes resolve automatically within a few weeks without any action needed. I keep wanting to call the IRS immediately, but based on everyone's experiences here, it sounds like patience really is the best approach (even though the waiting is torture when you're counting on that refund!). For those of you who had your 570 codes resolve - did you notice any pattern in terms of what day of the week your transcript updated? I've been checking randomly but wondering if there's a better strategy. Thanks so much to everyone for sharing their experiences - this community is amazing for helping us newcomers navigate this confusing process!
Hey Mateo! I'm brand new to all this tax stuff too and just discovered my 570 code yesterday - filed February 24th so we're right in the same timeframe! Reading through everyone's experiences here has been such a huge relief. I was also ready to panic-call the IRS until I saw how many people said theirs resolved automatically. From what I've been picking up in this thread, it sounds like transcripts typically update weekly based on your cycle code (that last digit thing people mentioned), but I'm still trying to figure out exactly how that works. The waiting is definitely killing me since I really need that refund, but it's so comforting to know we're not alone in this! Fingers crossed both of ours clear up soon - seems like most people here had good outcomes within 2-3 weeks!
Hi Mateo! I'm also really new to this whole tax transcript thing and just found my 570 code yesterday too! Filed on February 26th, so we're all pretty much in the same boat timing-wise. This entire thread has been such a godsend - I was literally googling "is my refund gone forever" before I found this discussion! π From what I'm gathering from everyone's experiences, it really does seem like most of these resolve on their own within that 2-3 week window. I've been trying to figure out the whole cycle code thing too - apparently that last digit tells you what day of the week your account updates, but I'm still confused about how to actually use that information. The hardest part is definitely just sitting and waiting when you really need that money! But seeing all these success stories is keeping me sane. Really hoping all of us February filers see some movement soon!
Does anyone know if foreign dividend stocks have different reinvestment tax rules? I have some Canadian dividend stocks and I'm not sure if the tax treaty affects how reinvested dividends are taxed.
Foreign dividends have an extra wrinkle - they're often subject to foreign tax withholding (typically 15% for Canadian stocks if held in a regular account). The good news is you can claim a foreign tax credit for those withheld amounts on your US return. When the dividends are reinvested, the same basic rules apply - you pay US tax on the gross dividend amount in the year received, and those reinvested shares have a cost basis equal to the amount invested (after any foreign withholding).
Just wanted to add a quick tip for anyone dealing with this - make sure you keep good records of your dividend reinvestment transactions! I learned this lesson after scrambling during tax season when I couldn't figure out which shares were purchased with cash vs. dividends. Most brokerages will show this on your monthly statements, but I started keeping a simple spreadsheet tracking: date, stock symbol, dividend amount, number of shares purchased, and price per share. Takes literally 2 minutes each quarter when dividends hit, but it's been a lifesaver for tax prep. Also, if you're using tax software like TurboTax, they can usually import your 1099-DIV directly from most major brokerages, which automatically includes your reinvested dividends. Just double-check that the amounts match what you actually received!
This is such great advice about record keeping! I wish I had started doing this from the beginning. I'm a complete newcomer to dividend investing and just set up DRIP on a few stocks last month. Your spreadsheet idea sounds perfect - simple but comprehensive. Quick question though - when you say "price per share" in your tracking, do you mean the price on the dividend payment date when the shares were actually purchased? I want to make sure I'm recording the right cost basis information from the start so I don't run into problems later when I sell. Also, has anyone had issues with TurboTax importing the 1099-DIV correctly? I'm using Schwab and want to know if their integration typically works smoothly.
Monique Byrd
One factor nobody is addressing is TIMING. Yes, mathematically it might work out similar in some cases, but getting reimbursed now vs. getting a tax deduction later is a huge cash flow advantage. Think about it - you get the $67 in your next check with reimbursement. With a deduction, you might wait 3-15 months to see that tax benefit, depending on when you file. Plus, the benefit is spread across your tax refund or reduced liability. For a contractor with lots of miles, this timing difference can be thousands of dollars in your pocket NOW vs. later.
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Jackie Martinez
β’Great point about the timing! Also worth noting that tax deductions only help if you have enough income to offset. I had a slow year once and couldn't even use all my deductions because I didn't have enough income. Getting reimbursed would have been way better.
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Zainab Omar
Something I haven't seen mentioned yet is the impact on self-employment taxes. When you receive mileage reimbursement that gets reported as income on your Schedule C, it increases your self-employment tax liability (Social Security and Medicare taxes). However, when you deduct the mileage expense on the same Schedule C, it reduces your self-employment income by the same amount. So like others said, it's a wash for income tax purposes, but more importantly it's also a wash for self-employment tax. If you WEREN'T reimbursed and just took the deduction, you'd save on both income tax AND self-employment tax on that deduction amount. This is actually a small advantage to not being reimbursed, though the cash flow benefit of getting paid upfront usually outweighs this. The key is making sure your reimbursement rate matches the IRS standard rate ($0.67/mile for 2024). If your client pays less than the standard rate, you can deduct the difference!
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