I've been dealing with a similar situation and wanted to share what I learned after doing a deep dive into this. The IRS Publication 527 (Residential Rental Property) actually has specific guidance on this exact issue. The key test is whether you provide "substantial services" to your guests. Things like daily maid service, regular meal service, or concierge-type services would put you on Schedule C. But if you're just providing the typical Airbnb setup (cleaning between guests, basic amenities, maybe some snacks), that's Schedule E territory. One thing that really helped me understand this was looking at the self-employment tax angle. Schedule C income gets hit with the 15.3% SE tax, while Schedule E doesn't. So if your accountant correctly moved you from C to E, you're actually saving money on taxes even though the prep fee went up. The fee increase does sting though - maybe ask your accountant for a breakdown of what additional work Schedule E requires so you understand where that extra cost is coming from?

I went through this exact same confusion last year! My accountant made the same switch from Schedule C to Schedule E without explaining it, and I was so frustrated with the fee increase. After doing some research and talking to other Airbnb hosts, I learned that the IRS has been cracking down on this distinction lately. They're specifically looking for people who incorrectly use Schedule C when they should be using Schedule E. The good news is that if your setup is like mine (just cleaning between guests, providing basic amenities), Schedule E is probably correct AND you'll save money on self-employment taxes. That 15.3% SE tax doesn't apply to Schedule E rental income, so even with the higher prep fee, you might come out ahead. I'd definitely recommend asking your accountant for a detailed explanation of why they switched and what additional work Schedule E requires. A good tax preparer should be able to explain their reasoning clearly. If they can't or won't, it might be time to find someone new who communicates better about these important decisions.

Anyone know if this also applies to the additional Medicare tax? I'm above the threshold for that too and wondering if that gets handled the same way when switching employers.

This is exactly what happened to me two years ago when I switched from a startup to a big tech company mid-year. The frustrating part is watching your new colleagues celebrate their "SS tax holiday" while you're still getting hit with the full deduction! One thing I learned the hard way - make sure you keep detailed records of your pay stubs from both employers throughout the year. When tax season came around, I had to dig through months of pay stubs to calculate the exact overpayment amount. Having everything organized made the refund process much smoother. Also, if you're using tax software, most of the major ones (TurboTax, H&R Block, etc.) will automatically calculate your excess Social Security tax refund when you enter your W-2 information. They'll flag it and walk you through claiming it on Schedule 3. Just double-check their math - I caught a small error one year that would have cost me about $200. The silver lining is that you essentially get an interest-free loan to the government that you'll get back at tax time. Not ideal, but at least it's not lost money!

I'm dealing with a similar situation right now - living in Canada and just received an IRS notice that's 6 weeks past the response deadline! Reading through all these responses has been really reassuring. One thing I want to add is that when you call the IRS international line, ask them specifically about Form 911 (Request for Taxpayer Advocate Service Assistance). If you're experiencing significant hardship due to the mail delays and can't resolve the issue through normal channels, the Taxpayer Advocate Service can intervene on your behalf. They have special authority to work with international taxpayers facing these kinds of systemic issues. Also, I've found that including a brief timeline in your response letter helps - something like "Notice dated [X], postmarked [Y], received [Z]" makes it crystal clear to whoever reviews your case that this was a mail delay issue, not procrastination on your part. Thanks to everyone who shared their experiences - it's made this whole situation feel much more manageable!

I'm currently facing this exact situation as well - received an IRS notice 5 weeks past their deadline while living in Germany. The stress has been overwhelming, but reading everyone's experiences here is incredibly helpful! One thing I wanted to add that hasn't been mentioned yet: if you're in a country that's part of a tax treaty with the US, you might want to reference that treaty in your response letter. Some treaties have specific provisions about correspondence and reasonable timeframes for international taxpayers. I found this information in IRS Publication 901 (U.S. Tax Treaties), and it gave me additional grounds to explain why the delay was beyond my control. Also, for anyone else dealing with this - I discovered that some international post offices will provide a "Certificate of Posting" retroactively if you can provide them with tracking numbers or other proof. This can serve as additional documentation that the letter was indeed sent much earlier than you received it. The anxiety about missing deadlines when you're overseas is real, but it sounds like the IRS is generally understanding about these situations when you respond promptly and document everything properly. Thanks to everyone who shared their stories - it's made this process feel much less scary!

This thread perfectly captures why I've become so cynical about our political system. The fact that we have clear evidence of companies spending millions to deliberately keep a government service complicated - and our representatives just... let it happen - shows how broken things really are. What's particularly infuriating is that this affects literally everyone. Unlike a lot of political issues where you can argue there are different legitimate perspectives, this is just pure rent-seeking behavior that makes every American's life worse and more expensive. There's no public benefit to the current system - it exists solely to generate profits for a handful of companies. I've been thinking about this since reading everyone's experiences, and it's made me realize how many other areas of government probably work the same way. How many other "complicated" systems are actually just artificially complex because some industry has a financial interest in keeping them that way? The grassroots solutions people are sharing here give me some hope, but it's depressing that we need them at all. We shouldn't have to crowdsource workarounds to deal with basic government services. Still, I'm grateful for everyone sharing these resources - it's probably saved me hundreds of dollars and hours of frustration.

As someone who just discovered this community through a friend's recommendation, I have to say this thread has been absolutely eye-opening. I've been using TurboTax for the past 5 years and just accepted the annual $150+ charge as "the cost of doing taxes," but reading about the deliberate lobbying efforts to keep the system complicated has me genuinely angry. What really gets me is that I work in tech, so I understand how easy it would be to automate most of this process. The fact that other countries have solved this problem decades ago while we're still stuck with this archaic system purely because of corporate interests is infuriating. I'm definitely going to try some of the alternatives mentioned here - especially the taxr.ai tool that several people have vouched for. The idea that I might have been missing legitimate deductions all these years because TurboTax's interview process isn't thorough enough is both frustrating and motivating. Thank you to everyone sharing practical solutions here. It's refreshing to find a community that doesn't just complain about problems but actually helps each other find ways to fight back against unfair systems. Looking forward to contributing more as I learn!

This thread has been incredibly informative! I'm in a similar situation caring for my disabled spouse and receiving HCBS waiver payments that I've been reporting as self-employment income for three years now. One aspect I haven't seen discussed much is the interaction between Notice 2014-7 and Social Security benefits. Since I've been paying self-employment tax on these payments, they've been contributing to my Social Security earnings record. If I exclude them going forward and amend prior returns, will this affect my future Social Security benefits calculation? I'm particularly concerned because as a caregiver, I've had very limited other employment income over the past several years, so these payments have been my primary source of Social Security credits. Has anyone looked into this aspect or gotten guidance from Social Security Administration about how excluded Medicaid waiver payments impact benefit calculations? Also, I'm curious if anyone has experience with how this affects eligibility for other federal programs that use MAGI (Modified Adjusted Gross Income) calculations. Lower reported income from excluding these payments might actually help qualify for things like premium tax credits for health insurance. Would love to hear if anyone has navigated these broader implications beyond just the immediate tax benefits!

This has been such a valuable discussion! I'm also a caregiver receiving Medicaid waiver payments and had no idea about Notice 2014-7 until reading this thread. I've been dutifully reporting everything on Schedule C and paying self-employment tax on about $24,000 annually for the past five years. What strikes me most is how many of us were in the exact same situation - incorrectly paying SE tax on payments that should have been excluded. It really highlights how poorly publicized this notice is, even among tax preparers. I actually asked my previous tax preparer about this a few years ago and they had never heard of Notice 2014-7. I'm definitely going to pursue amending my returns for the past three years. Based on the experiences shared here, it sounds like the process is straightforward if you have proper documentation. I'm particularly encouraged by those who reported smooth processing without additional IRS questions. One thing I'm curious about - has anyone dealt with this if you provide care for multiple family members? I care for both my elderly mother and my adult brother who has autism, and receive separate waiver payments for each. I'm assuming both would qualify under the notice, but wondering if there are any special considerations for reporting multiple excluded payment streams. Thanks to everyone who shared their experiences - this community knowledge is invaluable!