According to Internal Revenue Manual 25.25.6.1, returns with incarceration indicators are subject to additional scrutiny under the Prisoner Fraud Prevention Program. However, IRM 21.5.6.4.52 also states that taxpayers released during the tax year may experience different processing procedures than those who remained incarcerated throughout. Your return will likely be reviewed, but since you're no longer in the system, it should move through verification more quickly. I'd recommend checking your tax transcript weekly rather than daily - excessive access attempts can sometimes trigger additional verification flags.

Based on my experience working with clients who've been through similar situations, you should expect some processing delay but it will likely be much shorter than what you experienced last year. Here's why: The IRS system automatically flags returns with "yes" answers to the incarceration question, but the key difference now is your current status. Since you were discharged in July and are no longer under any form of supervision, the verification process should be more straightforward. What typically happens: • Your return gets pulled for manual review (usually adds 2-4 weeks) • They verify your current status isn't showing active incarceration • Since you can respond to any correspondence quickly, processing continues I'd suggest filing as early as possible and monitoring your transcript through the IRS website. If you do get stuck in review longer than 6 weeks, that's when I'd recommend using a callback service like the ones mentioned above to speak directly with an agent. The good news is that each year you file without issues, the less scrutiny your future returns will receive. This should be your last year dealing with significant delays from this flag.

Has anyone actually compared the ACTUAL TAX FORMS between the two software? Not just the summaries, but download the actual Form 1040 and all schedules from both and compare them line by line? That's the only way to really see where the difference is coming from. I had a similar issue last year and it turned out one software was putting a business expense on the wrong line, which cascaded into a huge difference in the final calculation.

For the self-employed health insurance premium deduction, you need to make sure you meet all the qualification requirements. The deduction goes on Schedule 1, Line 17, but there are several conditions: 1. You must have net self-employment income from the business under which the health insurance plan is established 2. You can't be eligible for coverage under your spouse's employer health plan (if married) 3. You can't be eligible for coverage under any employer health plan for the months you're claiming the deduction 4. The deduction can't exceed your net profit from self-employment The most common mistake I see is people trying to deduct more in premiums than they actually earned from self-employment. If your SE income was $23k, your health insurance premium deduction is capped at that amount. Check both software to see how they're handling these limitations. TurboTax might be correctly applying the full deduction while FreeTaxUSA might be incorrectly limiting it, or vice versa. You'll need to manually verify which calculation follows the IRS rules properly.

Ok but what if my client paid exactly 90% and not a penny more? Does the software round in their favor or does it need to be slightly over 90%? Our firm uses different software and I'm curious if there are any edge cases I should watch for.

This is a great discussion! I've been dealing with similar penalty calculations and it's clear there's a lot of nuance here that even experienced practitioners sometimes miss. From what I'm seeing in the responses, it sounds like Ultratax might actually be correct in your situation. The combination of filing an extension AND paying at least 90% by the original due date does provide some protection from the Failure to Pay penalty during the extension period. However, I'd still recommend double-checking this with the IRS directly or using one of the tools mentioned here to verify. The stakes are too high to just assume the software is right without confirmation. I've seen cases where software gets updated penalty calculations wrong, especially when there are special provisions or recent rule changes. Also worth noting - even if the Failure to Pay penalty doesn't apply during the extension period, make sure your client understands that interest is still accruing from the original due date on that unpaid $8,000. That can add up over time even without penalties.

Ugh I'm literally in the EXACT same situation! PATH Act filer with cycle code 20250704 and my account transcript is completely blank too. I've been refreshing WMR like every hour and it's still just sitting on "received and processing" 😤 This is my second year filing with EITC so I should know better but I'm still stressing about it. Reading everyone's comments here is honestly so reassuring though - sounds like we're all just stuck in the same waiting game until mid-February. The blank transcript thing had me worried something was wrong but apparently that's totally normal for us PATH filers. Still doesn't make the waiting any less painful though! 😭

I'm in the exact same boat! PATH Act filer with cycle code 20250704 and my account transcript is completely blank too. This is actually my third year filing with EITC/ACTC and I remember freaking out about this same thing my first year. The blank transcript with just a cycle code is totally normal for PATH filers in early February - it basically means your return processed but they're holding everything until mid-Feb per the PATH Act requirements. Your cycle code shows processing happened on 2/4/25 which is actually pretty good timing! The account transcript won't populate with the 846 refund code until they're ready to actually release the funds. I know the waiting is absolutely brutal when you need that money, but you're definitely not alone in this. We're all just stuck in limbo until the IRS lifts the hold period. Hang in there! 💪

As someone who just went through this exact situation with my occasional photography sales, I can confirm that getting an EIN for privacy protection is totally legitimate and won't force you into business status. The IRS allows individuals to obtain EINs for various reasons beyond just business formation. Here's what I learned from my research and talking to a tax professional: 1. Having an EIN doesn't automatically require Schedule C filing - the determining factor is whether your activity meets the IRS criteria for a business (profit motive, regularity, time investment, etc.) 2. You can absolutely report the income on Schedule 1, Line 8 as hobby income even with an EIN. Just make sure to be consistent in how you treat the activity. 3. When you receive the 1099-NEC (which they'll likely issue for $600+), include a brief statement with your tax return noting that the 1099 income is being reported as hobby income on Schedule 1. This prevents automated IRS matching notices. 4. Creating an LLC isn't necessary for just getting an EIN - you can apply for one as a sole proprietor for privacy purposes. One thing to consider though: since hobby expenses aren't deductible anymore (thanks to 2018 tax law changes), you might actually save money by treating it as business income on Schedule C if you have legitimate photography expenses. The self-employment tax might be offset by equipment deductions, but run the numbers for your specific situation. The key is being consistent in your treatment and having a clear understanding of your intent with the activity.

This is exactly the kind of situation where getting an EIN makes perfect sense! You're absolutely right to be cautious about sharing your SSN with companies - identity protection is important. To answer your specific questions: 1. No, getting an EIN doesn't automatically require Schedule C filing. The IRS determines business vs. hobby status based on your actual intent and activity patterns, not whether you have an EIN. 2. Yes, you can definitely report this as hobby income on Schedule 1, Line 8 even with an EIN. Just be consistent in treating it as a hobby. 3. You don't need an LLC at all - you can apply for an EIN as a sole proprietor specifically for privacy purposes. One practical tip: when you receive the 1099-NEC (which they'll issue for $600), consider adding a brief statement to your tax return explaining that the 1099 income is reported as hobby income on Schedule 1, Line 8. This helps prevent any automated IRS notices about mismatched income. Since this is truly a one-off payment and you want to keep things simple, the hobby income approach with an EIN for privacy protection sounds like the perfect solution for your situation. You'll protect your personal information while avoiding unnecessary business complications.