I saw one where it shows the IRS as Michael Scott from The Office saying "I am not superstitious, but I am a little stitious" with the caption "The IRS requiring receipts for exactly $599 but not $600" and I think about it every time I do my self-employment taxes.

The "calculating if I can claim my plants as dependents" one absolutely sent me! 😂 My personal favorite is the one with someone frantically digging through a mountain of papers captioned "Me looking for that ONE receipt from 8 months ago that might save me $3 in taxes." There's also this classic with Drake pointing - "Doing taxes myself" (disapproving Drake) vs "Paying someone else to do them and pretending I understand what they did" (approving Drake). Hits way too close to home! Anyone else relate to the meme where it's like "January: I'm going to be so organized with my receipts this year" followed by "April: *shoebox full of crumpled receipts*"? That's literally my life story every single year.

Has anyone used TurboTax to claim home office deductions like this? The software kept giving me warnings when I tried to deduct my home office renovation costs last year.

I went through something very similar in 2020-2021 when I claimed renovation expenses for my home office setup. The key distinction the IRS agent explained to me is that major renovations like what you described are typically considered "capital improvements" rather than startup costs or regular business expenses. Capital improvements need to be depreciated over time (usually 39 years for home office improvements) rather than deducted all at once. The fact that you deducted the full $18,500 in one year as startup costs is likely what triggered their attention, especially combined with zero income. When I dealt with my situation, I had to file an amended return using Form 8829 to properly categorize the renovation as a capital improvement and start depreciating it. The IRS was actually pretty reasonable about it once I showed I was genuinely trying to run a business and had documentation of my business activities (even though I wasn't profitable yet). My advice: Don't panic, but do take this seriously. Gather all your receipts, any evidence of business activity (marketing efforts, business registration, etc.), and consider consulting a tax professional before responding. The IRS agent is likely just trying to understand if this is a legitimate business expense that was incorrectly categorized rather than looking to penalize you.

Has anyone used TurboTax for reporting small amounts of foreign interest income? Does it automatically generate Schedule B when you input foreign interest, or do you have to know to add it yourself?

I've been dealing with a similar situation for years and can confirm what others have said here. The most important thing is that you've been properly reporting the income on your 1040 - that shows good faith compliance with tax obligations. The Schedule B requirement for foreign interest is indeed a technicality that many people miss, but since you've reported all income correctly, the IRS isn't going to come after you for a few dollars of properly-taxed foreign interest. The disclosure aspect is important, but it's separate from your tax liability. Going forward, definitely include Schedule B and check "Yes" on Part III about having foreign accounts. This gives the IRS the transparency they're looking for. Don't lose sleep over amending previous returns - focus your energy on getting it right from now on. One tip: when you do file Schedule B going forward, make sure to report the interest in the foreign currency amount converted to USD using the average exchange rate for the year. Keep records of the conversion rates you used.

Has anyone tried using the simplified home office deduction method instead? It's $5 per square foot up to 300 sq feet, so maximum $1,500 deduction. Seems easier than tracking all these expenses, but I'm not sure if it's worth it for a larger detached space.

This is such a helpful thread! I'm dealing with a similar situation with my converted shed office. One thing I want to add that might help others - when you're calculating that square footage percentage, make sure you're measuring the *interior* finished space, not the exterior dimensions of the building. I initially calculated using the outside measurements of my shed (12x16 = 192 sq ft) but my accountant corrected me to use the interior space after insulation and drywall (about 11x15 = 165 sq ft). It seems minor but it actually changed my percentage from about 8% to 6.5% of my total property. Also, if anyone is wondering about insurance coverage, I had to add a rider to my homeowners policy specifically for the business use of the detached structure. The cost of that rider is also deductible as a business expense since it's 100% related to the office use.

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 return 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!

I'm dealing with reference number 1242 too and this thread has been incredibly helpful! I've been stuck in the same cycle of calling and getting hung up on. Reading everyone's experiences, it sounds like the automated callback feature is definitely the way to go instead of trying to wait on hold. I'm going to try requesting a callback first thing Monday morning with all my documents ready - my 2022 return, Social Security number, and prior year AGI from line 11. It's reassuring to hear from Leo and others that this is usually just routine verification and gets resolved once you can actually speak to someone knowledgeable. The persistence and specific tips shared here (like calling at 7 AM, having exact AGI ready, allowing unknown numbers for callbacks) are exactly what I needed to hear. Thanks everyone for sharing your experiences - it really helps to know we're not alone in dealing with this frustrating but ultimately resolvable issue!