One thing nobody's mentioned is that if you switch from 940/941 filing to Schedule H for future quarters/years, make sure you formally close out your 940/941 filing requirements with the IRS. Otherwise, they'll keep expecting those quarterly filings and may flag your account when they stop receiving them. You'll need to file a final 941 form for the last quarter you're using that system, and check the box indicating it's your final return. This tells the IRS you're no longer operating under that filing requirement. Then you can switch to Schedule H going forward (which is definitely simpler for most household employers).

Just want to share that I went through this EXACT situation in 2023. I was filing 940/941 for my nanny all year and then realized I should've been using Schedule H. I ended up calling my local IRS Taxpayer Assistance Center and scheduling an in-person appointment (way easier than phone). The IRS rep helped me fill out my Schedule H correctly, essentially zeroing out what I owed by entering my previous payments. They also helped me submit a form to close out my 940/941 filing requirement going forward. Worth noting: they told me the 940/941 approach is actually MORE accurate technically, but Schedule H is specifically designed to simplify things for household employers. So you actually did it the "more correct but more complicated" way!

I filed February 10th, got 846 code last Friday with March 27th date, bank with Go2Bank, and still waiting. Their customer service confirmed they don't release tax refunds early like some other banks do. We're just gonna have to be patient until the 27th. 😩

Go2Bank holder here and unfortunately can confirm what everyone else is saying - they stick to the exact date on your transcript no matter what. I've been with them for 2 years and they've never released my refund early, even by one day. Since your 846 shows March 27th, that's exactly when you'll get it. I know it's frustrating seeing other banks release early, but at least you know for certain it's coming! The good news is Go2Bank is usually pretty reliable about depositing right at midnight on the scheduled date.

Has anyone used any of the mainstream tax software solutions like Avalara or TaxJar for handling the VDA process? We're trying to decide if we should go with specialized help or if the regular tax software companies have good VDA support.

This is exactly the situation my small manufacturing company went through last year. We had similar issues with high-value products pushing us over nexus thresholds in multiple states despite relatively low transaction volumes. One thing that really helped us was creating a comprehensive spreadsheet documenting every customer interaction regarding exemption certificates. We included dates of requests, methods of contact (email, phone, certified mail), and their responses (or lack thereof). This documentation became crucial during our VDA negotiations. For customers who were clearly resellers but wouldn't provide certificates, we gathered alternative evidence: their business licenses from state databases, screenshots of their websites showing they resell products, and invoices showing consistent business purchasing patterns over multiple years. Several states accepted this as reasonable evidence of exempt transactions. The key insight we learned was that state tax authorities are generally reasonable during VDA processes if you can demonstrate good faith effort and provide logical explanations for why sales were exempt. They understand that businesses sometimes have uncooperative customers. I'd recommend prioritizing your VDA filings by states with the highest potential liability first, and don't let perfect documentation prevent you from moving forward. The penalty relief from VDAs is significant, but only if you act before they contact you.

Has anyone successfully had the IRS accept retroactive loan documentation? My accountant says its too late for me since my business has already made several "repayments" over the last 2 years without proper documentation. Now she wants me to pay capital gains on all of it!

I went through this exact same nightmare last year! My LLC (S-Corp election) had been "repaying" my initial capital injection for two years before I realized I never created proper loan documentation. My CPA initially wanted to treat everything as taxable distributions. Here's what saved me: I worked with a tax attorney to create a formal loan agreement that matched what had actually been happening (reasonable 4% interest rate, quarterly payments). We filed Form 8275 with my amended return explaining the documentation was being formalized to properly reflect the original intent of the transactions. The IRS accepted it without issue. The key was showing that the loan terms were reasonable and consistent with actual business practice. I had to pay tax on the interest portion going forward, but the principal repayments were correctly treated as non-taxable return of my loan. Don't let your CPA take the easy way out by just calling everything capital gains. If you genuinely loaned money to your business with the intent to be repaid, you can usually fix the documentation issue. Just make sure any loan terms you create are commercially reasonable and match what you've actually been doing.

Make sure you're using the CORRECT TAX FORMS for 2021! This is super important - you can't just use current year forms for prior year returns. Go to the IRS website and download the specific 2021 forms or make sure your tax software is generating the correct year's forms. I screwed this up once and had my return rejected because I grabbed the wrong year's form from the IRS website. Wasted weeks of processing time just to start over.

Adding to what others have said about the 3-year refund window - you're actually in decent shape timing-wise! The 2021 tax deadline was April 18, 2022, so you have until April 18, 2025 to claim that refund. That gives you several months to get everything sorted out. One thing I haven't seen mentioned yet: when you do mail your 2021 return, include Form 8453 (U.S. Individual Income Tax Transmittal for an IRS e-file Return) if FreeTaxUSA generated one. This form is required when you prepared your return electronically but have to mail it instead of e-filing. Also, don't stress too much about the paper filing process - millions of people still file paper returns every year. Just make sure you sign and date everything, include all required attachments, and use certified mail like others suggested. The IRS is used to processing paper returns, it just takes longer than e-filing. For your 2022 and 2023 returns, definitely prioritize getting those done ASAP since you should be able to e-file those through most services. Good luck!