I think there's some misunderstanding about how the offset system works: • The debt WILL appear in the Treasury Offset Program database • You SHOULD receive a notice from the creditor agency (state unemployment) • The offset WILL appear on your tax transcript, but possibly not until after processing • The BFS (not IRS) handles the actual offset process • You CAN call TOP directly at 1-800-304-3107 to verify debts • You MAY have appeal rights depending on the debt type I appreciate all the insights shared here. This helped me understand the process much better!

Based on my experience dealing with this exact situation last year, I can confirm that unemployment overpayments will typically show up in the Treasury Offset Program before they take your refund, but the timing and visibility can be inconsistent. Here's what actually happened in my case: 1. I received a generic overpayment letter from my state unemployment office in October 2. In December, I checked the TOP database by calling 1-800-304-3107 and confirmed my debt was listed 3. When I filed my taxes in February, there was no indication on my initial transcript 4. My refund was processed but reduced by the overpayment amount 5. Code 898 appeared on my transcript about 10 days AFTER the offset occurred The key lesson: don't rely solely on your tax transcript for advance warning. If you suspect you might have an unemployment overpayment, proactively call the TOP line or contact your state unemployment office directly. The "60-90 day advance notice" rule exists on paper, but in practice, many people (myself included) don't receive adequate warning. I'd recommend checking both your state unemployment portal and calling TOP directly if you're concerned. Better to know now than be surprised when your refund is smaller than expected!

Has anyone used any particular tax software that handles this 941 deduction well for small business owners? I tried using TurboTax Small Business last year and it was super confusing with my payroll taxes.

Great question! I just went through this exact situation with my LLC last year. Yes, the employer portion of your 941 payroll taxes is definitely deductible on Schedule C. Here's what I learned: You can deduct the employer's share of Social Security (6.2%), Medicare (1.45%), FUTA, and any state unemployment taxes you paid. For your $2,100 in quarterly taxes, a good chunk of that should be deductible - just make sure you're only counting the employer portion, not the employee withholdings. I put mine on Line 23 "Taxes and licenses" on Schedule C. One thing that helped me was creating a simple spreadsheet to track the employer vs employee portions each quarter, since the 941 form shows everything together. Your payroll service should be able to give you a breakdown if you don't already have one. Also, don't forget about any state payroll taxes you paid - those are deductible too if they're the employer portion. Just keep good records of all your payroll tax payments and forms in case the IRS ever asks for documentation.

11 Your sister may be in for a surprise. Venmo is owned by PayPal, and they've been cracking down on business transactions labeled as personal. They're getting better at detecting patterns that look like business activity even when marked as "friends and family." For 2025 taxes (covering 2024 income), payment apps are supposed to report to the IRS when someone receives over $600 in business transactions, not the old $20,000 threshold. So she might actually get a 1099-K even if she thinks she's flying under the radar.

Your sister is playing with fire here. I've seen this exact scenario play out badly for several people in my tax practice. The "friends and family" labeling on Venmo doesn't magically make business income disappear - it's still taxable regardless of how it's categorized or whether she receives a 1099. With $44k total income ($35k Venmo + $9k Rover), she's looking at roughly $6,200 in self-employment taxes alone, plus regular income tax on top of that. If she's in the 12% tax bracket, her total tax liability could easily be $8,000-10,000. The scariest part? Since she hasn't been making quarterly payments, she'll likely face underpayment penalties too. The IRS expects self-employed people to pay as they go, not wait until April. She needs to start setting aside money immediately and consider filing an amended return or voluntary disclosure if this has been going on for multiple years. The longer she waits, the worse the penalties get. I'd strongly recommend she consult with a tax professional ASAP - this isn't a DIY situation anymore.

Has anyone used a CPA with experience in identity theft cases? After reading all these comments, I'm still confused about whether to handle this myself or hire someone. I'm worried about making a mistake that could delay things even further.

I went through a very similar situation with my daughter's identity being stolen for tax purposes. One thing I learned that might help - when you call the IRS Identity Theft line at 800-908-4490, ask specifically for a "case trace" on your 2021 return. This will show you exactly what adjustments they made and why. For the dependent they incorrectly removed from your EIC calculation, you'll definitely need to file Form 1040X as others mentioned, but here's something important - include a cover letter that references your identity theft case number. This helps the IRS connect the two issues and can speed up processing. Regarding the Taxpayer Advocate Service (Form 911), absolutely do this ASAP. With $10K at stake and multiple years of back-and-forth, you clearly meet their criteria for "significant hardship." When filling out the form, be very specific about the financial impact this has had on your family. One more tip - if you do decide to hire professional help, look for an Enrolled Agent (EA) rather than just a regular tax preparer. EAs can represent you directly to the IRS and many specialize in complex cases like identity theft. They're often less expensive than CPAs but have the specialized knowledge you need. The interest calculation should apply to any additional refund amount from the original due date, so that's definitely something to pursue. Good luck - you're doing all the right things!

Has anyone used Cash App Tax for self-employment income? I do freelance graphic design and the self-employment taxes always confuse me.

I've been using Cash App Tax for the past two years and it's been solid for my situation. I have W-2 income plus some contractor work (1099s), and it handled everything without issues. The interface is clean and asks the right questions to make sure you don't miss anything important. One thing I really appreciate is that it doesn't try to upsell you at every step like some other tax software does. It's genuinely free for federal and state filing, which saved me around $120 compared to what I was paying before. The only downside I've found is that customer support can be slow if you run into problems, but for straightforward tax situations like yours, you probably won't need to contact them. I'd say give it a try - worst case scenario, you can always switch to a professional if you get stuck partway through.