Warning from someone who made an expensive mistake: Be careful about rushing into an LLC with S-Corp election just for tax savings! I did this in 2022 without really understanding all the requirements. Yes, I saved about $8k in self-employment taxes, but then got audited because my "reasonable salary" was too low compared to my distributions. Ended up owing back taxes PLUS penalties. The IRS is watching this area closely. The rule is that your salary must be "reasonable" for your industry and the work you do. You can't just pay yourself $30k and take $200k in distributions if comparable positions would pay $120k. Also, the administrative hassle is real. Quarterly payroll filings, extra tax forms, higher accountant fees, etc. For me it added about $3,200 in extra costs annually.

This thread has been incredibly helpful! I've been running a freelance graphic design business as a sole proprietorship for 3 years now and had no idea about these different tax structures. Reading through everyone's experiences, it sounds like the S-Corp election could potentially save me money, but I'm nervous about the "reasonable salary" requirement that @Mateo Perez mentioned. My income fluctuates a lot - some months I make $15K, others I barely break $3K. For those who have made the S-Corp election, how do you handle the salary requirement when your income isn't consistent? Do you have to pay yourself the same amount every month even if the business didn't earn that much? And what happens if you guess wrong on what's "reasonable" - is there a safe harbor rule or something? Also wondering if anyone has experience with creative businesses specifically. I'm not sure what comparable salaries would be for someone doing logo design, web design, and brand identity work.

As a newcomer to this community, I have to say this thread has been incredibly informative! I'm currently dealing with my first 570 code situation - got mine on March 11th (so 16 days ago) and like everyone else here, no 971 notice. I was completely lost about what this meant until I found this discussion. Reading through Matthew's original post and seeing how many others (Oliver at 21 days, Aisha at 19, Liam at 17, Zoe at 20) are all experiencing nearly identical situations with such similar timelines is both reassuring and eye-opening. The consistent 28-32 day resolution pattern that keeps appearing across everyone's stories gives me hope that we're all approaching the light at the end of the tunnel. I need my refund to help cover some unexpected home repairs, so the waiting has been nerve-wracking, but this community has provided so much valuable insight. Going to follow the advice about limiting transcript checks to Fridays and Wednesdays instead of my current daily obsession! Thank you all for sharing your experiences so openly - it's made this stressful process so much more manageable.

As someone completely new to this community and filing taxes for the first time, this thread has been absolutely invaluable! I'm not currently dealing with a 570 code myself, but reading through everyone's experiences has been like getting a masterclass in how the IRS actually works. The consistency across all your timelines is remarkable - Matthew at 23 days, Oliver at 21, Aisha at 19, Zoe at 20, Liam at 17, and Anastasia at 16 days, all with the same 570 code and no 971 notice pattern. What strikes me most is how the 28-32 day resolution window keeps appearing in story after story from different people. It really seems like the IRS has some kind of internal batched review process that just takes time, regardless of individual circumstances. I'm bookmarking this thread for future reference because the advice about checking transcripts only on Fridays and Wednesdays (instead of daily obsessing) and the insights about what different codes mean have been so educational. Thank you all for being so open about your situations - you're creating an amazing resource for people navigating these stressful financial situations. Hoping everyone sees their refunds come through soon!

Question for anyone who knows - when filling out Form 8889, do employer contributions count toward the annual limit? My company puts in $500 per quarter ($2,000/year) and I contribute about $3,000 through payroll. The form seems to add these together but I'm not sure if that's right or if I'm supposed to be tracking them separately?

I had a similar confusion with Form 8889 last year! What helped me understand it was realizing that the form is just tracking contributions and distributions - not taxing your balance. The key thing to check is Part III of Form 8889. If you see amounts in lines 14a (total distributions) that are greater than line 15 (qualified medical expenses), then the difference goes to line 16 and becomes taxable income. This would happen if you withdrew HSA money for non-medical purposes. Your actual HSA balance (the money just sitting there growing) is never taxed. That's the whole point of an HSA - it's a tax shelter for medical expenses. Make sure you're not accidentally including employer HSA contributions as taxable income either - those should be excluded from your W-2 wages if they went through a cafeteria plan. Double-check your 1099-SA and 5498-SA forms from your HSA provider to make sure the numbers match what you entered on Form 8889. That's usually where the disconnect happens.

Has anyone actually gotten audited over backdoor Roth contributions? I'm in the same boat with multiple years showing on one 1099-R and now I'm worried. Should I be concerned about red flags if I report this as described above?

I went through this exact same situation last year and want to share what worked for me. The key thing to understand is that the 1099-R is just reporting the total distribution amount - it's not determining your taxable income. Here's what I did in TurboTax step by step: 1. Enter the 1099-R as a Roth conversion (not a regular distribution) 2. When TurboTax asks about your basis, you'll need your Form 8606 from 2020 AND the one you'll file for 2021 3. The 2021 Form 8606 will show your total basis from both years ($15k in your case) 4. This should result in zero or minimal taxable income since you're converting non-deductible contributions The critical part is making sure you filed Form 8606 for 2020 when you made that contribution. If you didn't file it, you might need to amend your 2020 return first. Also, keep excellent records - bank statements showing the contributions, conversion confirmations, and all your Form 8606s. The IRS wants to see a clear paper trail that these were legitimate backdoor Roth strategies, not attempts to avoid taxes on deductible IRA contributions. Don't stress too much about the single 1099-R - this is actually pretty common when conversions happen across calendar years but get processed together.

I feel your pain! That same message drove me crazy for weeks. The "being processed" status is basically the IRS's way of saying "we got it but we're not done yet" - super frustrating when you need that refund money. Since you filed in February and claimed EIC/CTC, that definitely explains the delay. Those credits trigger extra review steps that can add months to processing time. I'd honestly recommend checking out taxr.ai like others mentioned - it'll decode your transcript and give you actual insights instead of that generic message. Way better than calling and waiting on hold for hours! Hang in there, it'll come through eventually 🤞

Ugh, I'm in the exact same situation! Filed in late January and still getting that "being processed" message. It's been driving me absolutely nuts checking every day for updates. The worst part is not knowing if something's wrong or if it's just normal delays. I've been tempted to call but everyone says it's impossible to get through. Maybe I should try that taxr.ai thing people are mentioning - at least then I'd know if there are any actual issues with my return or if it's just stuck in the queue. This whole process is so stressful when you're depending on that refund! 😫