These $1 checks are definitely legitimate! I work as a tax preparer and see this pretty frequently. The IRS is required to pay interest on refunds that are delayed beyond their standard processing timeframes, and sometimes they also send small adjustments for prior year corrections. Since you mentioned getting your refund quickly this year, this $1 check is most likely either: 1) Interest on a previous year's refund that was processed late, or 2) A small adjustment from an IRS review of a prior return (they sometimes catch minor calculation errors and send the difference). The reason you're getting them two years in a row could be that the IRS is working through a backlog of prior year adjustments - they've been catching up on processing delays from the pandemic years. Definitely cash the check - it's real money, and letting it expire just means more paperwork for both you and the IRS. If you're curious about the exact reason, the check should have a code or explanation on it, or you can check your IRS account online at irs.gov to see recent account activity.

I've been getting these too! Got a $2.13 check last month that had me completely baffled. Called my accountant and he confirmed what others are saying here - it's almost always interest payments or small adjustments from previous years. The IRS has been working through a massive backlog of corrections and recalculations, especially from the 2020-2022 tax years when everything was delayed due to COVID. Sometimes they'll review your return months or even years later, find a small error in your favor, and send the adjustment plus interest. Pro tip: Keep these checks even if they seem tiny! I know someone who ignored several small IRS checks thinking they were mistakes, and it turned out to be over $50 in total adjustments that she missed out on. The IRS won't keep sending them forever - they'll eventually just absorb unclaimed refunds into their general fund. Also, definitely set up that online IRS account like others mentioned. It's been super helpful for tracking what's going on with my taxes without having to play phone tag with their customer service.

One important thing nobody mentioned - if you had healthcare through the marketplace (Obamacare) during any of those years, make sure you find your Form 1095-A! You absolutely need those to file correctly if you received any premium tax credits. I learned this the hard way when catching up on my unfiled returns. The IRS kept rejecting my returns until I tracked down those forms. You can log into your marketplace account to get copies if you need them.

When you get professional help, make sure you find someone who specializes in unfiled returns! Made a huge mistake of just going to a regular tax preparer who didn't know what they were doing with my unfiled returns. Ended up paying wayyy too much in penalties because they didn't file things in the right order. Should've gone to a tax resolution specialist from the beginning.

I keep seeing conflicting info about mortgage interest! Has anyone else noticed that some newer homes dont qualify for the full mortgage interest deduction? I think theres a new loan limit around $750k.

@Molly Hansen - Just to add another perspective on your mortgage interest situation: don't forget to also consider if you had any mortgage insurance premiums (PMI) during the year. If you paid PMI and meet certain income requirements, that could also be deductible and help push your itemized deductions higher. Also, since you mentioned you've been getting 1098s since 2019, you might want to double-check that you haven't been missing out on deductions in previous years. If you were taking the standard deduction but could have benefited from itemizing in any of those years, you can still file amended returns (Form 1040X) for up to three years back to claim those deductions. The mortgage interest deduction really is one of those things that can make a big difference depending on your total tax picture, so it's worth running the numbers each year!

I'm going through my first Letter 12C experience right now and this whole thread has been incredibly helpful! Just wanted to chime in that I'm about 3 weeks into my own verification process and was starting to get really anxious about the N/A transcript status. Reading everyone's experiences here - especially hearing from @Ian that an IRS agent confirmed the N/A status is totally normal during manual review - has really put my mind at ease. It sounds like the key things are: 1) responding within the 20-day window (which you did), 2) keeping your fax confirmation as proof, and 3) being patient during peak tax season when everything takes longer. The HelloFax recommendation from @Jessica keeps coming up and I think I'm going to use that for any future IRS communications. Getting that delivery confirmation seems worth the peace of mind compared to traditional fax machines. Ryan, it sounds like you're handling everything exactly right. The waiting is brutal but you're still well within normal processing times. Hopefully we'll all see our transcripts update soon! 🤞

I went through this exact same Letter 12C verification process last year and totally understand the anxiety! The waiting period is honestly the worst part, but you're doing everything right. A few things that helped me get through it: - The N/A transcript status is completely normal - it just means they've temporarily pulled your return for manual review - The 6-8 week timeline starts from when they actually begin processing your faxed documents, not when you sent them - Peak tax season means everything takes longer, so don't panic if it goes beyond 8 weeks Since you responded within the 20-day window by faxing on Feb 20th, you're in full compliance. At 4 weeks in, you're still well within normal processing time. I'd recommend waiting until at least week 8-10 before calling, since they'll just tell you to wait anyway. Keep that fax confirmation safe as proof of your timely response. The verification process is slow but it does work - your refund is just sitting in the queue waiting for its turn. Hang in there! 🙏

Don't forget about foreign tax complications if your ETFs or index funds hold international stocks! My Vanguard VXUS generates foreign taxes that I can claim as either a deduction or credit.

Great question! I was confused about this exact same thing when I started investing. Yes, you absolutely still owe taxes on those reinvested dividends - the IRS treats them as if you received the cash and then immediately used it to buy more shares. Since you mentioned you're holding VTI and VXUS, most of those dividends will likely be "qualified dividends" which get the favorable capital gains tax treatment (0%, 15%, or 20% depending on your income level) rather than being taxed as ordinary income. Your brokerage will send you a 1099-DIV that breaks down qualified vs. non-qualified dividends. One silver lining - those reinvested dividends do increase your cost basis in the funds, so when you eventually sell, you'll have less capital gains to pay taxes on since your purchase price will include all those reinvestments you already paid taxes on. $780 in dividends isn't too bad for your first year! Just make sure to save some cash for the tax bill if you haven't been setting aside money for taxes on your investment gains.