Quick question - does anyone know if the gift tax applies to cryptocurrency transfers? I was thinking of sending my sister some Bitcoin to help with her expenses but not sure if that triggers any reporting requirements.

Thanks everyone for all this helpful information! I had no idea about the lifetime exemption being so high - it really changes things knowing I'd just need to file a form but wouldn't actually owe tax. The suggestion about paying medical expenses directly is genius. I'm definitely going to contact his hospital about paying that $5k directly, and then I can help him with the remaining debt without going over the annual limit. One follow-up question though - when you pay medical expenses directly to providers, do you need any special documentation from the recipient to prove it was for their medical care? Or is the payment directly to the hospital/doctor sufficient proof for the IRS? Also really appreciate the recommendations for taxr.ai and Claimyr - might check those out if I run into any complications. This community is so much more helpful than trying to decode IRS publications on my own!

I work in a tax office and see this issue frequently. The IRS actually has specific guidelines for this exact situation in Publication 936. Since you're both legal owners but you paid 100% of the interest, you're entitled to deduct 100% of the interest regardless of whose SSN is on the 1098. When you respond to the IRS, make sure to cite "IRS Publication 936" which states that the person who pays the mortgage interest can claim the deduction. Include bank statements showing the mortgage payments coming from your account. Pro tip: If your son files electronically, the IRS computer may automatically try to assign the mortgage interest deduction to him based on the 1098. Make sure he doesn't claim it since he didn't actually pay it!

I had a very similar issue last year with my daughter when we co-purchased her first home. The mortgage company put her SSN as the primary on the 1098 even though I was making all the payments while she got established in her career. What ultimately resolved it for me was calling the IRS directly (took forever to get through) and speaking with a representative who walked me through exactly what documentation they needed. They told me to send: 1. Copy of the 1098 form showing both names 2. Bank statements proving I made the mortgage payments 3. A simple letter explaining the co-ownership situation and that I paid 100% of the interest 4. Copy of the deed showing both our names The key thing the IRS rep told me was to reference IRC Section 163(h)(3) in my response letter, which covers mortgage interest deductions for jointly liable parties. She said this helps their review process go faster since they know exactly which tax code applies. The whole thing was resolved within about 6 weeks of sending in the documentation. Don't stress too much - this is more common than you'd think and the IRS has seen it many times before. Just make sure you have clear documentation showing you made the payments and you should be fine.

This is incredibly frustrating and you're definitely not alone! I've been dealing with something very similar - got hit with the 570/971 codes about 3 weeks ago and I'm still waiting for any kind of notice or explanation. Called the IRS multiple times and keep getting the same vague "120-day review" response with absolutely no specifics. What's really bothering me is how random these reviews seem this year. My return was super straightforward too - single W-2, standard deduction, same job I've had for years. Yet somehow I'm stuck in this limbo while friends with more complicated returns sailed through processing in weeks. One thing I learned from my multiple calls is that you can ask them to verify what address they have on file for you - apparently some people have missed important notices because of outdated addresses. Also, the representative mentioned that if they actually need documentation from you, that notice typically comes within the first 30 days after the 971 code appears. I know the waiting is brutal, especially when you're counting on that refund. I've started checking my transcript weekly instead of daily (per IRS recommendation) which has helped my sanity a bit. Hang in there - from what I've read, most people with legitimate returns do eventually get their full refund, even if it takes way longer than expected.

I'm going through the exact same nightmare right now! Got my 570/971 codes about 2.5 weeks ago and I'm completely new to dealing with IRS reviews. Like so many others here, my return is ridiculously simple - one W-2, standard deduction, nothing fancy at all. What's really getting to me is the complete lack of transparency. I've called twice now and both times got the same scripted "120-day review" response with zero explanation of what triggered it. The representatives are polite but basically useless when it comes to actual information. I'm a newcomer to this community but wow, reading through everyone's experiences here has been both reassuring (I'm definitely not alone in this!) and terrifying (some people are really waiting the full 4 months?). It seems like 2025 tax season has been particularly brutal for these mysterious reviews. One question for those who've been through this before - is there any benefit to calling back periodically, or should I just wait it out? I don't want to waste more hours on hold if they're just going to give me the same non-answers. Also definitely going to double-check my address is current with them after reading some of the horror stories here about notices going to old addresses. The financial stress is real when you're counting on that refund. Hoping we all get some movement soon! 🤞

I've been following this discussion and wanted to add something that might help other small partnership owners. The confusion around criterion #4 is super common, and I think part of the issue is that the IRS instructions use the term "reportable entity partner" without clearly defining it upfront. A "reportable entity partner" is basically a corporation, partnership, or other business entity that's already required to file its own Schedule M-3. So unless your LLC is owned by another company or partnership that files M-3 (like if a corporation bought into your business), you don't need to worry about this criterion. The key thing to remember is that individual people - even if they own 50% or more - are never considered "reportable entity partners." This rule is really targeting situations where large corporations or complex partnerships have ownership stakes in other businesses, not simple partnerships between individuals. For what it's worth, I've never seen a small two-person LLC partnership need to file Schedule M-3 unless they had some really unusual circumstances or grew to meet one of the first three criteria (assets/receipts thresholds).

This whole discussion has been incredibly helpful! I'm in a similar situation with my business partner and was getting completely overwhelmed by the Schedule M-3 requirements. What really clicked for me reading through all these responses is that the IRS is essentially asking "Is your small partnership owned by a big company that already has to deal with complex tax reporting?" rather than "Do you have partners with significant ownership percentages?" For those of us with simple two-person LLCs where we're both individuals, it sounds like we can breathe easy and stick with Schedule M-1. The language in the tax code definitely makes it sound scarier than it actually is for small partnerships! I appreciate everyone sharing their experiences - from the software recommendations to the tools for getting IRS clarification. It's reassuring to know that so many others have been in the same boat and figured it out successfully.

Has anyone run into this problem where they filed correctly but the IRS sided with the incorrect parent? My mom claimed me when I was 22, working full-time and living with roommates. I filed claiming myself and got a letter saying my return was rejected because someone else claimed me.

This is a really common situation that many young adults face when transitioning to financial independence. Based on your description, your mom should not be claiming you as a dependent this year. The key tests for dependency are pretty clear-cut: - Age test: You're 23 (almost 24), so you'd need to be a full-time student to qualify under the age requirement - Residency test: You live with your dad, not your mom - Support test: You support yourself financially through your full-time job The fact that you were previously on her health insurance doesn't matter now that you have your own coverage through work. Even when you were on her plan, that alone wouldn't have qualified you as her dependent if you failed the other tests. You should absolutely file your own taxes and claim yourself. Don't let her pressure you into filing incorrectly again. If she's already filed claiming you, the IRS will flag the discrepancy when you file your return. They'll send both of you letters asking for documentation to prove who can legitimately claim the exemption. Keep records of your employment, where you live, and how you support yourself - you'll need this if the IRS asks for proof. This situation might be uncomfortable with your mom, but filing correctly is important for your financial future.