I've been through almost the exact same situation! The IRS took about $1,200 from my expected refund last year with similar codes, and I was completely panicked at first. Here's what I learned: those transcript codes are actually pretty straightforward once you understand them. The 826 code means they applied your 2023 refund to pay a debt from 2021, and the numbers at the end (202112) refer to the tax period - so December 2021 processing cycle. The most common reasons this happens are: 1. Unreported income from 2021 (1099s, W2s, or side gig income) 2. Math errors on your original 2021 return 3. Forgotten retirement account withdrawals or distributions 4. Claimed credits you weren't eligible for Since you mentioned having a side gig, my guess is either you underreported some 1099 income from 2021, or you didn't pay enough estimated taxes that year and penalties/interest accumulated. Don't panic though - you have options! You can request a payment trace to see exactly what the debt was for, and if there was an error on the IRS's part, you can dispute it. Sometimes they make mistakes too. The key is getting your full account transcript for 2021 to see what triggered the balance. You can download it instantly from the IRS website if you can verify your identity online.

I've been helping people navigate IRS transcript codes for years, and your situation is actually more common than you might think. The 826 and 706 codes you're seeing are standard offset procedures - basically the IRS found a discrepancy in your 2021 return and applied your 2023 refund to cover it. Given that you mentioned having a side gig and cashing out a 401k in 2021, here's what likely happened: The IRS received documentation (like a 1099-R for your retirement withdrawal or a corrected 1099-MISC from a client) that didn't match what you reported. They then made an adjustment to your 2021 account, creating a balance due with penalties and interest. The good news is this isn't necessarily permanent. Here's what I'd recommend: 1. Get your complete 2021 account transcript online - look for transaction codes 290, 300, or any 30X series that show adjustments 2. Compare that against your original 2021 return to identify the discrepancy 3. If you find the IRS made an error, file Form 843 to claim a refund 4. If the adjustment is correct but you qualify for penalty relief (first-time penalty abatement, reasonable cause, etc.), you can still recover some money Don't give up - I've seen people successfully challenge these offsets when they had valid reasons or when the IRS made computational errors.

Has anyone mentioned the filing deadline implications? If you're planning fundraising activities soon, timing matters a lot here. The IRS generally recommends filing for 501(c)(3) status within 27 months of formation to have tax-exempt status apply from your date of formation. If it's been longer since your club was formed, your tax-exempt status might only apply from the date of application forward. This could impact how you handle any fundraising you do while waiting for approval. Also, don't forget about state requirements! Even with federal 501(c)(3) status, you might need to register for state tax exemptions separately, and some states require charitable solicitation registration before fundraising. I learned this the hard way with our cycling club - we got federal approval but forgot about state requirements and had some complications.

Great thread! I'm dealing with a similar situation for our university soccer club. One thing I haven't seen mentioned yet is the potential impact on your current university funding. When we looked into forming our own 501(c)(3), our student activities office warned us that having independent nonprofit status might affect our eligibility for certain university grants and allocations. Apparently some schools have policies that prevent them from funding organizations that have their own tax-exempt status, since it creates potential conflicts with their own nonprofit designation. We ended up going the EIN-only route for now - it satisfied most of our immediate fundraising needs (restaurant nights, local business partnerships) without the complexity of full nonprofit status. We're planning to revisit the 501(c)(3) application next year once we have more clarity on the university policy implications. @AstroAce - have you checked with your student activities office specifically about how independent nonprofit status might affect your current university funding and RSO status?

Has anyone dealt with state taxes in this situation? I've heard some states have different rules than the IRS about spousal liability, even when filing separately.

I'm so sorry for your loss and the stress you're dealing with during this difficult time. Based on your situation, you should have very limited liability for your husband's tax debts since you consistently filed separately and maintained separate finances throughout your marriage. The key protections working in your favor are: 1) You always filed "married filing separately" which generally protects you from the other spouse's tax obligations, 2) You kept separate finances after that joint account incident, 3) You owned no joint property or assets, and 4) You were estranged and living in different states. Since your husband passed away, his estate would be responsible for any tax debts, not you personally. If the estate has no assets to pay the debts, they typically can't be collected. However, I'd strongly recommend getting a consultation with a tax attorney who specializes in these situations - many offer free initial consultations for situations like yours. Also consider contacting the IRS Taxpayer Advocate Service (it's free) to explain your situation proactively. They can help ensure your records clearly show your separate filing status and financial separation. Having documentation ready (your separate tax returns, bank statements showing separate accounts, rental agreements in your name only) will be helpful if any questions arise. You've been through enough - don't let fear of his tax problems add to your burden when you're likely protected.

Just to clarify something that might help others - the self-employed health insurance deduction has another important limitation that hasn't been mentioned yet. You can't take this deduction for any month that you (or your spouse if filing jointly) were eligible to participate in an employer-sponsored health plan. So even if your business has enough profit to cover the full premium amount, you'd need to reduce your deduction by the months you had access to employer coverage. This caught me off guard when I started freelancing while still having access to my spouse's employer plan for part of the year. The IRS is pretty strict about this - "eligible" means you could have enrolled, even if you chose not to. Worth double-checking if this applies to your situation before calculating your maximum deduction.

This is really helpful information! I'm dealing with a similar situation where my premiums are higher than my net profit. Based on what everyone's saying, it sounds like I need to look at both Schedule 1 (limited to my business profit) and Schedule A (for the excess if I have enough medical expenses to itemize). One follow-up question - when you're calculating the 7.5% AGI threshold for medical expenses on Schedule A, does that include the health insurance premiums you couldn't deduct on Schedule 1? Or do you have to exclude those since they're already "accounted for" in the self-employed deduction calculation, even if you couldn't use the full amount? I'm trying to figure out if that $4,300 excess in my case ($14,500 premiums minus $10,200 profit limit) can count toward meeting the 7.5% threshold or if it gets excluded somehow.

21 Question for anyone - if I have unrealized losses (stocks that have gone down but I haven't sold yet), can I still claim those on my taxes? Or do I actually have to sell to get the tax benefit?

Great question about unrealized losses! You absolutely have to sell the stock to claim the tax loss - just holding a stock that's down in value doesn't give you any tax benefit. This is actually a strategic consideration many investors face near year-end. If you have stocks that are significantly underwater and you don't think they'll recover, selling them before December 31st lets you claim those losses on that year's tax return. Just remember the wash sale rule I mentioned earlier - if you sell for a loss but then buy back the same stock (or something "substantially identical") within 30 days before or after the sale, the IRS disallows the loss deduction. So if you still believe in the company long-term, you'd need to wait 31 days before repurchasing, or buy something similar but not identical. Some people get around this by selling their losing position in Company A and immediately buying a similar company or ETF in the same sector, so they maintain market exposure while still capturing the tax loss.