Tax preparer here (but not yours!) - one thing no one has mentioned yet is that you might want to look into filing amended returns BEFORE the IRS comes after you. If you voluntarily correct errors before being audited, it can sometimes reduce penalties. This does mean you'll need to figure out what's wrong with your returns though. Common issues with fraudulent preparers include fake Schedule C businesses, inflated charitable donations, and bogus education credits. The preparer was probably getting you larger refunds by making up these deductions.

I'm going through something very similar right now and wanted to share what I've learned so far. Got the same type of letter about my preparer being under investigation about 3 weeks ago. The first thing I did was immediately request my IRS account transcripts online (irs.gov/individuals/get-transcript) to see exactly what was filed under my SSN. What I found was shocking - there were business expenses totaling over $8,000 that I never discussed with the preparer, plus charitable donations I never made. I've already contacted the IRS agent mentioned in the letter and scheduled my interview. She was actually pretty helpful and explained that they're mainly trying to build a case against the preparer, not go after us individually (unless there's evidence we knowingly participated in fraud). My advice: Don't wait. Get your transcripts now, document any discrepancies between what was filed and your actual financial situation, and be proactive about contacting the IRS. The agent told me that cooperation and transparency usually work in your favor when it comes to penalty assessments. Also, keep records of any communications you had with this preparer - texts, emails, receipts for their services, etc. This can help show your good faith efforts and lack of knowledge about any fraudulent activity. The stress is real, but from what I've been told, most people in our situation end up having to pay back taxes and interest but avoid the worst penalties if they cooperate fully.

Has anyone experienced any audit issues by NOT filing the 1023-EZ? Like if you stay under $5k for a few years but then grow, does the IRS ever come back and question your earlier years?

I'm dealing with this exact situation right now! I'm forming a small educational nonprofit focused on financial literacy workshops in underserved communities. Expected annual budget is around $3,000, so we'd definitely fall under the $5,000 threshold. After reading through all these responses, it sounds like the consensus is pretty clear - even though we technically don't need to file 1023-EZ, the practical benefits far outweigh the $275 cost. The points about donor tax deductions, bank account requirements, and state-level exemptions are really compelling. One question I haven't seen addressed: if we file the 1023-EZ now while under $5k, does that help establish our credibility with potential funders? I'm wondering if having that determination letter from day one makes us look more legitimate when applying for small grants, even if the grants themselves don't explicitly require 501c3 status. Also, for those who used the document analysis services mentioned here - did they help with the actual 1023-EZ application process, or just with the formation documents like bylaws and articles of incorporation?

Has anyone successfully deducted the costs of medications for egg freezing? The hormones alone cost me almost $4,000 and I'm not sure if I need special documentation for those or if regular receipts are enough?

One thing to keep in mind that I don't see mentioned yet - if you're planning to use the frozen eggs in the future, you'll want to keep all your documentation from the freezing procedure for when you eventually do IVF or other fertility treatments. The IRS allows you to deduct the costs when you incur them, but having that paper trail will be important if you ever get audited. Also, make sure you're tracking mileage to and from all your appointments (monitoring visits, retrieval procedure, etc.). Medical travel is deductible at the standard mileage rate, and with all the monitoring required for egg freezing, those miles can really add up. I probably had 15+ appointments during my cycle and didn't think to track the mileage until it was too late. The consultation fees with the reproductive endocrinologist are also fully deductible, even if you decide not to proceed with the procedure after the consultation.

Anyone else just keep everything forever because they're paranoid? Lol. I have tax records going back to my first job in 2002 😂 My spouse thinks I'm crazy but I've seen too many horror stories of people getting randomly audited for stuff from 6+ years ago!

I've been dealing with this exact same situation! After years of hoarding every piece of tax-related paper, I finally developed a system that works. Here's what I learned from my CPA and some trial and error: **Basic rule**: 3 years for most stuff, but keep these longer: - Investment records (stocks, bonds, crypto): Until 7 years after you sell - Property records: Forever (or until 7 years after you sell) - Business/self-employment records: 7 years - Records supporting permanent disabilities or retirement contributions: Forever **My purging strategy**: I go through my files every January and create three piles: 1. "Safe to shred" (older than 3-7 years depending on type) 2. "Scan and shred" (stuff I want digital copies of) 3. "Keep physical" (property deeds, some investment docs) The key is being systematic about it. I was amazed how much space I freed up once I actually followed the IRS guidelines instead of just keeping everything "just in case." You'll probably find that 80% of what you're keeping can safely go! Pro tip: Before you toss anything, take a photo with your phone of documents you're unsure about. That way you at least have something if you realize later you needed it.

Has anyone tried calling the IRS Identity Protection Specialized Unit at 800-908-4490? I had to do this last year when I lost my PIN and they were able to help me verify my identity to efile.

I went through this exact same frustration last year! Here's what worked for me without having to wait on hold with the IRS: First, try the AGI method that others mentioned - it's definitely the easiest if you can find your 2023 tax return. But if you're like me and had moved/lost everything, here's a backup plan: You can create an account on IRS.gov and use their "Get Transcript Online" tool. They'll ask you some identity verification questions (like previous addresses, loan amounts, etc.) and if you pass, you can immediately see your prior year AGI. I was able to do this at 11 PM when I was panicking about my deadline. If the online verification doesn't work, you still have options before resorting to paper filing. Some tax software will let you print and mail just the signature pages while still preparing everything electronically, which can speed up processing compared to a fully paper return. The key thing is don't stress too much - you have multiple paths to get this resolved and it shouldn't significantly delay your refund as long as you can verify your identity one way or another. Good luck getting it sorted this weekend!