I went through this exact scenario during the 2020 tax year with the pandemic unemployment. The key factor is determining which tax year the unemployment compensation was received. When I filed my amended return (Form 1040-X), I had to include Schedule 1 (Additional Income and Adjustments to Income) where unemployment is reported on Line 7. The process took approximately 20 weeks for the IRS to process my amended return, and I received an additional tax bill of $1,842 due to the unemployment income plus a small penalty for underpayment.

Just to clarify the timeline for everyone who might be confused - unemployment compensation follows a simple rule: report it in the tax year you actually received the payments, not when you filed your return. So if you got unemployment anytime from January 1, 2023 through December 31, 2023, it belongs on your 2023 tax return (even if you file that return in 2024). If you already filed your 2023 return without including 2023 unemployment benefits, you'll need to file Form 1040-X to amend. But if your unemployment started in 2024, you're all set - just include it on next year's return. The 1099-G form you receive will show exactly which year the benefits were paid, so that's your definitive guide.

Has anyone tried using the "V" codes to modify a TXF file directly? I'm trying to fix a few transactions without reconverting the entire file. Which text editor works best for editing TXF files without corrupting the format?

Great thread! I've been dealing with this exact issue. One thing I want to add for anyone using these CSV to TXF converters - make sure to check if your brokerage provides a "tax export" option that might already be in a format closer to what TurboTax expects. I spent hours trying to convert my Schwab CSV exports until I realized they have a dedicated tax document export that includes all the proper cost basis adjustments and wash sale calculations already built in. It's usually under the "Tax Center" or "Tax Documents" section of your account. Also, if you're dealing with RSUs or ESPP transactions, those often need special handling in the TXF format that basic converters might not account for. The V-codes for these are different from regular stock transactions and need to reference your W-2 data properly.

Experienced tax pro here with a detailed breakdown. The 971 code is just one piece of the puzzle. You really need to look at the whole transcript to understand whats happening. Common reasons for 971: - Identity verification needed - Income verification - Dependent verification - Math error corrections - General processing delays Honestly, the best way to know exactly what's happening is to use taxr.ai - it analyzes your whole transcript and gives you a clear timeline. Saves everyone time instead of guessing. I recommend it to all my clients now.

Same thing happened to me last month! Got the 971 code and was panicking thinking something was wrong. Turns out it was just a simple verification letter asking me to confirm my identity online. Took like 5 minutes to complete and then my refund processed within 3 weeks. Don't stress too much - the majority of 971 notices are routine stuff, not anything serious. Just keep checking your mail and transcript regularly!

ugh the IRS is such a mess this year. my return has been stuck since january smh

I've been dealing with IRS transcripts for years and these codes are actually pretty routine. The 570 just means they're taking a closer look at something on your return - could be as simple as verifying your identity or checking if your withholdings match what employers reported. The 971 notice will tell you exactly what they need. In most cases, you don't need to do anything unless the notice specifically asks for documentation. Try not to stress too much, the majority of these holds get released automatically once their systems finish cross-checking everything.

Has anyone else noticed that FreeTaxUSA sometimes gives different results from other tax software? I entered the same info in both FreeTaxUSA and TurboTax for my LLC and got different amounts. Not sure which one is right.

I had this exact same confusion last year! The key thing to understand is that FreeTaxUSA's "attach to business" feature is essentially asking whether this income should go on Schedule C (business income) or somewhere else on your return. Since you're doing freelance work through your single-member LLC, those 1099-NECs should definitely be attached to your business and reported on Schedule C - even though they have your SSN instead of your EIN. The IRS treats single-member LLCs as "disregarded entities" by default, so for tax purposes, you and your LLC are the same entity. The big jump in your tax bill when you attach them is because Schedule C income is subject to self-employment tax (15.3% for Social Security and Medicare) in addition to regular income tax. When you don't attach them, the software might be treating it as "other income" that doesn't trigger SE tax - but that would be incorrect for freelance work. Here's what I learned: Yes, you'll pay more in taxes by doing it correctly, BUT you can also deduct all your legitimate business expenses (home office, equipment, software, business meals, etc.) which will significantly reduce that taxable income. Make sure you're claiming every expense you're entitled to - it makes a huge difference!