I received exactly 3 verification letters over the past 5 years. In 2020, it delayed my refund by 42 days. In 2022, only 16 days. This year, I verified my identity online and received my refund in exactly 9 days. The IRS has definitely improved their verification processing times by approximately 78.6% since 2020. If you receive a letter, I suggest responding within 24 hours for fastest processing. Just be cautious about verifying through unofficial websites - always go directly through IRS.gov links.

If you're concerned about receiving a verification letter, you might consider filing a Form 8821 (Tax Information Authorization) which allows a tax professional to speak to the IRS on your behalf should issues arise. This can sometimes help resolve verification issues more quickly, especially if you're not familiar with the US tax system. I've seen this approach work well for several clients who were new to filing in the US.

I always keep a record of my hours and pay when working jobs like this exactly because of situations like yours. Even a simple notes app on your phone can save you so much hassle later. Hope you get this sorted out!

Don't panic - this is definitely fixable! I went through something very similar when a small restaurant I worked at closed abruptly. Here's what I learned: First, definitely don't skip reporting the income. $14,500 is substantial enough that it could cause real problems later if the IRS discovers it through other means (bank deposits, business expense deductions by your former employer, etc.). You'll want to use Form 4852 (Substitute for Form W-2) to report this income. Gather whatever documentation you can - bank statements showing deposits, any text messages about pay, even photos of cash if you took any. The IRS understands that sometimes documentation is limited in these situations. Since you were likely paid under the table with no withholdings, you'll probably owe both income tax and self-employment tax on this amount. It's not fun, but it's better to get compliant now than deal with penalties and interest later. Also consider whether you were actually an employee or independent contractor - this affects how much you'll owe in taxes. If you had set hours, used their equipment, and they controlled how you did your work, you were probably an employee, which could save you some money on the self-employment tax portion. Document your attempts to contact the former employer (disconnected phone, bounced emails) - the IRS likes to see you made a good faith effort to get proper documentation.

Anyone know if it makes sense to do cost segregation on smaller properties? I've got a single family rental worth about $250k. Most companies seem to focus on much larger properties or commercial stuff.

Great thread! I'm going through this process right now with my first rental property. One thing I learned that might help others - make sure to factor in your state taxes too when calculating potential savings. I'm in California with high state income taxes, so my effective tax rate on the accelerated depreciation is actually higher than just the federal rate, which made the numbers work even better. Also, if you're planning to do multiple properties, some companies offer package deals that can bring the per-property cost down significantly. I'm getting quotes for doing 4 properties at once and the cost per study drops from about $5K each to around $3K each when bundled. One question for those who've done this - do you typically do the cost segregation in the same year you purchase the property, or wait until the following tax year? I closed in December and wondering if there's any advantage to timing it one way or the other.

Can somone explain why the government allows businesses to deduct losses but not individual gamblers? If I start an LLC for my sports betting, could I then deduct the losses?

I've been following this discussion and wanted to add something important that hasn't been mentioned yet - the timing of when you report gambling winnings and losses. If you're planning to make that $3,800 bet next month, remember that any winnings or losses will be reportable on your 2025 tax return (due April 2026), not your current 2024 return. This might affect your tax planning strategy. Also, if you do win and receive a Form W-2G from the sportsbook (which you typically get for winnings over $600 that are at least 300 times your wager), the IRS already knows about your winnings. Make sure you report them even if you don't receive a tax form - the threshold for reporting gambling income to the IRS is actually lower than what triggers a W-2G. One more thing - if you're in a state where sports betting winnings are subject to state taxes, remember that the rules for deducting gambling losses at the state level can be completely different from federal rules. Some states don't allow gambling loss deductions at all, even if you itemize federally.

Can someone explain why this even matters? If it's your S-Corp and all the money flows to you either way, why does the IRS care how you classify it?

The reasonable compensation analysis for your situation is complex, but I'd strongly recommend documenting your decision process thoroughly. As others have mentioned, $168,600 is almost certainly too low for a $5M law practice. One approach I've seen work well is to break down your compensation into components: (1) what you'd pay an attorney with your experience to handle the legal work, (2) what you'd pay someone to manage a business of this size, and (3) any premium for specialized expertise or client relationships you bring. You might also consider a gradual approach - if you've been taking minimal salary historically, the IRS may be more understanding of a phased increase to reasonable levels over 2-3 years rather than a sudden jump. This shows good faith effort to comply while managing cash flow. Whatever number you settle on, make sure you can justify it with market data and keep detailed records. The IRS burden is to prove compensation is unreasonable, but you want to make their job as difficult as possible with solid documentation.