Don't overthink this. Here's the simple way to look at it: 1) The TCJA limits PERSONAL mortgage interest deduction to interest on the first $750k of loan 2) For Schedule C business expenses, you're deducting BUSINESS expenses not personal 3) So you take your FULL mortgage interest ($75k), multiply by your business use % (30%) 4) That gives you $22,500 as a legitimate business expense I've been doing this for years and have never had an issue. The $750k limit is for Schedule A itemized deductions, not Schedule C business expenses.

This is a common area of confusion. I think some of the answers here are mixing up different concepts. For clarity: The $750k mortgage loan limit DOES apply even for the business portion of mortgage interest. The IRS position is that any interest on debt exceeding $750k is personal consumption, not an ordinary and necessary business expense. You need to: 1. Calculate what portion of your total interest applies to the first $750k 2. Apply your business use percentage (30%) to THAT amount 3. Report that on Schedule C

Jackson Hewitt is having delays this year. I work at a bank and we're seeing a pattern with tax prep services. Most DIY filers (TurboTax, FreeTaxUSA) are getting processed in 2-3 weeks. Professional preparation services like JH and H&R Block are taking 3-5 weeks right now. IRS is prioritizing simple returns first. If you're newly married with any credits or deductions, that puts you in a more complex category.

I filed through Jackson Hewitt on February 20th and I'm in the exact same situation! Also newly married and filing jointly for the first time. My WMR has been stuck on "processing" for weeks now. After reading through all these responses, it sounds like JH has definitely had some system issues this year, especially with more complex returns like ours. I'm going to check my transcript like Connor suggested - didn't even know that was a thing! It's somewhat reassuring to know we're not alone in this delay, though I wish JH had been more upfront about the processing issues they were having.

I think I know exactly what's happening here. You're probably looking at the instructions for Form 8582 (Passive Activity Loss Limitations) where it might direct certain losses to other areas of the return depending on your specific situation. But even with passive activity or at-risk considerations, business losses would never be reported as dividends. Here's the correct flow for Schedule C losses: 1. Net loss flows from Schedule C to Schedule 1, Line 3 2. Then from Schedule 1 to Form 1040, Line 8 3. If you have at-risk limitations, you'd use Form 6198 first 4. If you have passive activity limitations, you'd use Form 8582 first For Schedule SE - the $434 threshold is the minimum self-employment income required to owe SE tax. Below that = no Schedule SE needed.

Is anyone using tax software for their Schedule C? I've been using TurboTax and it automatically puts everything on the right lines - it wouldn't let me put business losses on the dividend line even if I tried. Might be worth the investment to avoid these kinds of headaches.

I'm currently going through this exact same situation and wanted to share what I've learned from calling multiple times and speaking with different representatives. First off, the 120-day timeframe is definitely their standard CYA response, but from tracking cases in various tax communities, the actual resolution time for CP05 reviews this year has been averaging 8-12 weeks. The key factors seem to be: 1. Complexity of your return (multiple income sources, significant deductions, etc.) 2. Current IRS processing backlog in your region 3. Whether you proactively provide documentation Regarding the documentation question that several people have asked - I spoke with a Taxpayer Advocate who recommended waiting for the actual CP05 notice before sending anything. The notice will specify exactly what triggered the review and what (if any) documentation would be helpful. Sending docs too early can sometimes create a separate correspondence file that actually slows things down. For your renovation timeline Noah, I'd definitely recommend having a contingency plan. I learned this lesson the hard way with a roof repair that couldn't wait. Consider a 0% intro APR credit card if you have good credit - many offer 12-15 months no interest, which should cover you even if this takes the full timeframe. One helpful tip: your transcript cycle date (the 8-digit number at the top) is more reliable for tracking progress than the individual code dates. When that changes, it usually means real movement on your case. Hang in there - this process is frustrating but it does resolve!

I'm going through the exact same thing right now! Filed 4/19, accepted 4/20, got the 570/971 codes on 5/28, and just saw my second 971 code appear this morning. The timing is eerily similar to yours Noah - it's like we're all in some kind of tax refund time warp together! What's really frustrating is that I specifically chose to file early this year because I knew I'd need the refund for summer expenses (my daughter starts daycare in July), and now I'm potentially looking at waiting until August or September. The irony is not lost on me. After reading through everyone's experiences here, I'm feeling cautiously optimistic about the 8-12 week timeline that AstroAce mentioned rather than the full 120 days. It sounds like most people are seeing resolution much faster than what the phone agents tell you. I'm definitely going to wait for the actual CP05 notice before sending any documentation - that advice about creating a separate correspondence file that could slow things down really resonates. The last thing any of us need is to accidentally make this process even longer! Has anyone here had success with congressional inquiries if this drags on past the 10-12 week mark? I'm hoping it won't come to that, but good to know what options exist if needed. Hang in there everyone - sounds like we'll get through this sooner rather than later based on the patterns people are sharing!

Does anyone know if selling the property would let me use those accumulated losses? I've been carrying forward losses for like 3 years now and wondering if I should just sell.

Great thread! Just wanted to add that if you're a real estate professional (which has very specific IRS requirements), your rental activities might not be considered passive at all. You need to spend more than 750 hours annually in real estate trades or businesses AND more than half your personal services must be in real estate activities. If you qualify as a real estate professional, your rental losses can offset other types of income without the passive activity limitations. It's a high bar to meet, but worth investigating if you're heavily involved in real estate. Most casual landlords won't qualify, but thought it was worth mentioning since it's another exception to the passive loss rules.