Something to consider - you don't HAVE to cash them all out at once! You could spread the redemption over multiple tax years to potentially reduce the tax impact. Maybe cash half this year and half next year?

Just wanted to add another perspective based on my experience with my son's bonds last year. The key thing that helped me was getting copies of all the original paperwork from when the bonds were first purchased or exchanged. If your parents originally bought Series E or EE bonds and then exchanged them for the HH bonds, there should be documentation showing the deferred interest amount from the original bonds. This is crucial because that deferred interest becomes taxable when you redeem the HH bonds, even though you never received it as cash. I found old records in my parents' files that showed exactly how much deferred interest was involved. Without those records, I would have had no idea there was additional taxable income beyond just the regular HH bond interest payments we'd been receiving. Treasury Direct might have some of this information on file if you can't locate the original paperwork, but having the physical documentation made the whole process much clearer when filing taxes.

This is unfortunately becoming way too common lately! I'm a CPA and I've had at least a dozen clients deal with this exact CP14/payment disconnect issue just in the past few months. The IRS payment processing system and their account management system aren't properly synced, which creates these phantom balance due notices. When you call tomorrow, make sure you're very specific about asking them to check for "unposted payments" or "misapplied payments" on your account. Sometimes the payment gets coded incorrectly (like as an estimated tax payment for the wrong year) rather than being applied to your actual tax liability. Also, don't just ask them to fix the current issue - request that they put a "no automated notices" flag on your account for 60 days while their systems fully update. This prevents you from getting more CP14 or CP501 notices while the correction is processing. Since you paid through their own website and have the confirmation, this should be resolved quickly once you reach someone. The key is being persistent and not accepting "we'll look into it and get back to you" as an answer. They have the tools to fix this during your call.

I just wanted to chime in as someone who recently dealt with this exact same issue! Got a CP14 notice in January even though I could see my payment clear as day on the IRS website from when I paid in April. It's incredibly frustrating when their own systems can't communicate with each other properly. After reading through all these responses, I wish I had known about some of these services and tips before I spent literally 6 hours over three days trying to get through to someone. I finally connected with an agent who found my payment sitting in what she called "suspense" - apparently it was received but never applied to my actual tax account. The whole thing was resolved once I got someone who actually looked into it. She removed all the interest charges since it was clearly their error and put notes on my account to prevent future automated notices. Got my correction letter about a month later. My advice: call early (7 AM sharp), have all your documentation ready (confirmation number, bank statement, account transcript), and don't let them tell you to just wait it out. Since you have proof from their own website that they received your payment, they absolutely can and should fix this during your call. This seems to be happening more and more lately, so you're definitely not alone in dealing with this mess!

Maya, I've been following this thread and wanted to add one more possibility that hasn't been mentioned yet. Sometimes CP171 notices are triggered by automatic matching programs where the IRS computer systems flag discrepancies between different databases. For example, if your nonprofit received any government grants or payments that were reported to the IRS via 1099-G forms, but those amounts weren't properly reflected or explained on the 990EZ, it can trigger an automated assessment. The IRS system assumes unreported income and generates a balance due notice. Also check if they received any Form 1099-MISC for things like awards, prizes, or certain types of payments that might need special handling on the 990EZ. Even small amounts can trigger these notices if not properly categorized. Given all the great suggestions in this thread (especially the Claimyr and taxr.ai options), you should be able to get this resolved fairly quickly once you identify the root cause. The key is having all your documentation ready when you do get through to someone at the IRS.

Maya, one additional resource that might help while you're working through this issue - the IRS has a specific webpage for exempt organizations that includes common CP171 triggers and resolution steps at irs.gov/charities-non-profits. They also have a dedicated email address for exempt organization questions where you can submit documentation and get written responses, which can be helpful when phone lines are jammed. Also, if this turns out to be a systemic processing error (which happens more often than you'd think), you might want to have your client register for an IRS online account at irs.gov/payments/your-online-account. Once verified, they can view their account transcripts online, which will show exactly what transactions and assessments the IRS has on file. This can help you identify discrepancies between what you filed and what the IRS processed. Keep us posted on what you find - these cases are always good learning experiences for everyone in the community!

This is a great question and I've seen many organizations struggle with this exact issue. The key thing to understand is that the IRS looks at the direct recipient of the donation, not the ultimate destination, when determining tax deductibility. Since you're a 501(c)(7), donations made directly to your organization are not tax-deductible to the donor, even if you plan to pass 100% of the funds to a qualifying 501(c)(3). The donor's tax deduction is based on who they're writing the check to, not where the money eventually goes. Here are the cleanest approaches I've seen work: **Option 1: Direct donations with your club as organizer** Have donors make checks payable directly to the 501(c)(3) charity. Your club collects and forwards these donations. This maintains tax deductibility since the charity is the direct recipient. **Option 2: Charity-sponsored event** Work with the 501(c)(3) to officially sponsor your event. They handle all payment processing and issue tax receipts directly to donors. Your club focuses on event logistics and promotion. Regarding event expenses - if you use Option 1, you cannot use any of those donated funds for expenses since they belong to the charity. You'd need to cover event costs through separate fundraising (ticket sales, sponsorships, etc.) or have the charity reimburse you for approved expenses. I'd recommend speaking directly with the 501(c)(3) you're supporting - they likely have experience with this type of partnership and may have established procedures that make everything much simpler.

I've dealt with this exact situation with our local veterans' association fundraiser last year. What really helped us was getting everything documented upfront with the 501(c)(3) we were supporting. We ended up going with the direct donation approach - donors made checks payable to the charity, but we collected them at our event and forwarded them in batches. The charity provided us with donation forms that included their tax ID number and official letterhead, which made donors feel confident about the tax deductibility. One thing I'd strongly recommend is setting up a meeting with the charity's treasurer or development director before your event. They can walk you through their preferred process and may even provide pre-printed donation envelopes or receipts. Most established charities have handled this type of partnership before. Also, make sure you're crystal clear with potential donors about the process. We had signs at our registration table explaining that checks should be made out to the charity (not our club) for tax deduction purposes. This eliminated confusion and actually increased our donation totals since corporate sponsors knew they'd get proper documentation. The key is transparency and proper documentation - when everything is set up correctly, it benefits everyone involved.

Has anyone used TurboTax or H&R Block's withholding calculators? Are they any good for figuring out how to fix withholding problems mid-year? My spouse is having a similar issue with under-withholding.

I went through this exact same nightmare last year! The new W-4 form is so confusing compared to the old one with allowances. Here's what worked for me: I immediately calculated roughly how much I should have been paying in federal taxes for those 3 months (you can use last year's tax return as a guide - just divide your total federal tax by 12 and multiply by 3). Then I filled out a new W-4 with that amount PLUS my normal withholding divided by the remaining pay periods and put it all in Step 4(c) as additional withholding. For example, if you normally should have $200 withheld per paycheck and you missed $600 over 3 months, and you have 9 months left in the year, you'd put $200 + ($600/18 paychecks) = about $233 extra per paycheck in Step 4(c). Don't panic - this is fixable! The key is acting quickly so you have more paychecks to spread the catch-up amount over. Also, make sure you keep all your paystubs to show the IRS you tried to fix it mid-year if there are any issues when you file.