One more thing to consider - make sure you keep REALLY good records of all these early expenses if you're claiming them before you have income. In my experience, this increases the chances of scrutiny. I started my landscaping business in February last year but didn't have income until April, and got a letter asking for more documentation.

Great thread everyone! As someone who went through this same confusion when starting my graphic design business, I wanted to add that the IRS Publication 535 (Business Expenses) is really helpful for understanding startup costs in detail. What I learned is that there are actually two categories: startup costs (things like market research, advertising before you open, travel expenses to secure suppliers) and organizational costs (legal fees, state incorporation fees, etc.). You can deduct up to $5,000 in startup costs and $5,000 in organizational costs in your first year, with the remainder amortized over 15 years. The key test the IRS uses is whether you're in "active pursuit" of a business - so buying photography equipment and setting up your office definitely counts, even before your first client. Just make sure you can show it was part of a genuine business plan, not just a hobby that might make money someday. One tip: start a simple business journal documenting your activities each month. Even just a few sentences about what you did to advance your business can help establish that timeline if questions ever come up later.

Has anyone actually gone through with surrendering a policy like this? What forms did you need to file with your tax return? I'm in a similar situation with a policy worth about $140k and surrender charges of $35k, so I'm trying to prepare for the paperwork nightmare.

This is exactly the kind of situation where you really need professional guidance, but I understand the frustration of waiting for your accountant meeting while losing sleep over it! One thing that might help ease your mind - yes, you're unfortunately correct that you'll be taxed on the full $190k even though you'll only receive $138k after surrender fees. The IRS treats the policy transfer as taxable compensation at the moment of transfer, regardless of what happens afterward. However, there might be some silver linings to explore with your accountant. Since you're being taxed on $190k but only receiving $138k in cash, the difference could potentially be treated as a loss in certain circumstances. This depends heavily on how your "basis" in the policy is calculated and whether the surrender qualifies under specific sections of the tax code. Before surrendering, definitely explore the option of reducing the death benefit instead of full surrender - this often dramatically reduces premiums while avoiding those brutal surrender charges entirely. You might be able to make the policy manageable rather than losing $52k to fees. Document everything from your employer, the insurance company, and any communications about the transfer. You'll need this paper trail to properly calculate your basis and avoid any potential issues with the IRS down the road.

The 570 code is like a yellow traffic light in the IRS processing system - it's not a full stop, just a pause while they check something. I've seen this happen to many people this tax season. The good news is that for most folks, it resolves within 2-3 weeks without any action needed. Think of it as your return going through an extra security checkpoint at the airport - annoying but usually just a brief delay. If you're worried, you can always call, but be prepared for a long wait or busy signals - it's like trying to get concert tickets when they first go on sale.

Thanks everyone for sharing your experiences! This is my first time dealing with a 570 code and honestly, I was starting to panic a bit. Reading through all these timelines is really reassuring - it sounds like most people do eventually get the 571 release code. I'm at about day 12 since mine appeared, so based on what @Christian Burns and @Noland Curtis shared, I'm probably still within the normal timeframe. Going to try to be patient for another week or two before calling. The airport security checkpoint analogy really helps put this in perspective @Isabel Vega! Fingers crossed mine resolves soon.

Congratulations! This gives me so much hope - I filed on Feb 8th and have been checking my transcript obsessively. I'm also cycle code 0405, so it sounds like we're in the same batch. My transcript still shows "N/A" for my refund date, but seeing your timeline makes me think I should see an update soon. Quick question - did your transcript show the DDD first thing in the morning, or did it update throughout the day? I've been checking at like 6am every day but wondering if I should check again later. Also, did you get any kind of notification from Capital One when the deposit hit, or did you just happen to check your account? Thanks for sharing the details about your cycle code and timeline - this community has been so helpful for tracking patterns!

This is exactly the kind of detailed timeline that helps everyone! I'm also with Capital One 360 and can confirm they're really good about releasing tax refunds as soon as they receive the ACH notification. Filed on Feb 14th with cycle code 0405 too, so fingers crossed I'm in the same processing batch as you. One thing I learned from lurking here is that the transcript usually updates overnight between Tuesday and Wednesday for 05 cycle codes, then deposits typically hit 3-5 days later. Your experience confirms that pattern perfectly. Thanks for mentioning that you paid TurboTax upfront instead of having fees deducted - I've seen some posts suggesting that refund transfers can add delays, so it's good to know the direct deposit route worked smoothly for you. Hoping my deposit shows up soon too!

This is a really concerning situation that unfortunately happens more than it should in the service industry. Your wife's manager is giving her incorrect advice that could lead to serious tax complications. Here's what's actually required: All employees who receive more than $20 in tips per month must report those tips to their employer. This includes both cash and credit card tips. The employer is then legally required to withhold taxes on those tips and include them on her W-2. What's happening now is that your wife will end up owing a large tax bill when you file, potentially with underpayment penalties. Plus, as others mentioned, unreported tips won't count toward her Social Security earnings record, which could affect her future benefits. I'd strongly recommend she start documenting all tips immediately and attempt to report them to her employer using the proper IRS forms (4070A for daily records, 4070 for monthly reporting). If the manager continues to refuse, make sure you keep records of those attempts - this will help protect you if the IRS has questions later. Don't wait on this - the longer it goes on, the bigger the potential tax problem becomes. It's much better to address it now than face a surprise tax bill and penalties later.

This situation is more common than you'd think, but your wife's manager is definitely giving her bad advice that could cause major problems down the road. Here's the reality: The IRS requires employees who receive more than $20 in tips per month to report those tips to their employer regularly (usually daily or weekly). The employer must then withhold taxes and include the tips on her W-2. This isn't optional - it's the law. What's particularly concerning is that credit card tips are already being processed through the salon's payment system, creating an electronic trail. If the IRS ever looks into this, they'll see those credit card tips but won't see them reported on her W-2, which raises immediate red flags. If your wife continues following her manager's advice, you'll likely face: - A large tax bill when you file (both income tax AND additional Social Security/Medicare taxes on unreported tips) - Potential underpayment penalties - Lost Social Security credits that could affect future benefits - Possible IRS scrutiny since tipped employees in salons are often audited My advice: Start having your wife keep detailed daily records of ALL tips using IRS Form 4070A, then submit monthly reports to her employer using Form 4070. Even if the manager refuses to accept them, keep copies as proof she attempted to report properly. This documentation will protect you both if questions arise later. Don't let this slide any longer - it only gets worse with time!