these codes are starting to feel like hieroglyphics fr fr... irs needs to speak english 💀

I had the same codes last year and it turned out to be an identity verification issue. The IRS wanted to make sure I was really me before releasing my refund. Got a CP05A notice asking me to verify my identity online through ID.me. Once I completed that, my refund was released within 2 weeks. Don't panic - these codes are super common and usually resolve quickly once you respond to whatever they're asking for.

One thing nobody's mentioned - start with your most recent tax years first! The IRS typically focuses more on recent unfiled returns, and there's a 10-year statute of limitations on collecting back taxes. Also, you might not owe as much as you think. As a 1099 contractor, you can deduct business expenses that W-2 employees can't. Things like home office, equipment, supplies, mileage, health insurance premiums, and even part of your cell phone bill if you use it for work. These deductions can significantly reduce your taxable income.

I understand the panic you're feeling - I was in a similar situation a few years ago with 4 unfiled returns. The fear of jail time was consuming my thoughts daily, but I want to reassure you that actual imprisonment for non-filing is extremely rare and typically reserved for cases involving deliberate fraud or tax evasion schemes. Here's what helped me get through it: 1) The IRS has a Voluntary Disclosure Program that's designed specifically for people who come forward on their own. This shows good faith and significantly reduces the risk of criminal prosecution. 2) As a 1099 contractor, you likely have more deductions than you realize. Business expenses like equipment, software, office supplies, mileage, and even a portion of your home if you have a dedicated workspace can substantially reduce what you actually owe. 3) The IRS offers several payment options including installment agreements that can make even large tax debts manageable over time. They'd rather collect something monthly than nothing at all. The key is taking action now rather than waiting. Every month you delay, the penalties and interest continue to compound. But by addressing it proactively, you're demonstrating to the IRS that you're making a good faith effort to become compliant, which goes a long way in their eyes. You've got this - the situation is manageable, and there are people and resources available to help you through it.

Im confused about something else too. I sold a rental last year and my tax guy said I needed to file form 8949 along with the 4797. Is that right or was he just making extra work?

I just went through this exact situation last month! For a rental property that was never your primary residence, you definitely don't need the Sale of Home Worksheet - that's only for homes where you lived and might qualify for the $250K/$500K exclusion. You'll use Form 4797 to report the sale. One thing to watch out for: even though you didn't receive rental income in 2023, you should still file Schedule E if you had any deductible expenses during the time you owned the property that year. Things like property taxes, insurance, utilities (if you paid them), maintenance, or repairs are all deductible even during vacancy periods as long as you were holding it as rental property. Also, make sure you have good records of all the depreciation you claimed over the years - you'll need this for the depreciation recapture calculation on Form 4797. The recapture gets taxed at 25% regardless of your normal capital gains rate, so it's important to get this number right.

Anyone have experience with how QBI works if you have business losses? I started a business similar to the original poster but had a $12,000 loss my first year. Now in my second year I'm profitable (about $27,000). Does that previous loss affect my QBI calculation?

Great question about QBI! As someone who's been through this maze myself with my small consulting business, I can definitely relate to the confusion. Since your total income is $72,000, you're well below the 2025 threshold of $182,100 for single filers, which means you get the simplified treatment. Your handmade jewelry business absolutely qualifies - it's exactly the type of legitimate trade or business the QBI deduction was designed to help. Here's what you need to know: You'll use Form 8995 (the simple version, not 8995-A) along with your Schedule C. The calculation should be straightforward - 20% of your $45,000 business profit, so roughly $9,000 deduction. One tip that saved me headaches: double-check that all your business expenses are properly categorized on Schedule C first, because that directly affects your QBI calculation. Things like shipping supplies, Etsy fees, materials, and even a portion of your home workspace if you use it exclusively for business. Most tax software should handle this correctly, but if you're getting conflicting results between different programs, it might be worth having a tax professional review it once to make sure you're not missing anything. The peace of mind is often worth the cost, especially in your first year claiming QBI.

This is probably a stupid question, but does anyone know if group term insurance through professional associations (not employers) gets the same tax treatment? My employer doesn't offer benefits, but I can get group life insurance through my professional organization and I'm trying to figure out the tax implications.

Great question about maximizing group term insurance tax benefits! One strategy that hasn't been mentioned yet is coordinating your group term coverage with your overall estate planning. If you have dependents, you might want to consider keeping coverage at the optimal tax level (around that $50,000 threshold to minimize imputed income) and then supplementing with term life insurance purchased separately if you need more coverage. Also, don't forget that some employers offer "voluntary" or "supplemental" group term life insurance that you pay for with after-tax dollars but still get at group rates. While this doesn't have the same tax advantages as employer-paid coverage, it's often still cheaper than individual policies due to the group purchasing power. One more tip: keep good records of any imputed income reported on your W-2. This shows up in Box 12 with code "C" and while your employer should handle the calculations correctly, it's worth understanding how they arrived at the numbers in case you need to verify them during tax preparation.