Honestly, I think your accountant got it right. My tax situation is almost identical - around $85k from my day job and about $10k from freelancing. My tax hit was about $3.5k this year just from the freelance portion. It's the combination of: 1) Self-employment tax (15.3%) on the full 1099 amount 2) Income tax at your highest marginal rate (probably 22% federal) 3) State income tax (varies by state) So you're potentially looking at 40%+ effective tax rate on that 1099 income. Brutal but unfortunately correct.

I just went through something very similar last year and it was such a shock! What really helped me understand it was thinking about it this way: your W2 job already "used up" all the lower tax brackets. So when you add 1099 income on top, every dollar of that contractor income gets hit with your highest tax rate PLUS the self-employment taxes. In your case with $82k W2 income, you're already well into the 22% federal bracket. So that $11,500 from contracting gets taxed at roughly: - 22% federal income tax - 15.3% self-employment tax - Whatever your state rate is That's nearly 40% just on federal taxes alone! Meanwhile back in 2023 when you only had $13k total income, most of that was taxed at much lower rates (10-12% brackets) plus the self-employment tax. It's not your accountant's mistake - it's just how our progressive tax system works. The more you earn, the higher rate you pay on additional income. Definitely consider quarterly estimated payments next year if you're continuing both jobs!

If you can remember anything from the letter like the notice number (usually CP followed by numbers) or the tax year, you can also try calling the IRS Taxpayer Advocate Service at 877-777-4778. They sometimes can help when the regular channels are impossible to reach. They're especially helpful when there's a deadline involved. Another thing worth trying is checking if you received any IRS correspondence through USPS Informed Delivery if you're signed up for that. Sometimes you can see scanned images of mail you received, which might help jog your memory about some details from the notice.

I had the exact same situation happen to me earlier this year! Here's what worked for me: First, don't panic about the payment deadline. The IRS is generally understanding when you can demonstrate you're actively trying to resolve the issue. Even if you can't get the exact letter, you can still take action. Try logging into your IRS account and look for the "Tax Records" section, then request your "Wage and Income Transcript" for 2019. This will show you ALL the income that was reported to the IRS by employers, banks, etc. Compare this to what you actually reported on your return - any discrepancies are likely what triggered the notice. Also request your "Account Transcript" for 2019, which might show recent activity including the proposed adjustment amount (even if it doesn't show all the details from the letter). If you remember roughly how much they said you owed, you could make a payment online through IRS Direct Pay to buy yourself more time while you sort out the details. Just note "CP2000 response" in the payment description. The early morning calling strategy mentioned above really does work - I got through at 7:45 AM on my third try. Have your SSN and the tax year ready when you call. Don't stress too much - this is fixable once you can actually talk to someone!

Has anyone considered that the IRS calculator might actually be wrong? I'm an accountant (not a CPA) and I've seen the IRS calculator give wildly inaccurate estimates, especially for families with children who qualify for EITC. A few things to check: - Make sure you're calculating your annual income correctly. If you're paid monthly, multiply your gross pay by 12, not by the number of paychecks you've received YTD. - Double check that you're entering withholding correctly. Sometimes people enter their YTD withholding as if it's per-paycheck. - The calculator might be incorrectly applying tax credits. For your situation, with $73k income, 3 kids, and a stay-at-home spouse, your actual federal tax liability should be close to zero after standard deduction and child tax credits. Add in EITC and you're likely looking at a refund regardless of withholding. Try using a different calculator like TaxCaster by Intuit or H&R Block's tax calculator to compare results.

As someone who went through this exact same situation, I can tell you that your large refunds are completely normal given your circumstances. With three children and a $73k income, you're hitting the sweet spot for both maximum EITC and full Child Tax Credits. Here's what's happening: Your actual federal tax liability is probably close to zero after the standard deduction ($27,700 for married filing jointly). Then you get $6,000 in Child Tax Credits ($2,000 per child) and likely around $6,500+ in EITC. These are refundable credits, meaning you get them back even if your tax liability is zero. The reason the IRS calculator seems "broken" is that it's trying to account for these refundable credits, but the interface isn't great at explaining why you're getting such large refunds. To fix your withholding: Complete a new W-4 using the current 2024 version (not the old allowances system). In Step 4(c), add extra withholding per paycheck. If you want to reduce your refund by about $6,000, divide that by your number of pay periods - so if you're paid monthly, add about $500 extra withholding per month. Just remember that even with adjusted withholding, you'll still get a substantial refund due to those refundable credits. The goal is just to minimize the "interest-free loan" portion.

theres actually a really good guide on the irs website that explains all the codes but ngl that taxr.ai thing sounds way easier

I feel your pain! When I first got my transcript I thought it was some kind of secret code 😅 Here's what helped me: start with the most recent entries at the bottom and work backwards. Look for your filing date (150 code), then any holds (570), and hopefully an 846 refund code. The dates are in YYYY-MM-DD format which threw me off at first. Also check if you have any 971 codes - those usually mean they sent you a notice that might explain what's going on.

Definitely report it! I didn't report an inherited property sale a few years ago because it sold for less than the appraised value at death. Ended up getting a letter from the IRS asking about it, and had to go through the hassle of amending my return. Even though you don't owe any taxes, the title company reports the sale to the IRS on a 1099-S form, so they know about the transaction. Better to report it properly the first time than deal with questions later!

Just went through this exact situation with my grandmother's house last year! Even though we had no capital gains (actually a small loss), our tax preparer emphasized that we absolutely had to report it. The IRS gets a copy of the 1099-S from the title company showing the sale, so they'll be expecting to see it on your return. One tip that saved us some headaches - make sure you have clear documentation of the stepped-up basis. We used the estate's formal appraisal, but I've heard some people successfully use other methods like comparative market analysis if done close to the date of death. Since there are multiple siblings involved, each of you will report your portion of the sale on your individual tax returns. So if you inherited equal shares, you'd each report 1/3 of both the sale price and the stepped-up basis. Definitely smart to get professional help for this year - inherited property sales have some nuances that are worth getting right the first time!