Can you explain what exactly needs to be filled out on Form 2441? My preparer is insisting I don't even need to file this form since I'm not eligible for the credit. Should I be concerned?

Your preparer is definitely wrong. If you have a Dependent Care FSA, you MUST file Form 2441 regardless of your filing status or eligibility for the credit. For Form 2441, you need to complete Part III specifically. Line 12 should show your FSA contributions (this amount is often shown in Box 10 of your W-2). You'll work through the form, and even though you won't qualify for the credit as an MFS filer, completing Part III correctly ensures your FSA contributions remain pre-tax. Lines 18 through 24 are critical for properly accounting for the benefits. If your preparer skips Form 2441 entirely, your FSA benefits could incorrectly become taxable income.

Is there a specific certification or experience level I should look for? My current guy has been doing taxes for 20+ years but still got confused by my FSA situation when filing separately.

Would this work even if I've already paid the penalty? I just went ahead and paid the $220 penalty because I didn't want it to accrue more interest, but now I'm thinking I actually qualified for safe harbor.

Yes, it absolutely works even if you've already paid. The Form 843 can be used to request a refund of penalties you've already paid, not just an abatement of unpaid penalties. Just make sure to check the "Interest" box in Item 5a and explain in detail that you're requesting a refund of underpayment interest because you qualified for the safe harbor provision. Include copies of both tax years' returns to prove you met the requirements. Also enter the date you paid the penalty in section 2, and they'll refund it if your request is approved.

Yes, the IRS does have a "reasonable cause" provision where they can waive penalties for hardship situations. Medical emergencies can absolutely qualify. You'll need to submit a letter explaining the situation with documentation of your medical issues and how they impacted your ability to pay.

Do you need receipts for all business expenses? I'm terrible at keeping track of that stuff but don't want to miss out on deductions.

Yes, you should keep receipts for all business expenses. The IRS requires documentation to support deductions in case of an audit. It doesn't have to be paper receipts though - digital records work too. I use a combination of a dedicated credit card for business expenses (the statements serve as records) and a simple spreadsheet where I log expenses and note where the receipt is stored. For smaller items under $75, the requirements are a bit less strict, but I still recommend tracking everything.

Better to overwithhold than underwithhold and get hit with penalties though. I learned that the hard way last year.

Thanks for this suggestion! I just checked and the names do match on both forms in the software. It seems like the issue is definitely with the IRS database having my old name linked to the EIN. I think I'm going to try contacting them directly as suggested and see if I can get this fixed. Just curious - have you ever encountered this specific rejection code before?

I've seen this rejection code several times with clients who had name changes. It's specifically related to the EIN registration in the IRS system not matching what's on your current tax return. The W-3 tip sometimes helps, but in your case it does sound like an IRS database issue. The good news is that it's usually a quick fix once you get someone on the phone. Just be sure to have your EIN handy when you call, along with your SSN and your previous name. They might ask for verification of the name change too (marriage certificate), though usually just confirming your identity is enough for them to update the system.

This is terrible advice. MFS usually results in a much higher tax bill and you lose a bunch of credits. Just paper file if you have to - it's annoying but better than paying hundreds or thousands more in taxes.

I bought a Toyota RAV4 Prime PHEV. When I purchased it, the dealer specifically mentioned it qualified for the federal tax credit, and my tax software (TurboTax) confirmed it qualified based on the info I entered. That's why I'm so confused about the rejection based on VIN - everything else seems to match up with eligibility.

That explains it! Toyota hit their 200,000 vehicle limit for the full credit back in 2021, which triggered the phase-out period. If you purchased your RAV4 Prime in 2023, you were likely in the final phase-out period where the credit was significantly reduced or possibly eliminated completely. What probably happened is that your tax software may not have been updated with the latest phase-out information, or there was a miscommunication about which tax year's rules applied to your purchase. The VIN rejection might actually be the IRS's system recognizing that your particular vehicle doesn't qualify for the credit amount you claimed. I recommend checking the exact date Toyota hit their limit and calculating where your purchase falls in the phase-out timeline. This specific information would be crucial for your appeal.

I used the Taxpayer Advocate Service last year when I had an issue with a rejected education credit. They were actually really helpful! You need to fill out Form 911 (yes that's really what it's called lol) to request their help. They assigned someone to my case who actually called me back and helped resolve the issue in about 3 weeks.