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Under IRC ยง32(m) and ยง24(e), as amended by the Protecting Americans from Tax Hikes Act of 2015 (P.L. 114-113, Div. Q), the IRS is prohibited from issuing refunds for tax returns claiming the EITC or ACTC before February 15th. This applies regardless of when you file - January 1st or February 14th, the earliest possible refund date remains the same. For business owners specifically, this typically only affects you if your business is a pass-through entity (Schedule C, S-Corp, Partnership) AND your personal income falls within EITC thresholds (for 2024: below $63,398 with three or more qualifying children, $59,478 with two children, $52,918 with one child, or $17,640 with no children). If your business is profitable enough to exceed these thresholds, PATH Act holds won't directly affect your refund timing.
I've been filing taxes for over 20 years, and I remember the pre-PATH days when early filers with EITC could get refunds by late January. One alternative approach I've seen work well: if you need your refund quickly and typically claim these credits, you could adjust your W-4 withholding throughout the year to be more accurate. This reduces your refund amount but puts more money in each paycheck. Then the PATH delay affects a smaller portion of your annual tax benefit. I've found this especially helpful for my clients who are small business owners who also have W-2 income from a side job or spouse.
Does adjusting W-4 withholding affect quarterly estimated payments too? I'm trying to better balance my tax payments throughout the year.
W-4 adjustments primarily affect your W-2 withholding, while quarterly estimated payments are calculated separately based on your expected annual tax liability. However, they work together in your overall tax strategy. If you increase W-4 withholding to get closer to your actual tax liability, you might be able to reduce your quarterly estimates accordingly (as long as you meet safe harbor rules - generally 100% of prior year tax or 90% of current year). The key is that your total payments (withholding + estimates) should cover your expected tax liability to avoid underpayment penalties. I'd recommend running the numbers quarterly to ensure you're staying compliant while optimizing cash flow.
Quick tip: make sure you keep checking your transcript weekly. Sometimes they dont even send updates when they process stuff
Thanks! Where exactly should I look on the transcript?
I'm dealing with the exact same situation! Filed my amended return in November, got the 4883c letter in December, verified through id.me immediately, and still nothing on my transcripts. It's so frustrating because you do everything they ask and then just... wait indefinitely. At least we're not alone in this mess! ๐ค
Ugh same timeline here! Filed amended in October, got the letter in November, verified right away and still waiting. The worst part is not knowing if something went wrong or if it's just taking forever. Have you tried calling the practitioner priority line? I heard sometimes they can at least tell you if your verification went through properly.
Went thru this last month! Here's what they asked me for: - Last paystub from 2024 - All W2s - Photo ID - Utility bill for address verification Did everything online and got my refund exactly 19 days later
Just went through this last week! The whole process was actually pretty straightforward. Make sure you have all your docs ready before you start - W2s, last paystub, driver's license, and a recent utility bill. The ID.me verification took about 15 minutes once I had everything uploaded. Still waiting on my refund but the IRS website shows it's processing. Good luck! ๐ค
One approach nobody mentioned - you could also report this on Line 8z "Other Income" on Schedule 1 with a description like "Reimbursed travel expenses - see offsetting expense" and then deduct the same amount on Line 24b "Other deductions" with a note about travel expense reimbursement. This way you're not filing a Schedule C which might trigger more questions about self-employment, but you're still reporting the 1099-NEC amount so it matches IRS records. Net tax effect is zero.
This is actually much better advice than using Schedule C in this case. When you file Schedule C, it can trigger more scrutiny and implies you're running a business activity. The Schedule 1 approach is cleaner for a one-off situation like this.
Thanks! I've had to use this approach a couple times for unusual income situations. The key is making sure both entries have clear descriptions that match each other, and keeping documentation of the reimbursement in case of questions. The IRS mainly wants to see that you're reporting all income properly, but they're generally reasonable about not taxing reimbursements when properly explained.
Just to add another perspective - make sure you keep detailed documentation of everything related to this situation. Save copies of the original receipts your husband paid, the reimbursement from Company Y, any correspondence about the interview assignment from his employer, and the 1099-NEC itself. If the IRS ever questions this, having a clear paper trail showing that: 1) He was on assignment for his W-2 employer 2) He paid expenses out of pocket first 3) Company Y reimbursed those exact expenses 4) No services were provided to Company Y ...will make it much easier to explain that this was a misclassified reimbursement, not taxable income. Documentation is your best friend in situations like this where forms don't tell the whole story. I'd still recommend trying to get Company Y to correct the 1099-NEC first, but if they won't, the Schedule 1 approach mentioned by Sophia is probably the cleanest way to handle it on your return.
Tom Maxon
To all those having trouble reaching a human at IRS. I just ran across this video that gave me a shortcut to reach a human. Hope it helps! https://youtu.be/_kiP6q8DX5c
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Aidan Percy
I had a similar issue last year with my dependents not being recognized properly. The key is to check your Account Transcript on the IRS website - it will show exactly what information they have on file for your dependents versus what you submitted. In my case, one of my kids' had a transposed digit from when I originally filed. I had to file Form 1040X (Amended Return) with the correct information and it took about 12-16 weeks to get the additional refund processed. Make sure to include copies of Social Security cards and birth certificates as supporting documentation. The good news is that once they process the correction, you'll get the full amount you're owed plus any interest!
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Kaylee Cook
โขThis is super helpful! I'm dealing with a similar issue right now. Quick question - when you filed the 1040X, did you have to include documentation for both dependents or just the one with the error? And did the IRS send you any confirmation that they received your amended return before the 12-16 weeks were up?
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