I work in tax resolution (not an IRS employee though) and I can confirm what others have said. The Form 4549 is showing PROPOSED changes, not finalized assessments. The IRS gives you time to respond before officially assessing the tax. A few tips: 1. Check the notice date carefully - your 90-day response window starts from that date, not when you received it 2. If you agree with the changes, sign the form and return it 3. If you disagree, DO NOT SIGN IT - instead prepare a formal protest letter 4. Keep copies of EVERYTHING you send to the IRS 5. Consider sending any response via certified mail so you have proof of when it was received Also, sometimes these notices result from simple mismatches where income was reported in a different place on your return than where the IRS expected to find it. Don't automatically assume you owe the money.

I got a Form 4549 last year. The online account showing $0 is normal at this stage. One important thing nobody mentioned - check if there's a Form 870 included with your notice package. That's the "Waiver of Restrictions on Assessment" form they want you to sign if you agree to the changes. DO NOT sign that form if you disagree with their adjustments! Once you sign it, you're waiving your right to challenge the assessment in Tax Court. I almost made this mistake.

Just wanted to share my experience with VITA last year! I was nervous because my taxes felt complicated (to me at least), but they were so helpful and patient. The volunteer explained everything step by step. Pro tip: Go EARLY in the season if you can! I went in early February and was in and out in about an hour. My friend waited until late March and had to come back twice because they were so swamped.

I tried to use VITA last year but got turned away because my income was slightly over their limit. Just a heads up that they usually have income restrictions (around $60k in my area). Also, there's another program called TCE (Tax Counseling for the Elderly) that specifically helps people 60+ with their taxes. My parents used it and had a great experience - the volunteers were other seniors who understood their specific tax situations better.

The timing of the CP148A notice (dated 2020) and your recent state registration suggests they're unrelated. These notices can be generated for various reasons - someone submitting a change of address form, the USPS National Change of Address database, or even a third party like your tax preparer updating information. I'd focus less on what triggered it and more on correcting the address ASAP. File Form 8822-B immediately. Also check if your state registration has the correct address - you want consistency across all your business filings.

I had something similar happen - got a CP148A out of the blue after setting up state withholding for the first time. In my case, the IRS agent explained that when you register for state withholding, the state does sometimes share your information with the IRS, especially if you're a new business. The state had a different address than what the IRS had on file, which triggered the CP148A.

My two cents as someone who's been in your shoes - FreeTaxUSA is totally capable of handling your situation. I've used it for my Etsy shop (about $1400 in sales last year) plus my W2 job for 3 years now. The interface isn't as pretty as TurboTax, but it asks all the same questions and covers all the same deductions at a fraction of the price. I tracked inventory similar to you and had no trouble entering everything correctly. One tip: before you file, print out a draft of your return and review it carefully. This helped me catch a couple small errors last year. If everything looks right and you have good documentation, your audit risk is super low. Save the CPA money for when your business grows substantially or gets more complex with employees, multiple sales channels, etc.

For a side business with less than $2k in revenue, FreeTaxUSA is more than sufficient if you're organized with your books. I've used them for years with my photography side hustle. Don't stress about audits for such a small operation - they're extremely rare at your income level. The IRS is much more interested in businesses with unusual deductions or large cash transactions.

As someone who went the C-Corp route 5 years ago with similar income to yours, I want to share some real-world insights: 1. The administrative burden is significantly higher than pass-through entities. You'll need board meeting minutes, corporate bylaws, separate books, etc. 2. Medical expense reimbursement through a QSEHRA has been amazing - I deduct my family's healthcare costs pre-tax through the business 3. The retirement options are incredible. I've set up a cash balance plan that lets me put away almost $150k/year pre-tax, which is way beyond the limits of SEP IRAs or solo 401ks 4. The "double taxation" issue is real, but if you can keep money in the business for several years, the math often works out favorably 5. State taxes add another layer of complexity - some states have minimum corporate taxes or higher rates that can eat into the federal tax savings Worth noting that tax laws are always changing, so what works great now might not be optimal in 5 years.

Just throwing this out there - have you considered just staying as a sole proprietor but being more aggressive with retirement accounts and other tax strategies? I'm in a similar boat (31, single, ~$200k from consulting) and I've found that maxing out a Solo 401k with both employer and employee contributions plus setting up a SEP IRA has been enough to meaningfully reduce my tax burden without the corporate complexity. Also, you didn't mention what state you're in - that makes a HUGE difference. Some states have additional taxes on corporations that can wipe out the federal advantages.