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Did you claim EIC or child tax credit? Those usually take longer to process and can cause status changes like this
nah just a basic return this year
I wouldn't worry too much about it. The IRS systems are notoriously glitchy and status changes like this happen all the time. "Still being processed" just means they're working through their backlog - it's not necessarily a red flag. Tax Topic 152 is just their generic reference for refund processing info. As long as you don't have any actual issues with your return (like missing forms or math errors), you should be fine. The timing can vary but most people still get their refunds within the normal 21-day window even with these status changes.
Tax Topic 152 is definitely neutral - just means your return is in the system and being processed. I've seen it pop up for tons of people and most get their refunds right on schedule. The 21-day timeframe is pretty accurate for e-filed returns, so you should be good! Try not to stress too much about it š
Wait I'm confused... if a single-member LLC that's disregarded can't pay W-2 wages to its owner, when DOES it make sense to pay yourself a salary from your business? I've heard so many conflicting things about this.
It makes sense to pay yourself a W-2 salary when you've elected to have your LLC taxed as an S-Corporation! That's a common strategy for reducing self-employment taxes when your business has substantial profit. With an S-Corp election, you MUST pay yourself a "reasonable salary" as a W-2 employee, then can take additional money as distributions that aren't subject to self-employment tax. But without that S-Corp election, a single-member LLC is disregarded for tax purposes - meaning you and the business are the same entity in the IRS's eyes. Can't employ yourself!
This is a great discussion that highlights a really important distinction. I've seen this confusion come up repeatedly with small business owners who think paying themselves a W-2 salary will somehow legitimize their business or provide better tax benefits. The key takeaway here is that tax structure should follow legal structure, not personal preferences. A disregarded single-member LLC cannot create an employer-employee relationship with itself - it's legally impossible. Your friend's reasoning that it "feels more like a real business" doesn't change the fundamental tax law. Beyond the compliance issues everyone's mentioned, there are practical problems too. If your friend is filing employment tax returns (940, 941) for these phantom wages, he's creating a paper trail that doesn't match his actual business structure. This inconsistency is exactly what can trigger IRS scrutiny. The irony is that if he wants the benefits of paying himself a salary (like potential self-employment tax savings), he should consider making an S-Corp election. Then he'd be legally required to pay himself reasonable compensation as a W-2 employee, and any additional profits could be distributed without self-employment tax. But that's a completely different tax structure with its own requirements and limitations. Bottom line: work with the structure you have, not against it.
This is exactly the kind of clear explanation I wish I'd found when I was setting up my LLC! I made the same mistake initially - thought paying myself a salary would make my business look more "professional" to clients and banks. What really helped me understand it was thinking about it this way: if you're a disregarded entity, you ARE the business for tax purposes. You can't write yourself a paycheck any more than you can write yourself a check from your personal checking account and call it income. It's just moving money around within the same tax entity. The S-Corp election point is crucial too. I ended up making that election once my profits got high enough that the self-employment tax savings justified the additional administrative burden. But you're absolutely right - it's a completely different ballgame with quarterly payroll taxes, reasonable compensation requirements, and stricter record-keeping. For anyone reading this who's in a similar situation, definitely get this sorted out before tax season. The IRS computers are pretty good at catching inconsistencies between your business structure and how you're reporting income!
Has anyone used both TurboTax and FreeTaxUSA for delivery gig work? I'm trying to decide which one to use this year and wondering which handles the deductions better.
I've used both. FreeTaxUSA is WAY cheaper but TurboTax does a slightly better job walking you through all the possible deductions for gig work. TurboTax asked me about phone costs, car washes, hot bags, etc. that FreeTaxUSA didn't specifically prompt for (though you can still enter them manually). If you're comfortable knowing which deductions to take, FreeTaxUSA is fine and will save you like $100+ compared to TurboTax Self-Employed. If you need more guidance or it's your first year doing gig work, TurboTax might be worth the extra cost.
This is super helpful for understanding how multiple income sources work together! I'm in a similar situation with my Instacart gig plus a regular part-time job. One thing I learned the hard way is to keep really detailed records throughout the year - I wish I had tracked my mileage better from the start. For anyone doing delivery work, I'd recommend downloading a mileage tracking app like MileIQ or Everlance. They automatically track your drives and categorize them as business or personal. Way easier than trying to reconstruct everything at tax time! Also keep receipts for things like phone accessories, insulated bags, or car maintenance that's directly related to your delivery work. The quarterly payment advice is spot on too. I got hit with an underpayment penalty last year because I didn't realize I needed to make estimated payments. Setting aside that 25-30% in a separate account really does make tax season so much less stressful.
Victoria Brown
Be careful about amending unless you're absolutely certain something is wrong. I was in this situation, got impatient, and filed an amendment thinking it would speed things up. It actually reset my 120-day clock AND put me in a different processing queue that took even longer. If the IRS agent didn't specifically tell you what to fix, don't amend. Just wait it out or call again to get more specific information about why you were selected.
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JaylinCharles
I'm currently going through this same process - got the 570/971 codes about 3 weeks ago and was told the same thing about random verification. What's frustrating is that the IRS website just says "processing" with no real timeline. I've been checking my transcript weekly and nothing has changed. Has anyone here actually received their refund after one of these reviews? I'm curious if the July timeline is accurate or if people are getting theirs sooner. Also wondering if there's any pattern to what triggers the "random" selection - I claimed EITC and CTC this year, which seems to be common among people getting selected based on what I'm reading here. The waiting is the hardest part when you're counting on that money for bills and expenses!
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Sophia Carson
ā¢I can relate to your frustration! I'm also dealing with this right now - got my 570/971 codes about 2 weeks ago. From what I've gathered reading through everyone's experiences here, it seems like the July timeline might be conservative. Several people mentioned getting their refunds earlier than the initial estimate, especially if they proactively called to see if any documents were needed. I also claimed EITC and CTC, so that definitely seems to be a pattern for triggering these reviews. The waiting really is the worst part when you're depending on that money. I've been setting a reminder to check my transcript once a week instead of daily to try to reduce the stress a bit. Hang in there - sounds like most people do eventually get through the process!
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