Kinda late to this thread but something nobody has mentioned - if your spouse isn't actively involved in running the business and just lets you use their referral links, the IRS might see this as assignment of income which is a no-no. You can't just move income between people even if you're married. Make sure your spouse is actually doing something in the business if you're going to claim their 1099-MISC income as business income on either your Schedule C or theirs.

Great question! I'm dealing with something similar in my consulting business. Based on what I've learned from my accountant and research, you can definitely include those personal 1099-MISCs on your Schedule C if they're legitimately part of your business operations - which they clearly are since credit card referrals are a core part of your rewards business. The key is documentation. Keep records showing how all these income streams are interconnected parts of the same business activity. For your wife's 1099-MISCs, I'd be more cautious. The safest approach is probably having her file her own Schedule C for her portion, especially if she's actively participating in generating those referrals (not just passively letting you use her links). One thing to consider: even though separate Schedule Cs means you'll each pay SE tax on your respective portions, you'll both be building up Social Security credits and can each potentially contribute to your own SEP-IRAs based on your individual business income. Sometimes that actually works out better tax-wise than trying to consolidate everything under one person's return. Document everything well - the IRS likes to see clear business purpose and actual involvement when income appears under different names but gets reported as business income.

I just went through almost the exact same scenario. One other thing to consider - if your grandfather is elderly or in poor health, it might actually be more advantageous from a tax perspective to inherit the property rather than receiving it as a gift. With an inheritance, you get a "stepped-up basis" to the fair market value at the time of death, which eliminates all the capital gains that accrued during his lifetime. Not a pleasant thing to think about, but it can make a massive difference tax-wise.

One thing that hasn't been mentioned yet is the potential impact of depreciation recapture if your grandfather has been claiming depreciation on the property (if it was used as a rental or business property at any point). Even with the primary residence exclusion, any depreciation taken would need to be "recaptured" and taxed at 25% when you sell. Also, make sure to get a professional appraisal when the gift transfer happens to establish the fair market value for gift tax purposes. The IRS can challenge valuations that seem too low, especially on high-value properties like this. Given the complexity and the dollar amounts involved, I'd strongly recommend consulting with both a tax professional and an estate planning attorney before making any decisions. The potential tax savings from getting this right could easily pay for the professional advice many times over.

I had a very similar experience with a CP2100A notice last year, and I want to echo what others have said about responding promptly and keeping detailed records. The IRS data entry errors seem to be increasing, but they're generally fixable with the right approach. One thing I haven't seen mentioned yet is that you should also check if this affects any state tax filings you might have made. Some states cross-reference federal 1099 data, so if the IRS thinks there's an error, it could potentially trigger issues at the state level too. I'd recommend pulling your state account transcripts (if available online) just to make sure there aren't any corresponding notices coming your way. Also, since you mentioned this is a 1099-NEC you issued to yourself from your sole proprietorship, you might want to double-check with a tax professional that this is the correct approach for your situation. As someone else pointed out, sole proprietors typically don't issue 1099s to themselves - this might be part of what's causing the confusion in the IRS system. The good news is that once you send your response with the correct documentation, these usually get resolved without too much hassle. Just make sure to keep copies of everything and use certified mail so you have proof of delivery.

I've been dealing with IRS notices for years as a tax preparer, and I want to add a few important points that might help you and others in similar situations. First, regarding the timing - while most people mention the 60-day response window, I always recommend responding within 30 days if possible. The IRS processes responses faster when they're received promptly, and it shows good faith effort on your part. Second, when you write your response letter, be very specific about the alleged errors. In your case, mention exactly which letter is supposedly missing from your first name and which digit of your TIN they claim is wrong, then clearly state what the correct information should be. This level of detail helps the IRS agent processing your response understand exactly what needs to be corrected in their system. Third, I'd strongly recommend including a brief statement like "I request that you update your records to reflect the correct information as submitted on the original form" rather than just sending the documentation without explicitly asking for the correction. Finally, about issuing 1099-NECs to yourself from a sole proprietorship - this is indeed unusual and likely incorrect unless you have a very specific situation involving multiple business entities. A sole proprietorship and the individual owner are the same entity for tax purposes, so you typically wouldn't issue yourself a 1099. This might actually be contributing to the IRS system flagging your forms as suspicious. I'd definitely recommend consulting with a qualified tax professional to review your business structure and filing approach.

I feel obligated to mention a cautionary note regarding verification timelines. Per Internal Revenue Manual 21.9.1.3, identity verification should be processed within 9 weeks, but I've observed numerous cases where this timeline was exceeded without notification to the taxpayer. In one particularly concerning case from last tax season, a client submitted verification on February 3rd and received no updates until May 27th - nearly 16 weeks later. The IRS cited "exceptional processing circumstances" but provided no further explanation. According to Taxpayer Advocate Service Report 2023-1, approximately 18% of verification cases exceed standard processing times. I strongly recommend documenting all verification submission dates and following up proactively if the 9-week mark passes without resolution.

Thank you for sharing your timeline, Diego! As a fellow military family member, I completely understand the frustration of waiting on government processes. From what I've been reading in various tax forums and based on conversations with others who've gone through ID verification this season, your February 17th submission date puts you right in the thick of peak verification season. The IRS verification department seems to be processing in waves, and many people who submitted in mid-to-late February are just now starting to see movement. I'd suggest checking your online account transcript (if you haven't set one up yet) rather than relying solely on WMR - it tends to update faster and gives you more detailed information about where your return stands in the process. From what I've observed, once verification clears, the actual refund processing moves pretty quickly. Hoping you see some positive movement soon!

Tax person here - some practical advice on statute of limitations: 1) Federal: 3 years normally, 6 years if you omit >25% of income, unlimited if fraud or no return filed when required 2) States vary widely! Some follow federal rules, others have different timeframes entirely 3) The "no requirement to file" situation: Technically true that there's no violation if you weren't required to file. BUT proving that years later can be challenging without documentation 4) Documentation is key - keep records of income for at least 7 years, especially for cash/1099 work 5) If you get notices like OP did, ALWAYS respond and keep copies of all correspondence The most practical approach is to file simple returns even when below thresholds, just for the paper trail. It's easier than explaining yourself years later.

This is such a helpful thread! I'm in a similar boat with state taxes - been under the filing threshold for a few years but always worried about getting notices. After reading everyone's experiences, I think I'm going to start filing simple returns even when not required, just for the documentation. The peace of mind seems worth the small effort, especially after hearing about people successfully using services like taxr.ai to get proper documentation of their filing requirements. One question for the tax professionals here - if I start filing now for previous years where I was under the threshold, is there any specific way I should note on the return that I'm filing voluntarily? Or do I just file normally and let the low income speak for itself? Thanks to everyone who shared their experiences with the various services too. It's reassuring to know there are options if I ever need to get through to the IRS or state tax office quickly.