Has anyone used the IRS worksheet for calculating taxable amounts of IRA distributions? I'm looking at Publication 590-B but its kinda confusing me with all the different worksheets.

Great question! This is definitely one of those situations that can trip up new preparers. When box 2a is blank, you're essentially doing detective work to figure out the taxable portion. For your code 7 distribution ($42,350 or $89,700 - not sure which is which), this is a normal distribution. It's fully taxable UNLESS your client made after-tax (non-deductible) contributions to the plan. You'll need to ask if they ever filed Form 8606 in previous years or made contributions that weren't deducted on their tax return. For the code 3 distribution, that's typically for disability payments. These are usually fully taxable, but you should verify the nature of the disability and how the plan was funded. The rollover mention is crucial - if your client rolled over one of these distributions to another qualified account within 60 days, that portion wouldn't be taxable. You'll need documentation of the rollover (like a statement from the receiving institution). My advice: Get a detailed conversation with your client about their contribution history, any rollovers completed, and copies of previous years' returns if they have them. Also check if there are any boxes checked for "Taxable amount not determined" or "Total distribution" on the 1099-Rs - these give you additional clues about how to handle the calculations.

Just FYI, if you made less than $12,950 TOTAL income in 2024 (including your W-2 job and all cash jobs), you might not even be required to file a federal return. But if you made more than $400 in self-employment income, you still have to file to pay self-employment tax even if you're under the filing threshold. If you're worried about past years, look into the IRS Voluntary Disclosure Program. Sometimes they'll waive penalties if you come forward voluntarily.

The real question is how would the IRS even know about your under the table work? Unless someone reports you or you're depositing large cash amounts regularly, they have no way to track cash transactions. Not saying you shouldn't report it, just saying realistically the chances of getting caught are pretty low for small amounts.

Ugh I feel you so hard on this! I've been stuck with the same 570/971 codes for about 6 weeks now and it's driving me absolutely insane 😤 The waiting game is brutal especially when you really need that money. I've been checking my transcript like every other day hoping something changes lol. From what I've read here and other places, seems like most people do eventually get their refunds but the timeline is all over the place. Some get it in 2-3 weeks, others are waiting months. The IRS really needs to get their act together with communication - like at least give us a realistic timeframe instead of leaving us in limbo! Hang in there, we got this 💪

Ugh this is so relatable! I've been dealing with the exact same codes for about a month now and it's honestly been such a rollercoaster of emotions. One day I'm hopeful, the next I'm convinced something's wrong with my return. The $0 amount thing really threw me off at first too - I thought it meant they weren't gonna give me anything! 😭 Reading through these comments though, it sounds like most people do eventually get their refunds even with these codes. The waiting is just brutal when you're counting on that money. Definitely gonna look into that taxr.ai thing everyone's mentioning - at this point I'd pay anything to know what's actually going on instead of just sitting here refreshing my transcript every day like a crazy person lol. Stay strong everyone, we'll get through this! 🤞

Did you file with TurboTax or HR Block? Sometimes they send it to their bank first then to yours which adds a few days

Same thing happened to me last week with Chase! WMR showed "sent" on Friday but didn't actually hit my account until Tuesday morning. Chase told me they sometimes do additional verification on tax refunds which can cause the delay. Super frustrating but it did eventually come through. Hang in there!

This whole system is such a scam. The government knows exactly how much we owe, but they make us figure it out ourselves and then penalize us if we get it wrong. Meanwhile, rich people pay nothing with their fancy accountants finding loopholes. Last year I owed $600 after getting refunds for years and nearly had a heart attack.

I went through something very similar when I switched jobs mid-year! The key thing to understand is that your withholding is calculated based on what your employer thinks your annual income will be, but if you started a higher-paying job partway through the year, the calculations can get thrown off. When you were making $32k, you were likely in the 12% tax bracket, but jumping to $68k puts you into the 22% bracket for a portion of your income. The $5.3k withheld might have been appropriate if you had earned $68k for the full year, but since you probably earned less than that (due to starting the job partway through), the withholding percentage was based on incomplete information. The fact that you only owe $15 means your withholding was actually pretty accurate overall! Many people in your situation end up owing much more. For next year, I'd recommend using the IRS withholding calculator in January to make sure your W-4 is set up correctly for a full year at your new salary level.