For the phantom IRA distribution - check if someone stole your identity! My dad had something similar happen and it turned out someone had opened an account in his name. When they withdrew funds, the 1099-R got reported to my dad's SSN. Took almost a year to sort out with the IRS and credit bureaus.

Just to add another perspective - don't beat yourself up too much about these errors. Tax law is incredibly complex, especially with rental properties, and even professionals make mistakes. The fact that you caught these errors shows you're being diligent. For the years beyond the 3-year amendment window, document everything you found but don't stress about it unless the IRS comes knocking. Keep good records going forward and consider having a tax professional review your returns annually to catch issues early. That phantom IRA distribution is definitely the priority item here. Even if it's outside the amendment period, you should still contact the IRS about it. Sometimes they can make administrative corrections for clear errors, especially if it involves identity theft or third-party reporting mistakes. The worst case is they say no, but at least you'll have it on record that you tried to resolve it. Good luck sorting this out! These situations are stressful but usually more manageable than they seem at first.

i had the same issue last month and tried searching all over youtube and reddit to understand what was happening. after days of research and confusion I tried taxr.ai and it gave me a whole breakdown of what was happening with explanations for all the codes. saved me soooo much time and stress.

Don't panic! I went through the exact same thing last year and those codes had me stressed for weeks. Code 570 just means they put a temporary hold on your refund while they review something - it's actually pretty common, especially if you claimed EIC or child tax credits like you mentioned. The 971 code means they're sending you a notice explaining what they're reviewing. Since you don't see a TC 898 code (which would indicate an offset), they're most likely not taking your whole refund. They're probably just verifying your income or checking some calculations. I ended up getting my full refund about 3 weeks after those codes appeared on my transcript. My advice: wait for the letter they're sending you before calling. It'll explain exactly what they need or what adjustment they're making. If you don't get anything in 2-3 weeks, then definitely call the Treasury Offset Program number someone mentioned earlier to rule out any debts, and if that's clear, try to get through to an IRS agent. But honestly, with EIC and child tax credits, these delays are super normal even though they're stressful as hell!

Question about contribution limits - does the Code D amount still matter for checking if you've exceeded the annual limit? I'm trying to max out my 401k and want to make sure I'm counting it right for next year.

This is a great question and you're absolutely right to double-check! As someone who's dealt with similar timing issues, I can confirm that your payroll department is handling this correctly. The Code D box on your W-2 should reflect what was actually deducted from your paychecks during 2024, regardless of when your 401k administrator received and processed those funds. This timing discrepancy is especially common with December contributions - your employer withholds the money before year-end, but the 401k company might not process it until early January. For tax purposes, what matters is when the deduction reduced your taxable income (i.e., when it came out of your paycheck), not when it hit your retirement account. Since you're under the contribution limit and the numbers add up based on your paycheck deductions, you're all set. Use the W-2 Code D amount for your tax filing and don't worry about the difference with your 401k administrator's records - that's purely a timing issue that won't affect your taxes at all.

I work in payroll - completely normal for this time of year. The SSA has to process millions of W2s before sending to IRS

Just wanted to add some context as someone who's been through this process multiple times - the timing can vary significantly depending on your employer's payroll provider. Large companies using systems like ADP or Paychex typically get their W-2s submitted faster, while smaller employers might take until closer to the January 31st deadline. Even after submission, the IRS wage transcript system updates in batches, not continuously. One thing that helped me last year was setting up IRS account alerts, but honestly checking every few days just made me more anxious. The transcript will populate when it's ready, and you'll have plenty of time to file accurately. If you're really pressed for time, you can always file using the W-2 your employer provides directly and the IRS will match it up later during processing.

Something I haven't seen mentioned yet is that you should check if your state has any maximum contribution limits for 529 plans. Most states have aggregate contribution limits between $300k-$500k per beneficiary. Also, think about who should own the 529 accounts. If grandparents own them, the distributions don't count as income to the student on the FAFSA. But if you own them, they're considered parental assets which have less impact on financial aid than student assets.

Given your substantial windfall and complex situation, I'd recommend a multi-pronged approach rather than putting all your tax optimization eggs in the 529 basket. Since 529 contributions don't reduce federal capital gains taxes (as mentioned earlier), consider these additional strategies: 1. **Installment sale structure** - If possible, restructure part of the business sale as an installment sale to spread the capital gains over multiple years, potentially keeping you in lower tax brackets. 2. **Charitable remainder trust** - If you're charitably inclined, this could provide immediate tax deductions while generating income for retirement. 3. **Opportunity Zone investments** - Depending on timing, rolling some gains into Opportunity Zone funds could defer and potentially reduce capital gains taxes. 4. **State tax planning** - Some states have no capital gains tax. Depending on your residency situation around the sale, this could be significant. For the 529s specifically, I'd suggest contributing enough to maximize any state tax deductions you're eligible for, but don't over-contribute given your kids' ages and remaining education costs. Your sophomore and younger two would benefit most from the tax-free growth. With 20 years until retirement and another liquidity event expected in 4-6 years, you have flexibility to optimize across multiple tax years rather than trying to minimize everything in this single year.