Had 570. Waited 37 days. Got refund. No changes. No letters. Nothing to do but wait. Foreign income too. System just slow for us.

I've been through this exact situation as a non-US citizen with foreign income exclusions. Code 570 appeared on my transcript in late February, and I was initially panicked thinking it meant an audit or major issue. After doing extensive research and speaking with a tax professional, I learned that for international filers, this code is almost routine - especially when you have Form 2555 or foreign tax credits involved. The IRS has automated systems that flag these returns for additional verification, but it's usually just a computer checking your calculations against their databases. In my case, it took exactly 6 weeks to resolve with code 571, followed immediately by my refund being issued. The key thing I learned is that unless you receive an actual letter (CP notice) requesting documents, there's typically nothing you need to do except wait. The processing times for international returns are just longer due to the additional compliance checks they run on foreign income reporting.

Has anyone had this issue questioned in an audit? I've been claiming 100% of input tax credits on business meals because my accountant said as long as they're with clients, they're fully eligible. Now I'm worried I've been doing it wrong for years!

This is a great question that catches a lot of business owners off guard! The short answer is yes, you can claim input tax credit on business meals, but only 50% of the GST/HST paid - not the full amount. For your $5,800 in business meals, you'd be able to claim 50% of the tax portion as input tax credits. So if you paid $348 in GST (assuming 6% rate in some provinces), you could claim $174 as ITC. The key requirements are: - Keep detailed records showing who you met with and the business purpose - Retain all receipts - Ensure the meals are genuinely for business purposes (not personal entertainment) One important note: if any of those meals were for staff events or team meetings, different rules might apply. You can sometimes claim 100% ITC for employee meals at company events, but there are limits (usually 6 events per year). Also watch out for provincial differences - in non-HST provinces like BC, you can only claim the GST portion, not the PST. The rules can get complex, so it might be worth consulting with a tax professional to make sure you're maximizing your credits while staying compliant.

what about creating a non-profit arm of your practice specifically for low-income clients? I know a physical therapist who did this and now gets grants to cover part of his costs. took some setup but he said its worth it now.

I'm a CPA who works with several healthcare providers facing this exact situation. While you can't deduct the "discount" itself, there are some legitimate strategies to consider: 1. **Income averaging**: If your sliding scale work creates uneven income patterns, you might benefit from income averaging techniques or retirement plan contributions that smooth out tax liability. 2. **Business structure optimization**: Consider whether your current business structure (sole proprietorship, LLC, S-Corp) is optimal for your income mix. Different structures can affect how you're taxed on varying income levels. 3. **Expense allocation**: Make sure you're properly allocating all business expenses proportionally. If 40% of your clients are sliding scale, ensure you're capturing the full cost of serving them (additional time, payment processing, collections, etc.). 4. **Professional development**: Any training specifically related to serving low-income populations or trauma-informed care could be fully deductible professional development. The key is maximizing legitimate deductions rather than trying to create artificial ones. Your sliding scale work is valuable community service, but the IRS treats it as a business decision that reduces income rather than creating deductible expenses.

Don't forget you need to meet ALL FOUR TESTS for R&D credit: 1) Permitted purpose (creating new/improved functionality) 2) Technical in nature (relies on hard sciences) 3) Technical uncertainty (don't know how to do it from the start) 4) Process of experimentation (systematic evaluation of alternatives) Most software companies fail on #3 and #4. If you know how to build it using existing techniques, it's not eligible even if the software itself is new!

Great discussion everyone! As someone who's been through multiple R&D credit audits, I want to emphasize that documentation is absolutely critical. The IRS doesn't just look at what you claim - they want to see contemporaneous records proving your activities met all four tests. A few practical tips: Start keeping detailed project logs NOW, not when you file your return. Have your developers note when they're experimenting with new approaches versus implementing known solutions. Save failed prototypes and document why they didn't work. Meeting notes discussing technical roadblocks are gold during audits. Also, be conservative with your claims initially. It's better to claim less and be audit-proof than to be aggressive and face penalties. The R&D credit can be carried forward for 20 years, so you're not losing anything by being cautious while you build better documentation systems. One last thing - consider getting a technical memo prepared by a qualified professional that maps your specific activities to the four-part test. This shows the IRS you took the requirements seriously and can be your best defense if questioned.

Don't forget to look into your state's crime victim compensation fund! Depending on your state, they might have resources to help recover some losses while you wait for the court case to resolve. Also, make absolutely sure to file Form 14039 (Identity Theft Affidavit) with the IRS if the embezzler had access to any of your personal information. I had an employee steal from my business and they later tried to file fraudulent tax returns using my info.

I'm really sorry you're dealing with this situation - embezzlement is devastating both financially and emotionally. One thing I'd add to the great advice already given is to make sure you're documenting everything meticulously right now. Keep copies of all bank statements, canceled checks, invoices, and any correspondence with law enforcement. Also, consider reaching out to your bank about their fraud protection services. Some banks have business fraud recovery programs that might help, especially if the embezzler used business accounts or credit cards for the theft. They might also be able to provide detailed transaction records that could help with your tax documentation. Finally, don't forget to review your internal controls going forward. This might be a good time to implement separation of duties, require dual signatures on larger checks, and set up regular bank reconciliations. I know it's closing the barn door after the horse has bolted, but it can help prevent future incidents and might even be required by your insurance company if you get new coverage. Hang in there - this process is overwhelming but you'll get through it!