I just went through this same nightmare and found another solution! • Online verification completed March 5th • No updates for 3 weeks • Couldn't get through on the phone AT ALL • Went to my local Taxpayer Assistance Center in person • Completed verification same day • Refund processed within 5 business days I had NO IDEA the online verification wasn't enough! The IRS website is so misleading! 😡 The in-person option was actually faster than waiting on hold for hours.

This is really helpful information! I'm currently stuck in what sounds like the exact same situation - completed online verification 2.5 weeks ago and my transcript still shows the same codes with no movement. I've been calling the main IRS number but keep getting disconnected after hours on hold. For those who successfully got through by phone, what time of day did you call? And did they transfer you to a specific department or were you able to complete the additional verification with the first person you spoke to? I'm trying to figure out if there's a better strategy than just repeatedly calling the main number. Also wondering if anyone knows - does the additional phone verification typically happen the same day you call, or do they schedule a callback? Thanks for sharing your timeline, it gives me hope that there's actually an end to this process!

Great question about 401(k) interactions! This is actually a really important consideration that most people aren't thinking about yet. From what I understand about current retirement plan rules, 401(k) contribution limits are typically based on "compensation" as defined by the IRS, which generally includes all wages subject to income tax withholding. If overtime pay becomes federally tax-exempt, it would likely still count as compensation for retirement plan purposes - similar to how Roth IRA contributions are made with after-tax dollars but still count toward income limits. However, the percentage-based contribution calculations could get tricky. If your plan automatically deducts a percentage of your gross pay, you'd want to make sure that percentage is being applied to your full wages (including tax-exempt overtime) rather than just your federally taxable income. Otherwise, you might inadvertently reduce your retirement contributions. This is definitely something employers and plan administrators will need to figure out in their system configurations. I'd recommend checking with your HR department once any legislation actually passes to understand how your specific plan would handle it.

This is a really thorough discussion! As someone who works in HR benefits administration, I wanted to add a few practical considerations that employers are already starting to think about: 1) **Timekeeping complexity**: Companies will need to ensure their time tracking systems can clearly distinguish between regular hours and overtime hours for tax purposes, not just pay calculation purposes. This might require system upgrades for many employers. 2) **Multi-state complications**: For employees who work in multiple states or companies with locations across state lines, tracking which overtime is subject to which state's tax rules could become quite complex. 3) **Audit implications**: The IRS will likely scrutinize overtime classifications more closely, so companies will need to be extra careful about properly documenting what constitutes legitimate overtime versus regular hours. 4) **Potential for abuse**: There might be pressure to restructure jobs or schedules to maximize tax-exempt overtime, which could lead to some unintended workplace dynamics. The implementation timeline will be crucial - payroll systems, HR policies, and accounting procedures will all need significant updates. Most proposals I've seen suggest at least a 6-month implementation period, but even that might be tight for larger organizations with complex payroll systems.

Colorado DOR implemented enhanced fraud detection algorithms for TY2023 returns that are causing systematic delays across the board. Their internal processing queue prioritizes certain return types based on complexity factors and verification requirements. I've observed that returns with Schedule E income or non-W2 earnings are experiencing the longest delays, while simple returns with only W-2 income are moving through faster. If your AGI exceeds certain thresholds or you've claimed specific deductions like business expenses, expect additional verification steps. The system is functioning as designed, just with significantly reduced efficiency compared to previous filing seasons.

As a new Colorado resident (moved here last year), I'm experiencing this exact same issue! Filed my federal and Colorado returns on the same day in mid-February - federal was processed in 8 days, but Colorado is still showing "processing" after 6 weeks. This is so frustrating because I budgeted for receiving both refunds around the same time based on what friends told me about typical processing times. It's reassuring to know this is a widespread issue and not something specific to my return, but the lack of transparency from Colorado DOR is really disappointing. Other states seem to provide much better communication about delays and expected timelines. Has anyone found any official statements from the state about when they expect to catch up on the backlog?

Has anyone successfully gotten the penalties removed in a CP23 situation? I had a similar issue last year and got the payments sorted out, but they wouldn't remove the failure-to-pay penalty even though it was their mistake.

I went through this exact same CP23 nightmare two years ago! The IRS somehow "lost" three of my quarterly estimated payments despite having valid EFTPS confirmation numbers. What saved me was being extremely persistent and documenting everything. Here's what worked: I sent a certified letter to the IRS address on the CP23 notice with copies of ALL my EFTPS confirmations, bank statements showing the withdrawals, and a detailed timeline of when each payment was made. I also included a formal request for penalty and interest abatement citing "reasonable cause" since the error was entirely on their end. The key is to be very specific about the dates, amounts, and confirmation numbers. Don't just say "I made payments" - give them every single detail they need to trace the payments in their system. It took about 8 weeks, but they eventually found all my payments and reversed everything including penalties and interest. Also, if you have to call again, ask to speak with a "payment tracer specialist" - they have more authority to research misapplied payments than regular customer service reps. Good luck, and don't give up! You're definitely not at fault here.

Don't forget to check if she needs to pay state income tax in the state where she's working! Federal exempt status doesn't automatically mean state exempt. Some states have much lower thresholds for taxation.

Great question! I went through this exact situation with my college-age son last year. The key thing to remember is that being claimed as a dependent doesn't automatically disqualify your daughter from claiming exempt status on her W-4 - it just changes how her standard deduction is calculated. As others have mentioned, for dependents in 2025, the standard deduction is the greater of $1,250 or earned income plus $400 (but capped at the regular standard deduction of $14,600). With her expected $6,700 in earnings, her standard deduction would be $7,100. One additional tip: make sure she keeps good records of her actual earnings throughout the summer. If she ends up making significantly more than expected and goes over that $7,100 threshold, she might owe some tax even though she claimed exempt. In that case, she'd need to make quarterly estimated payments or face potential penalties. Also, don't forget about FICA taxes (Social Security and Medicare) - those will still be withheld from her paychecks regardless of her exempt status, since exempt only applies to federal income tax withholding.