Has anyone considered the De Minimis Safe Harbor election? If your business has applicable financial statements and an accounting procedure in place on the first day of the tax year, you can expense items up to $5,000. Without AFS, it's $2,500 per item. So a $3k espresso machine would need to be capitalized unless you have AFS, but a $2k one could potentially be fully deducted in year 1 under the safe harbor.

I've been dealing with similar home office expense questions for my consulting LLC. One thing I'd suggest is considering the "exclusive use" test more carefully. Since you mentioned keeping it in your designated home office space that you're already claiming, that helps establish business purpose. However, I'd recommend documenting a clear business justification beyond just "I need coffee to work." For example, if you're doing long video editing sessions that require sustained focus, or if the machine helps you avoid interrupting work to go out for coffee during billable hours, that creates a stronger case. Also consider this: instead of one $3,000 machine, what about a $1,500 commercial-grade setup that still meets your needs? It's easier to justify as "ordinary" for a business, falls under common de minimis thresholds, and still provides the quality you're looking for. The IRS tends to scrutinize luxury items more heavily, regardless of the business justification. Keep detailed records of how it's used exclusively for business purposes, and maybe track your productivity improvements or time savings to strengthen your position if questioned.

Be careful about amending unless you're absolutely certain something is wrong. I was in this situation, got impatient, and filed an amendment thinking it would speed things up. It actually reset my 120-day clock AND put me in a different processing queue that took even longer. If the IRS agent didn't specifically tell you what to fix, don't amend. Just wait it out or call again to get more specific information about why you were selected.

I'm currently going through this same process - got the 570/971 codes about 3 weeks ago and was told the same thing about random verification. What's frustrating is that the IRS website just says "processing" with no real timeline. I've been checking my transcript weekly and nothing has changed. Has anyone here actually received their refund after one of these reviews? I'm curious if the July timeline is accurate or if people are getting theirs sooner. Also wondering if there's any pattern to what triggers the "random" selection - I claimed EITC and CTC this year, which seems to be common among people getting selected based on what I'm reading here. The waiting is the hardest part when you're counting on that money for bills and expenses!

Just to add another data point - I'm self-employed AND my wife has a 401k at her job. We file jointly, and I've been deducting my SEP IRA contributions for the past 3 years with zero issues. My CPA never even questioned it because it's completely allowed. You might want to ask your CPA if they're thinking about the "spousal IRA" rules which are different. Or maybe they're thinking about the phase-out limits for Traditional IRA deductions when a spouse has a workplace plan. But those don't apply to SEP IRAs at all.

I've been a tax preparer for over 15 years and can confirm what others have said - your CPA is absolutely wrong about this. SEP IRA contributions for self-employed individuals are not subject to the same restrictions as Traditional IRA contributions when a spouse has an employer retirement plan. The key distinction is that SEP IRA contributions are treated as employer contributions (since you're self-employed, you're both the employer and employee). These contributions are deducted "above the line" on Form 1040 and are not subject to AGI limits or spousal retirement plan restrictions. Traditional IRA contributions, on the other hand, can have deduction limits based on income and whether you or your spouse participates in an employer plan. Your CPA is mixing up these two completely different sets of rules. I'd strongly recommend getting a second opinion from a CPA who specializes in self-employment taxation. This is a significant error that could cost you thousands in unnecessary taxes.

Has your friend checked if there are any specific provisions for the Robinson Huron Treaty in the US-Canada tax treaty? Some indigenous rights agreements have special handling. Also, remember that state taxation is a whole separate issue from federal. Some states are more aggressive about taxing foreign income than others. Which state does your friend live in? That could make a big difference in the overall tax burden.

This is definitely a complex situation that requires careful documentation. One thing I'd add to the excellent advice already given is that your friend should request detailed documentation from the Robinson Huron Treaty settlement administrators about the specific nature and classification of the payment. The IRS will want to see clear documentation showing whether this is compensation for historical land claims, income replacement, or another type of settlement. Having this upfront documentation could save your friend from potential audit issues down the line. Also, given that he's a Canadian citizen residing in the US, he may need to consider his filing obligations in both countries. Canada might still have tax implications even if there are indigenous exemptions, and the US will definitely want their share as he's a US tax resident. I'd strongly recommend setting aside at least 25-30% of the settlement amount for taxes until he gets professional guidance. Better to be over-prepared than caught short when tax time comes around.

Think of your tax refund like a package in transit - once it's been dispatched with specific delivery instructions (your closed bank account), it needs to be returned to the sender (IRS) before they can reroute it. This process typically adds 2-4 weeks to your wait time. One thing to consider: if you're moving soon or have concerns about mail delivery, you might want to set up USPS mail forwarding immediately as a precaution. The IRS won't know your account is closed until the deposit attempt fails, so you're already in the pipeline for the check conversion process.

I went through this exact situation two years ago! Here's what actually happened in my case: The IRS attempted the direct deposit on the scheduled date, my bank rejected it within 24-48 hours, and then it took about 3 weeks from that rejection date to receive the paper check. The frustrating part is that you can't really do anything to speed up the process once it's in motion. However, I'd strongly recommend checking the "Where's My Refund" tool on IRS.gov daily - it will show you when the status changes from "direct deposit" to "check mailed" so you know exactly where things stand. Also, if your address has changed since filing, definitely set up USPS mail forwarding ASAP as that's your best bet for making sure the check reaches you. The whole process felt like forever when I was waiting for the money, but it does work out in the end!