I wouldn't recommend waiting for a CP2000. They add penalties and interest from the original due date, and it could affect your credit if you don't respond promptly. Also looks bad if you're ever audited in the future since it shows a pattern of underreporting.

That's a fair point about the penalties and interest. I should have mentioned those potential costs. The penalties would likely be small on such a small amount of unreported income, but they do exist. You're right that responding to a CP2000 notice could be more stressful than just filing an amendment proactively. And while a single CP2000 notice doesn't automatically trigger an audit, multiple reporting discrepancies could potentially increase your chances of scrutiny in the future.

No, they won't just "note your account" or anything like that. You need to file the 1040-X amendment. They're very specific about following proper procedures for corrections.

Thanks for this suggestion! I'll definitely let him know about the EITC. Do you know what the minimum income requirement is to qualify? And would it matter that it's gig work rather than W-2 employment?

For the 2024 tax year (filing in 2025), a single person with no children needs at least $1 of earned income but cannot exceed around $17,640 to qualify for EITC. Yes, self-employment income (like from Doordash) does count as earned income for EITC purposes. The issue is that with only $230 in income, the credit would be very small, but still worth claiming if eligible.

Not a stupid question! There is a filing threshold. For self-employment income like Doordash, you need to file if you made $400 or more. Since the brother made less than that ($230), he technically isn't required to file a tax return at all unless he has other reasons to file.

Can you explain more about the accountable plan option? I have an S-Corp for my online business and my CPA never mentioned this as a possibility. Currently not taking any home office deduction at all because I was told I couldn't.

An accountable plan is basically a formal arrangement where your S-Corp reimburses you for legitimate business expenses you incur personally - including home office expenses. The key benefit is that the reimbursements aren't considered taxable income to you, but the corporation can still deduct them. You'll need to document the business use of your home (square footage calculations, exclusive use, etc.), calculate the expenses properly, and have formal documentation showing the corporation approved this arrangement. The business would then reimburse you periodically based on actual expenses. This avoids the "rental payment" situation your tax preparer was concerned about. Many CPAs aren't familiar with this approach, so it might be worth finding one who specializes in small business/S-Corp taxation.

I got audited in 2021 specifically for my home office deduction! They wanted proof that the space was used exclusively for business. I had to provide photos, a floor plan with measurements, and receipts for business equipment in that room. They also asked for a written explanation of business activities conducted in the space.

Do you know if I need to bring my actual tax return paperwork to the appointment? I used TurboTax and don't have a printed copy of everything. Would just my W-2s and ID be enough?

For identity verification appointments, you don't need your complete tax return paperwork if you filed electronically. Your photo ID, Social Security card, and W-2s should be sufficient as they're mainly verifying you are who you claim to be. If you can access a summary of your return from TurboTax (even just on your phone), that would be helpful but not strictly necessary. They mainly need to match your ID with the person who should be receiving the refund, along with verifying your income information matches what was submitted.

Is there any way to check if your address is correct with the IRS without calling them? Their phone lines are always jammed and I'm worried I might be in the same situation.

That's interesting and might explain what's happening in my case too. Did your former employer provide any documentation explaining this approach? And which method did you end up using - the itemized deduction or claim of right?

They didn't provide specific documentation beyond a brief explanation in the email that accompanied my W-2c. It was frustrating because they basically put the burden on me to figure out the tax implications. I ended up using the claim of right provision (Section 1341) since my repayment was over $3,000. This gave me a better result than the itemized deduction would have because I was in a higher tax bracket when I received the money than when I repaid it. I had to fill out some additional worksheets that weren't part of the standard tax software process, but it was worth it - I got back about $1,200 more than if I had just taken the itemized deduction.

Does the Tax Cut and Jobs Act affect this? I thought miscellaneous itemized deductions were eliminated until 2025?