Just wanted to add something that might be helpful - make sure you keep the warranty documents separate from your equipment receipts in your tax files. I learned this the hard way when my accountant needed to see the breakdown between equipment cost and warranty cost for my deductions. Also, if you're buying multiple pieces of equipment at once (like your camera and laptop), some retailers will give you a discount if you bundle the warranties together. I saved about $75 doing this last year, and the bundled warranty was still fully deductible since it was all for business equipment. One more tip: if you end up not needing to use the warranty and it has a money-back guarantee or partial refund option, any refund you receive would need to be reported as income if you already deducted the full warranty cost. Just something to keep in mind for future tax years!

Just to add another perspective on this - I run a small photography business and had the exact same question about warranties last year. After doing some research and talking to my tax preparer, I can confirm that extended warranties on business equipment are indeed deductible as ordinary business expenses. One thing that helped me was creating a simple spreadsheet to track all my equipment purchases with separate columns for the equipment cost and warranty cost. This made it super easy when tax time came around, and my accountant appreciated having everything clearly organized. Also worth noting - if you're planning to use Section 179 to deduct the full equipment cost in the first year, you can also deduct the warranty costs in that same year even though the warranty coverage extends beyond. This is different from some other types of prepaid expenses where you might need to spread the deduction over multiple years. The key is just making sure you can prove the equipment (and therefore the warranty) is genuinely for business use. Keep good records of how you use the equipment, and you should be all set!

I had almost the exact same experience with a LTR 672C notice! Got mine about 6 months ago for my 2017 return - also completely out of the blue after years of silence. The letter was so frustratingly vague, just like you described. What really helped me was following the advice others have given here about getting the tax account transcript online. When I pulled it up, I discovered that the IRS had corrected a mistake I made on my Form 8829 (home office deduction). I had accidentally used the wrong square footage calculation, which reduced my home office deduction and created an overpayment of about $180. They then applied that overpayment to cover a small penalty from 2019 where I had filed my return a few days late but didn't realize there was a penalty until much later. The whole thing was pretty minor, but without the transcript I never would have figured it out. The IRS backlog explanation makes total sense - they're still catching up on a lot of older processing. Don't worry too much about it being something serious. In most cases like this, it's just administrative cleanup of small discrepancies that got delayed in their system. The transcript should give you all the details you need!

I completely understand your frustration with getting such a vague notice about something from 7 years ago! The LTR 672C is notorious for being unhelpfully brief, but this situation is actually more common than you'd think. The timing delay could be due to several factors - the IRS has been working through massive backlogs since 2020, or they may have recently completed an internal review/audit of your 2018 return that resulted in this adjustment. Sometimes it's as simple as them finally getting around to processing a correction they identified years ago. My recommendation would be to start by requesting your tax account transcript for 2018 from the IRS website (IRS.gov - search for "Get Transcript Online"). This will show you exactly what the IRS processed versus what you originally filed, including any adjustments they made that created the overpayment. The transcript should also indicate which tax year or type of debt they applied your overpayment to. Most of the time these situations involve relatively minor issues - math errors, duplicate income reporting, or small penalties you weren't aware of. While the 7-year delay is unusual, it's likely just bureaucratic cleanup rather than anything serious. The transcript should give you all the details you need to understand what happened without having to spend hours trying to reach someone by phone. Don't stress too much - this is probably just the IRS finally getting their paperwork in order!

Everyone is focusing on fixing the problem, but don't forget to actually USE the FSA money before your husband leaves his job! If he quits mid-year, depending on the plan terms, you might lose any unspent FSA funds. I'd recommend scheduling any eligible medical expenses you were planning to have this year ASAP. Dental work, vision exams, prescription refills, etc. That way you at least get the benefit of the tax-free money before it potentially disappears.

This is a really tricky situation, but you're not alone! I went through something similar last year. One thing I'd add to the great advice already given - make sure you keep detailed records of all the dates and amounts involved. The IRS is very specific about month-by-month eligibility for HSAs. When you contact your HSA administrator to remove the excess contributions, ask them to provide written documentation showing the calculation they used and which months they considered you ineligible. This will be crucial for your tax filing. Also, don't forget about state tax implications if you live in a state that taxes HSA contributions differently than federal. Some states don't recognize HSA tax benefits at all, which could affect how you handle the excess contribution removal. The silver lining is that once your husband changes jobs and the FSA issue is resolved, you'll have a much cleaner setup going forward. Just make sure to double-check all your benefits elections during his new employer's enrollment process!

Has anyone here actually maxed out both the employee AND employer portions of their solo 401k? I'm trying to figure out if I can really contribute up to $66,000 for 2025 (I'm under 50) between both parts. My CPA says my employer contribution is limited by my net business profit and I'm trying to calculate exactly how much income I need to earn to max out the entire thing.

Great thread! I want to add one important detail that hasn't been mentioned yet - if you're using payroll software to process your solo 401k employee contributions (which some people do to maintain proper documentation), make sure your payroll is processed and the contribution is actually deducted from your pay by December 31st, not just scheduled. I learned this the hard way last year when I scheduled my December payroll to run on January 2nd thinking it would still count for the prior tax year. The IRS considers the contribution made when it's actually deducted from compensation, not when you schedule it or when the funds hit the 401k account. Also, for anyone using a solo 401k loan feature - loan repayments don't count toward your annual contribution limits, but they do need to be made on schedule to avoid being treated as taxable distributions. The loan repayment schedule isn't affected by the December 31st deadline since it's not a new contribution.

My client sent me this one: "What's the difference between a taxidermist and a tax collector? The taxidermist only takes your skin." I couldn't decide whether to laugh or cry because I was literally working on his 1040 with substantial underpayment penalties at that exact moment...

Here's one that perfectly captures tax season desperation: "Why did the taxpayer bring a ladder to the IRS office? Because they heard the rates were going through the roof!" And this classic: "What's the difference between death and taxes? Death doesn't get worse every time Congress meets." But honestly, after reading through all these comments, I'm starting to think we accountants have developed Stockholm syndrome with our own profession. We're sitting here making jokes about the thing that's slowly destroying our will to live! 😂 Anyone else feel like tax humor is just our collective coping mechanism for choosing a career that peaks in stress from January to April every single year?