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Reason #47293 why I'm now making sure I owe a tiny amount each year instead of getting a refund. I'd rather pay them $50 than let them hold my $2000 hostage for a year with no recourse.
I'm so sorry you're going through this nightmare with the IRS. Your situation sounds incredibly frustrating and unfortunately all too common. Based on what others have shared here, it sounds like you have several good options to try: 1. **File Form 911 for Taxpayer Advocate Service** - This seems to be the most recommended route for cases like yours where normal channels have failed 2. **Contact your Congressional representative** - Multiple people here have had success with this approach, with some getting results in just 3 weeks 3. **Try to get the specific fax number** for the department handling your EIC case - one person mentioned this worked after 14 months of waiting The fact that you've been dealing with this since 2021 and haven't received a refund since then is absolutely unacceptable. The IRS's antiquated systems and understaffing issues don't excuse holding taxpayers' money hostage for years. I'd definitely start with the Taxpayer Advocate route and congressional contact simultaneously. Document everything - dates of calls, names of representatives, case numbers, etc. You shouldn't have to fight this hard for your own money. Hang in there and don't give up. Your refund belongs to you, not them.
Have you considered using a payroll service that handles all your 940/941 filings automatically? I switched to Gusto last year and they take care of all the filings and deposits for my S-corp. Yes, there's a monthly fee, but the time saved and peace of mind is totally worth it when you factor in how much your time is worth per hour.
I've been looking at services like that. What's the approximate monthly cost for a one-person S-corp? And do they handle all the state filings too, or just federal?
For a single-employee S-corp, most payroll services run between $45-60 per month. This typically includes all federal filings (940, 941, W-2, etc.) plus state unemployment and withholding filings. Many services also offer direct deposit, tax payment scheduling, and year-end tax form preparation. Some even have additional features like time tracking or benefits administration if you ever expand. For me, eliminating the quarterly stress of handling these forms myself has been completely worth the cost.
Just wanted to point out that if you're mailing the forms but paying electronically through EFTPS, the IRS should be able to match your payment to your account even if there's some delay with the paper forms. I've been doing this for years with my small business and never had an issue. The key is making sure your EFTPS payment has all the correct information (form number, tax period, EIN).
That's reassuring! So even if there's some delay with the paper forms, as long as the money gets there through EFTPS, they generally don't send nasty letters about missing payments?
Exactly! The IRS payment systems are pretty sophisticated at matching payments to accounts. As long as your EFTPS payment includes the correct EIN, tax period, and form type, they can usually reconcile it even if the paper form arrives a few days later or gets delayed in processing. I've had situations where my 941 got held up in mail processing for over a week, but since the payment was already in their system through EFTPS, there were no penalties or late notices. The electronic payment system is really their primary concern - they want the money on time more than they need the paper immediately. Just make sure you're entering all the details correctly in EFTPS, especially the tax period dates and form number. That's what allows their system to automatically match everything up.
Has anyone successfully done this using regular tax software like TurboTax or H&R Block? I have my original 2018 return I did through TurboTax but not sure if I can use it to create the 1040X or if I need to start from scratch.
I did my 1040X through TurboTax last year, but it was for 2020 taxes. For 2018, I think you'd need to buy their 2018 software specifically since the online version only keeps recent years available. Might be cheaper to just fill out the paper form honestly.
I went through this exact situation last year with a missing W-2 from 2018! Here's what I learned that might help: First, don't panic - it's really not as complicated as it looks. The key is being methodical about it. Make sure you have your original 2018 return handy and the missing W-2. One thing I wish I'd known earlier: if the missing W-2 results in you owing additional tax, you'll want to pay that amount when you file the 1040X to minimize interest charges. The interest runs from the original due date (April 15, 2019) regardless of when you actually file the amendment. Also, keep copies of EVERYTHING. Your university will probably want proof that you filed the amendment, and with current IRS processing times being 20+ weeks, having documentation that you submitted it will be crucial for your financial aid office. The explanation section (Part III) doesn't need to be elaborate - just clearly state "Amendment due to missing W-2 from [employer name] not included in original filing" and attach the W-2 copy. Don't let the form intimidate you - most people overthink it. You've got this!
One thing that hasn't been mentioned yet - make sure your parent has a valid SSN or ITIN to claim the ODC. I got caught by this last year when trying to claim my mother-in-law who recently moved to the US. She had her green card but we hadn't gotten her Social Security card yet, and my tax return got rejected. Also, when calculating whether you provide more than half their support, remember to include fair rental value of lodging if they live with you! That can make a big difference in meeting the support test, especially if their Social Security is close to that 50% threshold.
Thank you for mentioning this! My grandmother does have a valid SSN, so that's not an issue. But I'm curious about the fair rental value part - how do you determine that? Do you just estimate what it would cost to rent a room in the same house or apartment?
You've got it right! To determine fair rental value, you estimate what it would cost to rent a similar room or living space in your area. If she has her own bedroom in your house, you'd look at what it costs to rent a bedroom in a shared house in your neighborhood. If she has her own bathroom or private space too, you can include that in the calculation. You can check local listings for room rentals or shared housing to get an idea. Don't forget to include a fair share of utilities, food, and other household expenses too. Keep documentation of how you calculated this amount in case of questions from the IRS. This fair rental value often makes a significant difference in meeting the "more than half support" test.
I just finished my taxes using TurboTax and ran into exactly this ODC issue with my elderly mother. When I entered her Social Security income ($16,400), the software automatically determined she didn't qualify for the ODC because of the income limit. However, I was still able to claim her as a dependent for purposes of my filing status (Head of Household) because I provided more than half her support and she lived with me all year. So even though I couldn't get the $500 ODC credit, I still benefited from a better filing status than Single. The support test calculation was tricky - had to add up all medical expenses, food, utilities, etc., plus the rental value portion that someone mentioned above.
Wait, that doesn't sound right. I thought if someone doesn't qualify as your dependent due to the gross income test, you can't claim Head of Household based on them? Can someone clarify this?
You're absolutely right to question this! There's actually a distinction between qualifying for the ODC and qualifying as a dependent for Head of Household filing status. For the ODC, your dependent must meet the gross income test (under $4,700 for 2023). But for Head of Household qualification, you can have a qualifying person who is your parent even if they exceed the gross income limit, as long as you provide more than half their support and they are your qualifying relative. So @Gianna Scott is correct - her mother can qualify her for Head of Household filing status even though the mother's $16,400 Social Security income disqualifies her from the ODC. The key is that she provided more than half her mother's support and her mother lived with her all year. It's one of those confusing tax situations where different rules apply to different benefits, even when dealing with the same person as your dependent!
Zoe Stavros
Don't forget to look into cost segregation for your rental property! Instead of depreciating everything over 27.5 years, you can potentially break out components like appliances (5 years), carpeting (5 years), landscaping (15 years) etc. This accelerates your depreciation deductions in the early years. Also, take lots of "before" pictures and document everything. The IRS loves to challenge rental property deductions so having good records is crucial. I've been audited twice on my rental properties and good documentation saved me both times.
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Jamal Harris
ā¢Is cost segregation worth it for a smaller property? I've heard the studies can be expensive. At what property value does it start making sense to do this?
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Zoe Stavros
ā¢Cost segregation definitely makes more sense as property values increase, but there are now more affordable options for smaller properties. As a rough guideline, properties valued at $400,000+ can usually benefit enough to justify the cost, but it depends on your specific situation. Some tax software now includes simplified cost segregation tools that are much more affordable than the traditional engineering-based studies. These can work well for single-family or small multi-family properties. The higher your tax bracket, the more valuable the accelerated depreciation becomes, so that's another factor to consider when deciding if it's worth it.
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GalaxyGlider
Make sure you understand the "placed in service" rules for your rental property. You can't start taking depreciation until the property is actually ready to be rented. If you're doing major rehab, depreciation starts when the property is habitable and you're actively trying to rent it - not when you first got the property. Also watch out for the passive activity loss limitations depending on your income level. If your rental shows a paper loss because of depreciation but your income is above certain thresholds, you might not be able to deduct those losses against your other income without some planning.
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Luca Russo
ā¢Thanks for mentioning the "placed in service" timing - that's something I was confused about! So even though I own the property now, I can't start depreciating until after all the rehab is done and I'm actively trying to find tenants?
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Ben Cooper
ā¢Exactly right! The "placed in service" date is when the property is ready and available for rent, not when you acquire it. So if you're doing major rehab work, you'll need to wait until the property is in rentable condition before you can start claiming depreciation. However, don't forget that the improvement costs you're putting into the rehab will become part of your depreciable basis once the property is placed in service. So while you can't depreciate during the rehab period, those improvement costs aren't lost - they get added to your basis and then depreciated over the 27.5 year schedule starting from your placed-in-service date. Keep detailed records of all your rehab expenses separated by repairs vs improvements, as @a54173a88722 mentioned earlier. This documentation will be crucial when you're ready to start your depreciation schedule.
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