Urgh, I hate when this happens. The IRS is holding our money hostage and can't even tell us why without making us wait for some letter that may or may not even arrive. This is my third year in a row dealing with delays. The system is broken beyond belief.

I feel your frustration! I went through something similar last year and it turned out to be an automated review for Head of Household filing status. The IRS has been extra cautious about HOH claims lately because of fraud. In my case, they just needed to verify that I actually qualified for HOH status - had to provide documentation showing I supported a qualifying person and paid more than half the household expenses. The whole process took about 6 weeks from the initial "Action Required" message to getting my refund. Try not to panic - it's likely just a routine verification and not an audit. Keep checking your transcript online as others mentioned, and if you don't get a letter within 30 days, definitely call them directly.

Has anyone dealt with the K-1 vs W-2 issue as a founder? My company started classifying me as a partner last year after raising our Series A, and I got a K-1 instead of a W-2. The quarterly estimated tax payments are killing me, and I wasn't prepared for the full self-employment tax hit.

I'm a tax attorney who's dealt with many founder classification cases. Your co-founder cannot unilaterally change your employment status, especially when you have a signed employment agreement. This is a common tactic to shift payroll tax burden from the company to the individual. The IRS uses a multi-factor test to determine worker classification, focusing on behavioral control, financial control, and relationship type. Based on your description - fixed salary, specific job title, limited decision-making authority, and formal employment agreement - you're clearly an employee under IRS guidelines. If your co-founder insists on this change, I'd recommend getting a written determination from the IRS using Form SS-8. This gives you official classification that protects both parties. Also consider that misclassification can trigger penalties and back taxes for the company, plus you could lose certain employment protections and benefits. Don't let him pressure you into taking on additional tax liability without proper legal review of your agreements and circumstances.

idk why everyone sleeping on taxr.ai but its literally the best $5 i ever spent. saved me hours of phone calls and actually told me why my refund was delayed

Try calling 844-545-5640 early morning around 7-8am. It's the practitioner priority line but sometimes they'll help regular taxpayers too if you're polite and explain you've been trying for weeks. Worth a shot!

Have you checked if you claimed any credits that might trigger additional review? EIC or Child Tax Credit can slow things down. Also, did you file with a military address? That sometimes routes returns through a different processing center. Try checking your transcript again tomorrow morning - they often update overnight on Thursdays.

I'm going through the exact same thing! Filed 1/30, accepted same day, got my state refund on 2/12, but federal is still stuck with just the 971 code. Called the IRS twice and got different answers - first agent said it's just normal processing, second one mentioned a "random review" but couldn't give specifics. What's frustrating is that my transcript hasn't updated at all since the 971 appeared on 3/2. At least your state came through quickly too, so hopefully that's a good sign that our info is all correct. Going to try checking again Friday morning since someone mentioned they update overnight on Thursdays.

Important tip: be aware there's a 3-year deadline for filing an amended return for a refund! For 2021 taxes, you generally have until April 15, 2025 (3 years from the original due date). Don't wait too long to file your 1040-X. Also, SAVE EVERYTHING related to this amendment. The IRS can sometimes take 4-6 months to process 1040-X forms, and having copies of everything you submitted makes follow-up much easier if needed.

The 3-year deadline is still based on the original filing date, not when you paid the balance after receiving the notice. So for your 2021 return, you still have until April 15, 2025 to file the 1040-X for a refund - paying that IRS bill doesn't extend this deadline. Regarding e-filing amendments - you're right that it's still mostly paper filing for 1040-X forms, though some tax software now allows e-filing of certain simple amendments. For complex situations like missing cost basis with supporting documentation, you'll likely need to mail it in. Make sure to send it certified mail so you have proof of delivery. One more thing for the original poster - when you file your 1040-X, you might want to include Form 4852 (Substitute for Form W-2/1099) if your brokerage didn't provide corrected forms. This helps explain why the cost basis was missing on your original return and strengthens your case for penalty abatement.