Does winning a trip as a customer count as self-employment though? I thought self-employment was only if you're actually selling stuff or providing services. The post says she won it through her consultant, which makes it sound like she's just a customer who entered some kind of contest?

You're right about the distinction. If she's just a customer who won a prize, then it would be reported as "Other Income" on Schedule 1, not subject to self-employment tax. The key is how the 1099-MISC is filled out - Box 3 is for "Other Income" like prizes and awards, while Box 1 would be for self-employment income. The OP should check which box on the 1099-MISC has the amount listed. If it's in Box 3, then it's just regular income (not subject to self-employment tax). If it's in Box 1, then Mary Kay might be incorrectly classifying it as self-employment income.

That's unfortunately not going to work. The IRS has very clear rules distinguishing gifts from prizes. A gift must be given out of "detached and disinterested generosity" with no expectation of benefit to the giver. When a company like Mary Kay gives a trip through a promotion or contest, it's clearly for business purposes (advertising, client retention, etc.), so it's a prize, not a gift. The 1099-MISC confirms this classification. Trying to reclassify it as a gift would likely raise red flags with the IRS.

I claimed CTC for my kids too and got my refund after about 4 weeks. Did you also claim Earned Income Credit? That usually takes longer. You might want to try getting your tax transcript from the IRS website - sometimes it shows more details about what's happening with your return.

You're even more detail oriented than me lol! Have you always used FreeTaxUSA? I've been thinking about switching from TurboTax to save some money.

I've used FreeTaxUSA for the last three years after switching from TurboTax. The interface isn't quite as polished, but it's completely adequate and handles all my tax situations correctly. The federal filing is free and state is only $15 compared to the $120+ I was paying with TurboTax for the same exact results. If you have a fairly straightforward tax situation (even with some common deductions and forms like I listed), it works great. The only people who might want to stick with the more expensive options are those with extremely complex situations like multiple businesses, complex investments, or unusual tax situations.

Thank you so much for this specific information! I just checked my 1042-S again and it DOES have the "corrected" box checked at the top. I hadn't even noticed that before. So I'm guessing you're right that the timing between their correction and my filing might be the issue. I'll contact the issuer tomorrow and specifically ask about when they submitted the electronic correction to the IRS. That seems like the most likely explanation for why the IRS thinks there's a mismatch when my numbers actually match what's on my form.

Glad I could help! That "corrected" box is definitely your smoking gun. Based on what you've said, I'm almost certain the timing is the issue. When you contact the issuer, ask them to provide you with documentation showing both the original and corrected submission dates. Having this documentation will make resolving the issue with the IRS much easier. You can include it with your response to show exactly what happened and why there appears to be a mismatch in their system.

In my experience, these specific matching issues almost always require a phone call or a written response. The online account tools don't have functionality to resolve document matching problems. Your best option is probably to prepare a written response with copies of your documents and mail it to the address on your notice.

Do you know if the safe harbor is calculated on total tax liability or just income tax? Like does it include the self-employment tax portion too when figuring the 100% or 110% of last year's taxes?

The safe harbor amount is based on your total tax liability, which includes both income tax and self-employment tax. So when people talk about covering 100% (or 110% for higher incomes) of last year's tax, they're referring to the total amount on line 24 of your Form 1040 from last year - that's your total tax, including self-employment taxes. That's why self-employment income can really complicate things, because you're responsible for both the employee and employer portions of Social Security and Medicare taxes, which adds about 15.3% on top of your regular income tax.

That's a great tip! I didn't realize you could adjust Social Security withholding too. Is there a limit to how much you can withhold from Social Security benefits specifically?

This is really helpful to know. Did they at least help reduce the amount you owed at all? Or was it literally just setting up the payment plan?

Literally just set up a standard payment plan. When I first called, they made it sound like they could potentially get my tax debt reduced through an Offer in Compromise. But after I paid their initial fee, they came back and said I didn't qualify for that (which I could have figured out myself using the IRS pre-qualifier tool). The worst part was how they dragged everything out. What should have taken maybe 2-3 weeks took over 3 months, all while penalties and interest continued adding up. They claimed this was "part of the process" but I think they were just juggling too many clients with too few staff.

Thank you so much for this insight! After reading all these comments, I'm definitely going to stay away from the big national companies. I think I'll try the DIY route first using the tools mentioned here, and if I get stuck, I'll look for a local EA or CPA. Any specific red flags I should watch out for when talking to local tax pros?

You're making a smart choice! The biggest red flags to watch for with local tax pros are: 1) Anyone who promises they can settle your debt for "pennies on the dollar" without reviewing your full financial situation first. Legitimate professionals know that IRS acceptance rates for major reductions depend entirely on your specific circumstances. 2) Professionals who won't provide a clear, written fee agreement before starting work. Reputable tax pros will outline exactly what services they'll provide and what they'll charge, with no surprises. 3) Someone who seems unfamiliar with Form 433-A/F (Collection Information Statement) or Form 9465 (Installment Agreement Request). These are fundamental forms for tax resolution that any qualified pro should know inside and out. Good luck with your DIY approach! The IRS website is actually quite helpful for setting up standard payment plans.