


Ask the community...
My mom had this exact issue but with a $156 bill. Turns out the IRS had sent multiple notices to her old address even though she had filed with her new address for years. By the time she found out about it, her credit score had already dropped 40 points! She had to file Form 911 (Taxpayer Advocate Service) to get help, and it took almost 6 months to get resolved and removed from her credit report. Don't wait on this - the longer it sits in collections, the harder it is to fix.
Thanks for sharing this. Did your mom have to pay the amount while disputing it? I'm tempted to just pay the $97 to make this go away, but I'm also upset about potentially taking a credit hit for something I never knew about.
Yes, she did pay it while disputing. The IRS representative told her that paying it wouldn't be seen as admitting fault, but would stop additional interest and penalties from accruing while the dispute was being processed. She still fought to have the collection mark removed from her credit report though, which was the more important part. The Taxpayer Advocate helped her file the right paperwork to show she never received proper notice. If you can prove you updated your address and the IRS still sent notices to the old one, you have a strong case to get the collection removed from your credit report even if you pay the bill.
$97 is such a small amount to send to collections! The IRS is really getting aggressive these days. I had a similar issue but with a larger amount ($560). Whatever you do, DON'T ignore it. Even small collections from the IRS can escalate to wage garnishment eventually.
True! My cousin ignored a small IRS debt and ended up with a tax lien that showed up when he tried to refinance his house. Cost him thousands in higher interest rates. Even small amounts matter to the IRS!
Don't forget that you need to track ALL car expenses if you're going to use actual expenses instead of standard mileage. Most independent contractors are better off with standard mileage (especially with the higher rates now), but just wanted to mention this since a lot of people try to do both and that's not allowed! Also, make sure to track business parking fees and tolls because you can deduct those SEPARATELY from your standard mileage deduction!!
Wait can you really deduct parking and tolls separately? I thought those were included in the standard mileage rate! I've been tracking everything together in one log. Do I need separate records for those?
Yes, parking fees and tolls related to business travel are deductible separately from your standard mileage rate! The standard mileage rate only covers the basic costs of operating your vehicle (gas, maintenance, depreciation, etc.). You should keep separate records of your parking and toll expenses for business trips. Save those receipts or take photos of them, and note which business trip they were associated with. This is one of the most overlooked deductions for freelancers who drive for work.
Can anyone reccomend a good app for tracking milage? I'm a doordash driver on weekends and I've just been writing down my odometer readings but there has to be a better way right?
I use MileIQ and it's pretty decent. Automatically tracks all your drives and you just swipe left for personal or right for business. Costs like $6/month but it's worth it to me.
One thing that helped me with a similar situation was getting old bank statements. Even though you mentioned the IRS only had recent transcripts, your bank might have records going back further. Most major banks keep statements for 7+ years, and some even longer. Even partial statements can help establish income patterns. Also, if you filed any returns during those years (like state returns), those can provide clues about your income. Same with mortgage applications or loan documents from that period - they usually include income verification. For the oldest years where you truly have no documentation, be reasonable but conservative in your estimates. The IRS mainly wants to see that you're making an effort to comply.
I actually called my old bank and they only keep records for 7 years so that only helps with the most recent missing returns. Did you have any luck explaining your situation to the IRS? Were they understanding about the estimation approach?
In my experience, the IRS was surprisingly reasonable once I explained my situation clearly. The key was documenting my estimation methods and being consistent. For the years where you have absolutely no documentation, focus on being realistic rather than punitive to yourself. I included a detailed cover letter with each return explaining exactly why I had no records and the methodology I used to create my estimates. The agent I eventually worked with appreciated the transparency and it made the negotiation process much easier. Remember that they deal with record loss situations frequently - you're not the first person to go through this.
Don't forget to check with the Social Security Administration too! They might have some records of any income that was reported under your SSN during those years, even if the IRS doesn't have the full returns anymore. This can give you another data point for your estimates. You can request your Social Security Statement online through their website pretty easily and it shows annual reported earnings.
3 Make sure to check if you included the corrected 1099-NEC amount on your tax return! Sometimes people receive a corrected form but forget to use the updated figures when filing. If you reported the amount from the corrected 1099-NEC correctly on your return, make that very clear in your response to the CP-2000.
1 Good point - I double-checked and I did use the corrected amount on my Schedule C. Should I specify which line on my tax return shows this income to make it easier for them to see I reported it correctly?
3 Absolutely! Being specific helps the IRS reviewer quickly verify your claim. Mention the exact form, line number, and amount where you reported the income. For example: "This income was correctly reported on my 2024 Form 1040, Schedule C, Line 1, in the amount of $X,XXX as shown on the CORRECTED 1099-NEC." Also, if the corrected 1099-NEC shows a different amount than the original, clearly point out which amount you reported and why. Sometimes corrections involve more than just checking a box - they might change the income amount too. The clearer and more specific you are, the faster they can resolve your case.
16 Don't forget to keep track of all communications with the IRS regarding this issue! I had a similar situation last year, and documentation was key to getting it resolved.
6 What's the best way to document everything? Should I be keeping a log of phone calls too, or just saving copies of written correspondence?
Nia Thompson
Just a heads up - even though your 2022 return was accepted, you might still face a late filing penalty IF you owed taxes (which you don't, so you're probably fine since you're getting a refund). For anyone else reading this who missed filing and OWED money, you'll likely face both late filing and late payment penalties. The late filing penalty is usually 5% of unpaid taxes for each month your return is late, up to 25%. The late payment penalty is typically 0.5% of unpaid taxes per month, up to 25%.
0 coins
Mateo Rodriguez
ā¢Can you claim reasonable cause to avoid penalties? My mom got really sick last year and I completely forgot to file my 2022 taxes until recently.
0 coins
Nia Thompson
ā¢Yes, the IRS does accept reasonable cause explanations for waiving penalties in certain circumstances, and a serious illness in the family can definitely qualify. You'll need to attach a signed statement explaining the situation when you file your late return. Be specific about the timeline of your mother's illness and how it prevented you from filing on time. Make sure to gather any supporting documentation you can, like medical records or doctor's notes. The more documentation you have, the stronger your case will be. Just be aware that the IRS reviews these on a case-by-case basis, so there's no guarantee, but they do often show leniency in genuine hardship situations.
0 coins
Aisha Hussain
Something similar happened to me but my e-file for 2022 was rejected cause of an IP PIN issue. Had to paper file instead. Anyone know if paper filing for prior year returns is taking forever right now?
0 coins
GalacticGladiator
ā¢Paper filing is STILL a nightmare. Sent my 2022 return by mail in January and it took almost 4 months to process. Definitely e-file if you possibly can. The IRS backlog for paper returns is insane.
0 coins