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When I got an LT38 last year, it turned out one of my 1099s didn't get reported correctly. Double check if you had any side income, investment transactions, or early retirement withdrawals in 2021 that might have been missed. Sometimes the simplest explanation is the right one! Also, call the Taxpayer Advocate Service at 877-777-4778 if you're struggling. They're an independent organization within the IRS that can help resolve issues. Completely free service that saved my butt when I was dealing with incorrect penalties.
I've heard mixed things about the Taxpayer Advocate Service lately. Aren't they super backlogged too? I tried contacting them about 3 months ago and still haven't heard back. Do they actually prioritize cases with pending levies like an LT38?
You're right that they're backlogged, but they do prioritize cases with imminent collection actions like levies. The key is to emphasize that you have an LT38 notice with a pending levy when you call. Also, while the main line might be backed up, try calling your local TAS office directly (you can find the number on the IRS website by searching "local taxpayer advocate" and your state). I had to be persistent, but once I got assigned an advocate, they resolved my issue in about 3 weeks. They're especially helpful if you can demonstrate that the standard IRS processes have failed you or if you're facing financial hardship because of the tax bill.
Don't ignore the LT38! I made that mistake and ended up with a bank levy that completely froze my checking account for almost 2 weeks. Even if you can't pay the full amount, responding to the notice stops the collection process while you work out a solution. The easiest option is an installment agreement - you can set this up online for debts under $50,000 at https://www.irs.gov/payments/online-payment-agreement-application. I'm currently paying $85/month on a similar tax debt. The interest and penalties continue to accrue, but at least you avoid levies and it's better than paying credit card interest rates.
That's terrifying about your bank account! I definitely don't want that to happen. Did you find that setting up the installment agreement online was pretty straightforward? And does the IRS typically approve reasonable monthly payment amounts or do they push for higher payments?
One thing to consider that hasn't been mentioned yet - if your income is currently only $55k, you might actually be in the 0% long-term capital gains tax bracket for at least some of your gains. For 2025, single filers with taxable income under $47,025 (after deductions) pay 0% on long-term capital gains. You could strategically harvest some gains each year while staying under that threshold. Even if you can't get all your gains at 0%, getting some of them tax-free is a huge advantage.
Wait is this for real?? So if my total income including the capital gains stays under that threshold, I pay NOTHING on the gains? That seems too good to be true...
Yes, it's absolutely real! The long-term capital gains tax rate is 0% for income (including the gains themselves) up to that threshold. But there's an important clarification - when figuring out if you're under the threshold, you need to include the capital gains in your income calculation. So if your taxable income from your job is $40,000 after deductions, you could realize about $7,000 in capital gains and still pay 0% on those gains. Once you go over the threshold, the amount over gets taxed at 15% (assuming you don't hit the higher brackets). This is why spreading sales over multiple tax years can be so beneficial.
has anyone used both turbotax premier and h&r block deluxe for reporting investments? im in a similar situation and wondering which one handles capital gains better. heard turbotax integrates with brokerages but costs more??
I've used both. TurboTax Premier is definitely better for complex investment situations. It imports all your trades automatically from most brokerages and calculates everything correctly. H&R Block can do it too but the interface isn't as smooth. If you have lots of transactions, the time saved with TurboTax is worth the extra cost IMO.
Did you file with any credits like the Earned Income Credit or Child Tax Credit? Those automatically get extra scrutiny and delay processing. My sister filed with EIC on Jan 30 and didn't get her refund until late March.
No special credits this year, just a straight W-2 filing with standard deduction. That's why I'm so confused about the delay. Nothing complicated that should trigger extra review.
That's strange then. Usually simple returns get processed quickly. One other thing to check - did you receive all three stimulus payments correctly? If there's any discrepancy with the Recovery Rebate Credit, that could cause delays too. Also make sure your bank account info was entered correctly in TurboTax.
This happened to me too, and it turned out I had checked the wrong box about healthcare coverage. Took forever to resolve! Have you tried contacting your local IRS Taxpayer Assistance Center? You need to schedule an appointment, but talking to someone face-to-face can sometimes get things resolved faster than phone calls.
Can confirm this works. I had an issue with identity verification delaying my refund. Made an appointment at my local IRS office, brought my ID and documents, and they cleared the hold while I was there. Had my refund the next week.
This is why I always do my own taxes using software. Tax preparers at those cheap places often have minimal training and make mistakes like this. For a simple return (sounds like you just have a W-2?), you can use free filing options through the IRS website. Did the preparer ever explain WHY they thought you needed an EIN? There are very specific circumstances where an individual might need one (like if you're setting up a solo 401k), but for a typical college student with a part-time job, there's absolutely no reason.
They never really explained it clearly. When I called back to ask questions, they just quickly said they'd cancel everything and deactivated my account. That's what made me most suspicious - like they knew they got caught doing something they shouldn't have been doing. I think I'm definitely going to do my own taxes from now on. I only went to them because a friend recommended them, but now I'm wondering if my friend actually had a good experience or if they might have had something similar happen without realizing it.
Something similar happened to my son last year. The tax place was trying to classify him as an "independent contractor" when he was clearly just a regular employee with a W-2. They said getting an EIN would help him "write off expenses" and get a bigger refund. Turned out they were planning to file a Schedule C with fake business expenses. The IRS ended up auditing him and it was a huge mess to clean up. He had to pay back the incorrect refund plus penalties. Definitely contact the IRS right away and maybe even consider filing a report with the FTC for tax preparer fraud.
Norah Quay
If you're comfortable with a bit more hands-on approach and want to save money, Square Payroll is another decent option. I use it for my retail shop with 6 employees. It's pretty straightforward, handles tax filings, and integrates well if you're already using Square for payments. The biggest advantage is the price - it's one of the more affordable options out there. The downside is the customer service isn't great if you run into problems. But since you have accounting knowledge, you might not need as much support.
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Owen Devar
ā¢Thanks for the Square recommendation. Have you had any issues with their tax filing services? That's my biggest concern with bringing payroll in-house - making sure all the filings happen correctly and on time.
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Norah Quay
ā¢I've been using Square Payroll for about two years now and haven't had any issues with their tax filings. Everything has gone through correctly and on time. They send you email reminders when quarterly filings are approaching and confirmations when they've been submitted. The system automatically calculates federal and state withholding, Medicare, Social Security, and unemployment taxes based on your employees' information. They also generate and file W-2s at year-end. Just make sure you set up your state tax accounts correctly during the initial setup.
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Leo McDonald
Don't forget to check if your bank offers payroll services! I use Chase Payroll for my landscaping business and it's been great. Since it's integrated with my business checking account, transfers for payroll are super easy.
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Jessica Nolan
ā¢Our credit union offers something similar but the interface looks like it was designed in 1995 lol. How's the Chase system? Modern and easy to use?
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