Thank you for this advice - you're right that I should respond directly to this notice rather than assuming they'll eventually process the amendment. Did you have to get tax transcripts to resolve your situation? Someone else mentioned those and I'm not sure if I need them.

Yes, tax transcripts were really helpful in my case. They show exactly what the IRS has in their system versus what you filed. You can request them online through the IRS website or have your accountant get them. The transcript will show if your amended return is in their system and whether your $4k payment was properly applied. The other thing to consider is requesting a formal appeal or audit reconsideration. This creates a separate track for resolving your case rather than just waiting for the amendment to be processed, which can take forever. Your accountant should be familiar with this process. The key is to be proactive rather than reactive - don't just wait for the IRS to figure it out.

This is excellent advice. I'm a tax preparer and see this issue multiple times every tax season. The IRS computers just match document numbers, so if the cost basis isn't properly reported, they'll tax the entire proceeds as gain.

That's super helpful! I'll check again tomorrow. Did you get any kind of email notification when it was uploaded or did you just happen to check and see it was there?

I didn't get any email notification, I just happened to check and it was there. I know some of my coworkers did get email notifications though, so it seems inconsistent. Might depend on what email preferences you have set up in the HR system. I'd recommend checking once in the morning and once in the evening rather than constantly refreshing. Their system gets really bogged down this time of year with everyone checking for their W2s.

Yep! This happened to me two years ago. My state withholding was completely wrong. I printed what was available and took it to HR, and they had to issue a corrected W2. Took almost 3 weeks to get the fix. I'd recommend comparing your last December paystub (with the year-to-date totals) to your W2 when it arrives to catch any errors early.

Wait really?? I do have some freelance income on the side of my regular job. So you're saying even though I'm extending my 2024 tax return, I still need to make my first quarterly payment for 2025 by April 18th? How do I even figure that out when I haven't completed last year's taxes yet??

Yes, that's exactly right. The extension only applies to your 2024 return, not to your 2025 estimated payments. It's super confusing and trips up a lot of people. For figuring out your 2025 quarterly payment, you can use last year's income as a basis (the safe harbor rule). If you pay 100% of what you owed last year (or 110% if your AGI was over $150,000), spread across your quarterly payments, you'll avoid penalties even if you end up owing more. You can always adjust later payments up or down as you get a better picture of your 2025 income.

This is technically true but still not a great idea. If you don't file or extend and then discover you actually DID owe money (like if you made a calculation error), you'll get hit with both failure-to-file AND failure-to-pay penalties, which add up fast. Plus, the statute of limitations for the IRS to audit you doesn't start until you file.

We don't actually have a formal custody agreement filed with the court. Everything has been verbal between us so far. I've been trying to avoid court involvement, but maybe I need to get something official in place?

Without a formal custody agreement, the IRS residency rules definitely apply. This means you, as the custodial parent with the child living with you most of the year, have the right to claim him. I would strongly recommend getting a formal custody agreement in place. This protects both you and your child by clearly defining visitation schedules, decision-making authority, and yes, tax claiming rights. Without documentation, these disputes can become "he said/she said" situations that often escalate unnecessarily. A formal agreement can specifically address who claims the child in which tax years, and can be structured in various ways (alternating years, splitting different tax benefits, etc.) if you choose to share this benefit.

This is accurate. My cousin had this exact situation and the judge split the tax benefits - she got odd years and he got even years, even though the kid lived with her most of the time. Judges have a lot of discretion with this stuff.

That's an interesting point! I've owned exactly 50% since the beginning with no changes to the ownership structure. The only change in my situation was becoming a US tax resident 4 years ago (I filed the 5471 that first year as required when acquiring stock as a US person). After that, there have been zero changes to ownership percentages or corporate structure.

Given there haven't been any ownership changes since your initial filing, your analysis looks even more solid. That initial filing when you became a US resident was correct (Category 3 for acquisition), but the ongoing yearly filings wouldn't be required if you don't meet any of the other categories. One more thing to consider - has the foreign corporation ever made any distributions or dividends to you during these years? Sometimes CPAs file Form 5471 if there are distributions because it provides a cleaner way to report them, even if technically not required. Might explain why they've been insistent on filing it.

I work with international business structures and this is 100% correct. The control test for Category 4 requires MORE than 50% ownership, not exactly 50%. This is a common misconception among accountants who don't specialize in international taxation. That said, there's a specific rule for closely held companies where two 50% owners might both be considered to have "control" in certain circumstances. This usually applies when both owners are actively involved in management decisions. Is that the case with your foreign corporation? Do you and the other owner make joint decisions, or does one of you have more operational control?