Emma, I'm so glad you trusted your gut instincts on this! The combination of cold calling, high-pressure tactics, and demanding immediate signatures are textbook scam warning signs. You absolutely made the right call backing away when those alarm bells went off. Since you've already frozen your credit (excellent move), I'd strongly recommend also filing reports with both the FTC at reportfraud.ftc.gov and the Treasury Inspector General for Tax Administration (TIGTA). These agencies track tax-related scams and your experience could help protect others from falling for the same tactics. For your legitimate $8000 tax situation, definitely work directly with the IRS at 1-800-829-1040 rather than through any third-party "relief" companies. The IRS Fresh Start Initiative has made payment plans much more accessible - you can often get monthly installments as low as $25-50 depending on your financial circumstances, without paying the thousands in fees these companies typically charge. Also consider getting an Identity Protection PIN through your IRS online account for additional security against tax identity theft. It's free and prevents anyone from filing returns using your SSN without the special PIN. You handled this situation perfectly by recognizing the red flags before signing anything. Many people get overwhelmed by tax debt and fall for these high-pressure tactics. Your story is going to help so many others spot these warning signs!

Emma, I'm so sorry you went through this stressful experience, but you should feel proud of how you handled it! Recognizing those red flags and backing away before signing anything likely saved you from a much worse situation. As a newcomer to this community, I've been reading through all these helpful responses and wanted to add one more protective step: consider contacting your bank directly to let them know about the potential fraud attempt. Even though you gave them an empty gift card instead of your real account information (which was brilliant thinking!), it's good to have your bank aware in case the scammers try any other tactics. The advice everyone's given about working directly with the IRS is spot on. I had a similar tax debt situation last year and was amazed at how reasonable the IRS was when I called them directly. They set up a payment plan that was way more affordable than what those "relief" companies were trying to charge me. One thing that really stands out to me is how these scammers seem to specifically target people who actually do have tax issues. It makes me wonder if they're getting information from people who search for tax help online. Going forward, it might be worth being extra cautious about sharing personal information on tax-related websites or forms. You absolutely did everything right by trusting your instincts. Your experience is going to help so many other people recognize these warning signs before they get taken advantage of!

This is exactly the kind of situation where getting professional help or using specialized tools makes sense. I went through something similar with multiple years of missing 8606 forms, and the complexity of calculating basis carryforward between years can get tricky fast. One thing I'd add to the great advice already given - when you file those standalone 8606 forms, make copies of everything and keep detailed records. The IRS systems don't always link these forms perfectly to your main tax records, so having your own documentation is crucial. Also, double-check your 2021 amended return to make sure the corrected 8606 properly reflects the basis from 2019 and 2020. If you didn't include that carryforward basis, you might need to amend 2021 again once you get the earlier years sorted out. The whole chain has to be correct for your basis tracking to work properly going forward.

One thing that hasn't been mentioned yet is the timing consideration for when you file these standalone 8606 forms. While you can file them at any time, I'd recommend getting them submitted sooner rather than later, especially for 2019 and 2020. The reason is that if you ever need to take distributions from your IRA or do Roth conversions, having your basis properly documented with the IRS becomes critical. I've seen cases where people waited years to file missing 8606 forms, then when they needed to prove their basis during a distribution, the IRS was more skeptical about accepting late-filed forms. Also, make sure you're using the correct version of Form 8606 for each tax year - don't use the current year's form for prior years. The IRS wants to see the form version that was actually in effect for that specific tax year. You can find prior year forms in the IRS forms archive on their website. One last tip: when you mail these forms, include a brief cover letter for each year explaining that you're filing a standalone Form 8606 to report nondeductible IRA contributions. This helps the IRS processor understand why they're receiving just this form rather than a complete return or amendment.

Be careful with income on line 11 - sometimes it can have foreign tax withholding associated with it that you can claim as a credit. My partnership K-1 had foreign interest income on line 11 last year and I almost missed claiming the foreign tax credit. Check if there's anything on line 16 about foreign taxes paid!

Great question! In addition to the excellent answers already provided, I'd like to mention a few more types of income that can show up on line 11: - Income from Real Estate Investment Trust (REIT) distributions that don't qualify as dividends - Gain/loss from mark-to-market elections on securities - Income from commodity futures contracts held as investments - Certain foreign currency gains/losses from investment activities - Income from credit default swaps and other derivative instruments One important tip: if you have significant amounts on line 11, especially from complex financial instruments, consider keeping detailed records of the source documents. The IRS may ask for additional information during an audit since this line often contains less common types of investment income. Also, don't forget to check if any of this income has associated expenses that might be deductible - sometimes partnerships will report the gross income on line 11 and related investment expenses elsewhere on the K-1.

I completely understand your stress about the EFIN timeline - I went through this same process two years ago and the waiting was agonizing! The good news is that your status change to "In Process" is actually a major milestone. This means they've successfully processed your fingerprints and all your documentation is in order. From what I've seen in our local tax preparers' group, once you hit "In Process" status, you're typically looking at 10-21 business days for final approval, depending on the current workload. The IRS has been pretty consistent with these timelines even with the increased volume they're dealing with. Since you submitted in January and it's now mid-February, you're actually in a pretty good position timing-wise. Many preparers who submitted in December are just now getting their approvals, so your January 5th submission should come through soon. My advice: use this waiting time productively. Get your tax software fully configured, create your client onboarding processes, and maybe even start gathering documents from existing clients. When your EFIN approval comes through (and it will!), you'll be ready to hit the ground running immediately. The worst thing is getting approved and then scrambling to set everything up. Hang in there - you're closer than you think!

I feel your pain! I just went through this process last year and the waiting is absolutely brutal. The fact that your status changed to "In Process" is actually really encouraging - that's when they start the final review stages. One thing I learned is that the IRS has been pretty consistent with their timelines once you hit "In Process" status. Based on my experience and others I've talked to, you're probably looking at another 2-4 weeks from here. I know that feels like forever when tax season is already underway, but you're actually still in decent shape timing-wise. My EFIN came through on March 3rd last year after hitting "In Process" in mid-February, and I was still able to have a successful tax season. A lot of clients don't even start thinking about their taxes until late February or March anyway. While you're waiting, I'd definitely recommend getting everything else ready - your software setup, security protocols, client intake processes, etc. That way when your approval hits, you can start filing immediately instead of spending another week getting organized. The approval can literally show up overnight, so being prepared is key! Keep checking that e-Services portal daily, and don't lose hope. You're much closer than it feels right now!

From an audit perspective, the IRS is primarily concerned with unreported income rather than legitimate business refunds and returns. The fact that you're keeping detailed records of all refunds and equipment returns puts you in a strong position. One thing that might help is maintaining a simple reconciliation document that shows: Total Bank Deposits - Refunds Issued - Equipment Returns = Reported Gross Income. This creates a clear paper trail that explains the discrepancy. Also, consider using separate bank accounts for your business if you haven't already - it makes these kinds of reconciliations much cleaner and reduces the chances of mixing personal and business transactions that could complicate things further. The key is being able to substantiate every transaction with proper documentation. As long as you can explain where every dollar came from and went to, you shouldn't have anything to worry about.

I went through something very similar last year with my consulting business. Had multiple clients who paid deposits then cancelled, plus some equipment purchases I had to return. The deposit vs. income discrepancy was making me lose sleep! What really helped was creating a monthly reconciliation spreadsheet that tracked: client deposits, refunds issued, equipment purchases, equipment returns, and net income. I also kept a folder (both physical and digital) with all refund receipts, return confirmations, and email correspondence about cancellations. When I filed my taxes, I included a brief explanatory note with my return outlining the situation. My accountant said this was a smart move because it shows you're aware of the discrepancy and have legitimate reasons for it. The IRS hasn't contacted me about it, but if they ever do, I have everything documented. The peace of mind was worth the extra bookkeeping effort. Your situation sounds totally legitimate - just make sure you keep those refund and return records organized!