Thanks for this suggestion! I just checked my IRS transcript online and found a TC 971 from about 5 months ago but never received any notice. Would you know what my next step should be? Should I call and reference this specific code?

Yes, definitely call and reference that specific TC 971 code along with the date it shows on your transcript. That's proof they've at least started processing your amendment. When you call, ask specifically what notice was issued related to that code. It's very common for IRS notices to get lost in the mail or sent to old addresses. Tell them you never received anything and ask if they can reissue the notice or tell you what information they need from you to continue processing your amendment. Having this specific code information will help get you to a more knowledgeable agent when you call.

I second this approach. I had a similar issue with an amended return and my senator's office was able to help. The caseworker told me they're seeing a huge increase in IRS cases because of the backlog. Worth trying if other methods don't work.

Thank you for this suggestion! I never thought about contacting my congressional rep for a tax issue. How exactly did you start this process? Did you call their office or is there a form on their website?

Yes, you should definitely mark that your child can be claimed as a dependent if that's the case. The kiddie tax (Form 8615) specifically applies to dependents with unearned income above a certain threshold. If you don't indicate they're a dependent, the tax calculations will be incorrect.

That's a great idea! I didn't think about using a third software as a tiebreaker. Have you found any free options that would work for this? I'm hesitant to pay for yet another tax program just to verify.

CashApp Taxes is completely free for federal and state, so that's a good option for a tiebreaker. TaxAct also has a free version that might work depending on your tax situation. Just enter your information and go far enough to see the calculation results - you don't need to file through them. Even if you just get to the federal calculation stage, that should tell you which of your other returns is calculating federal taxes correctly.

Same thing happened to me but with H&R Block calculating it wrong! The ACA credit calculations are super complicated. Double check Form 8962 on both returns if you have marketplace health insurance.

Thanks for mentioning this about being a dependent! So if my parents claim me, does that mean I'll end up owing more in taxes than if I filed independently? And what kind of things should I be tracking in this spreadsheet? Just dates, clients, and amounts or is there more I should be writing down?

Being claimed as a dependent could result in owing more taxes in some situations because your standard deduction might be lower than if you filed independently. However, there are other benefits your parents get from claiming you that might outweigh this difference for your family overall. For your spreadsheet, track way more than just the basics! Record dates, client names, payment amounts, payment methods, mileage to/from each client (with starting/ending odometer readings ideally), any supplies purchased (treats, bags, etc.), apps or software you use for the business, a portion of your phone bill if you use it for client communication, any insurance you get, and even home office expenses if you use part of your living space exclusively for business administration. Basically, document EVERYTHING with receipts. Tax time will be so much easier, and you'll maximize your deductions which directly reduces your taxable income.

This is a really good point. I'm in NYC and got completely blindsided by having to pay city tax on top of state and federal. It was an extra 3.8% I wasn't expecting!

That's really helpful info about the automatic penalty systems! Do you know if there's a specific form or procedure for "reopening" a partnership for tax purposes after a final return was filed? Or do I just file a regular 1065 again?

You just file a regular Form 1065 again. There's no special "reopening" form needed. Just make sure you don't check the "final return" box this time! The IRS systems are pretty forgiving about this situation since it happens fairly often. The most important thing is to make sure your client properly closes everything at the state level once they're truly done with the business. Until they formally dissolve the LLC with the state, they'll need to keep filing returns as long as there's any activity. Some states also require annual reports or minimum taxes just to maintain the LLC, even with zero activity.

In my experience, the penalties really depend on the amount of tax that was underpaid as a result. Small K-1 with minimal income? Probably just interest. Large K-1 with significant income? Could be 20% accuracy-related penalty plus interest. But filing voluntarily before they catch it is ALWAYS better than waiting.