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I had a similar situation in 2020. One thing that helped me was contacting my local Taxpayer Advocate Service office. They can sometimes intervene when there are hardships involved (like your home purchase). You'll need to complete Form 911 to request their assistance. In my case, they were able to expedite the process somewhat - it still took about 4 months total, but that was better than the year I was initially quoted. Just search "Taxpayer Advocate Service" + your city to find the local office.
Thanks for suggesting this! I didn't know about the Taxpayer Advocate Service. Did you have to prove financial hardship, or is the identity theft itself enough reason for them to help?
The identity theft alone may not be enough - you need to demonstrate some kind of significant hardship. In your case, the home purchase being jeopardized should qualify. Make sure to include documentation about your pending home purchase and any deadlines you're facing when you submit Form 911. Include a copy of your purchase agreement or a letter from your lender explaining that the mortgage approval is contingent on resolving the tax situation. Be very specific about dates and financial consequences if your tax situation isn't resolved in time.
Has anyone tried contacting their congressional representative's office about IRS issues? My brother had an identity theft situation last year, and after months of no progress, he contacted our senator's office. They have staff specifically for helping constituents with federal agency problems. Within a few weeks of the senator's office inquiry, the IRS suddenly became much more responsive. Might be worth a shot if other approaches aren't working quickly enough.
I second this approach. I worked for a congressional office years ago, and constituent services for federal agencies (especially IRS issues) was a big part of our work. The IRS has liaisons specifically for congressional inquiries, and they can often move things along much faster than going through normal channels.
Just wanted to add some info about penalties for the original poster. Since you had no income in 2021, you probably weren't required to file at all, which means there's no failure-to-file penalty. But if you did have some income from interest or other sources that required filing, here's what you should know: The failure-to-file penalty is typically 5% of unpaid taxes for each month your return is late, up to 25%. If you're more than 60 days late, the minimum penalty is either $435 (for returns due after 1/1/2020) or 100% of the tax owed, whichever is less. But again, this only applies if you were required to file in the first place.
What about the stimulus payments from 2021? Could filing for that year help claim those if someone missed them originally?
Yes, filing a 2021 return could help you claim the third Economic Impact Payment (stimulus) if you were eligible but never received it. The third stimulus payment was $1,400 per person, and it was technically an advance payment of the 2021 Recovery Rebate Credit. If you were eligible for the stimulus but didn't receive it, you can claim it as the Recovery Rebate Credit on your 2021 return. This is a really good point - even if you had zero income and weren't required to file, you might want to file specifically to claim this credit. However, you must file within three years of the original due date to claim this credit, so for 2021 taxes, you'd need to file by April 18, 2025.
Does anyone know if TurboTax or H&R Block still sell their 2021 software? I found my old W-2 from that year and realized I never filed.
For your specific situation with a husband/wife LLC, have you considered a Solo 401k with a separate SIMPLE IRA for your employee? Here's why: Solo 401k for owners: - Maximum contribution potential - Lower administrative costs - Simpler testing requirements SIMPLE IRA for employee: - Only requires 2-3% match - Almost no administration fees - No testing requirements This dual approach often works better cost-wise than a single 401k plan covering everyone when you have just 1-2 employees. The downside is you need to manage two different plans.
Is this approach actually legal? I thought if you offer a retirement plan it has to be available to all eligible employees. Wouldn't having separate plans violate some non-discrimination rules?
This is a common misconception. The key is in how you structure the business entities. If the owners operate through a separate entity (like a partnership) from the employee-hiring entity, then you can legally establish different plans. You'd need to consult with a tax professional to ensure your specific business structure qualifies, but many small businesses with similar structures to yours successfully implement this dual approach. The critical factor is having proper documentation of the separate business entities and ensuring you follow all IRS guidelines for each plan type.
Speaking from experience, we have a similar LLC (me and my wife plus 2 employees) and we went with Guideline for our 401k. Only $49/month plus $8 per participant, so WAY cheaper than what Paychex quoted you. Their platform integrates with most payroll systems too. For maximizing contributions, we did a Safe Harbor 401k with 4% match, then added a discretionary profit sharing component that allowed us to contribute more for ourselves while staying within IRS guidelines. We were able to get almost to the $61,000 annual limit for each of us.
Have you tried contacting the Taxpayer Advocate Service? They're an independent organization within the IRS designed to help taxpayers who are experiencing hardship or having problems that haven't been resolved through normal IRS channels. Their number is 877-777-4778. They might be able to help escalate your issue, especially if you're facing a deadline.
The Taxpayer Advocate Service is practically useless these days. I tried contacting them for help with an identity theft issue and they told me they're so backlogged they're only taking "extreme hardship" cases. Apparently owing the IRS $9,000 I don't actually owe isn't "extreme" enough lol.
That's disappointing but unfortunately not surprising. Their resources have been stretched thin over the past few years. For identity theft cases specifically, the IRS has a specialized unit you can contact directly at 800-908-4490. They handle cases where someone filed a fraudulent return using your information. For the incorrect tax debt situation, you might need to send a formal written dispute with certified mail. It's slower but creates an official record of your dispute that's harder for them to ignore. The key is to explicitly state the economic hardship the incorrect assessment is causing you - using those specific terms can help get your case prioritized.
If you're having trouble with the IRS website, have you considered using a different browser or clearing your cache? Sometimes their site has weird compatibility issues. Also double check that you're on the official irs.gov site and not some spoofed version. There are a ton of scam sites that look like the IRS.
This isn't a browser issue, it's the IRS being understaffed and overwhelmed. No amount of clearing cache is going to make them respond to a submitted ticket faster š
Jean Claude
Quick tip for first-time 1040 filers: The IRS has a free guided filing system called Free File if your income is under $73,000. Much easier than trying to figure out the paper form yourself, and it automatically checks for student credits. I used to think doing taxes meant filling out paper forms by hand, but the electronic systems ask you simple questions and fill in the right lines on the 1040 for you. Saves tons of headaches!
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Charity Cohan
ā¢Does Free File include state tax returns too? Or do I need to pay extra for that part? My state doesn't have its own free filing system.
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Jean Claude
ā¢It depends on which Free File provider you select. Some include free state returns, others charge for them. When you go to the IRS Free File page, you can see which providers offer free state returns for your situation. I used TaxAct through Free File last year and got both federal and state for free. The IRS website has a tool that helps match you with the right provider based on your income, state, and other factors like being a student. Just make sure you start at the official IRS.gov website to get the truly free versions.
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Josef Tearle
dont stress too much about the 1040. i was overwhelmed too but honestly for most college students with just a W-2 it's super simple. the most important thing is dont miss the education credits!!!! they can be worth a lot of money. look for the american opportunity credit, it gave me like $2500 back last year!!!
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Marcus Marsh
ā¢What documents do I need to claim the education credit? Just my tuition statement from school? And does financial aid affect how much I can claim?
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