Thanks for the suggestion! Yeah, I tried different browsers, clearing cache, even my phone - same maintenance message everywhere. I think their servers are just down. I ended up filing an extension through the IRS Free File site just to be safe. Thankfully I'm pretty sure I'm getting a refund so I shouldn't have any penalties. Just super frustrating to be so close to finishing!

Good move filing the extension - that'll give you plenty of time. And yeah, if you're getting a refund, there's zero penalty for filing later with an extension. The penalties only apply when you owe money and haven't paid by the deadline. For what it's worth, FreeTaxUSA has been my go-to for years and this is the first time I've heard of them having major issues so close to the deadline. Their customer service is usually pretty good about making things right, so maybe reach out to them once things are back up and running.

Thanks for the update! I just checked and was able to log in too. Website seems to be running slower than usual but at least it's working again.

OMG thank you!!! Just logged in and all my information is still there! Finishing up right now before anything else can go wrong. What a stressful evening this has been!

Thanks for breaking it down like this! This makes a lot of sense. Do I need to do anything special at tax time to report this deposit? Does it show up anywhere on Schedule C?

You don't need to do anything special with this deposit on your tax return. It won't appear on your Schedule C at all since it's not an income or expense item. Schedule C only reports items that affect profit or loss. This deposit will only be reflected on your balance sheet as an asset. Since the IRS doesn't require sole proprietors or single-member LLCs to file balance sheets with their tax returns, you won't need to report it anywhere on your tax forms. Just keep good records in your accounting system so you remember to properly handle it when it gets refunded.

Yeah, and make sure you get documentation if they don't refund it! My state tried to claim I never paid a deposit in the first place when it came time for my refund. Thankfully I had kept the original receipt and was able to get it back, but it was a hassle.

Wait, I'm confused now. My 1099-R shows the same amount in box 1 and 2a (the full $38,000), so does that definitely mean I don't need the Simplified Method? The software still keeps asking me about it.

If box 1 and box 2a show the same amount ($38,000), then yes, your entire distribution is taxable and you do NOT need to use the Simplified Method Worksheet. This indicates you only had pre-tax contributions in your 401k. The tax software is likely programmed to ask about the Simplified Method for all retirement distributions as a precaution, but you can confidently select "No" or "Not applicable" for that question. The software is just covering all bases - it doesn't know your specific contribution history until you provide that information.

There's no specific age requirement for the Simplified Method itself. It's all about whether you had after-tax contributions, not your age. The age factor comes into play when determining the "expected return" (basically how long the IRS expects you to receive payments), which affects the calculation within the worksheet. But you only need to worry about that if you actually need to use the method in the first place.

Would statements from my online banking work? I can see all my mortgage payments there with remaining principal balance after each payment.

Online banking statements typically won't work because they usually only show the payment amount and maybe the remaining balance, but rarely show the interest rate or break down how much of each payment went to principal vs. interest. The IRS specifically wants to see the interest rate and the beginning/ending balances to verify that the interest deduction you claimed is accurate. If you're in a bind, you could try compiling your January and December statements from your lender (not your bank) which should show the beginning and ending balances for the year, along with any statement that clearly shows your interest rate. Include a cover letter explaining that this is the closest documentation your lender provides to what was requested. Sometimes the IRS will accept this alternative documentation, especially if you make a good-faith effort to provide what they need.

Wouldn't the IRS still want official documents from the lender though? I can't imagine they'd accept a spreadsheet I made myself as proof of anything.

That's such a good point. In my case, the scammer only filed federal but not state (probably because my state has extra verification steps). How did you find out about the fraudulent state return? Did you get a separate rejection?

I actually didn't get a rejection for my state return initially because I filed my federal first and was dealing with that mess before I got around to filing state. I called my state tax agency as a precaution and they told me a return had already been filed with my SSN about two weeks earlier. The state tax agency ended up being much easier to work with than the IRS - they had me fill out their own identity theft affidavit form and submit copies of my ID. It still took about 8 weeks to resolve, but they were much more communicative throughout the process.

Not a stupid question at all! The scammers use your SSN but change the direct deposit information to their own account (or often to prepaid debit cards that are harder to trace). They typically make up income and deduction information to generate a larger refund than you'd actually be entitled to. They're basically betting that they can get the fraudulent refund processed before you file your legitimate return. The IRS processes returns on a first-come-first-served basis without automatically matching W-2s and 1099s until later, which creates this vulnerability.