I'd strongly recommend consulting with a tax professional about your specific situation. While the advice here is generally solid, there are some nuances with owner-occupied rental properties that can get complex. For instance, you mentioned your mortgage interest was $12,400 - you'll need to split this between your personal residence portion and the rental portion. If 30% of your home is rented out, then 30% of that mortgage interest ($3,720) would go on Schedule E as a rental expense, while the remaining 70% ($8,680) can still be claimed as an itemized deduction on Schedule A. Also, be very careful about the depreciation deduction that was mentioned. While you can depreciate the rental portion of your home, there's a "recapture" rule that means you'll have to pay back some of that depreciation benefit when you eventually sell the house, even if it's your primary residence. This can be a significant tax hit later. The bottom line is that yes, you absolutely need to report this income - but with proper planning and documentation, the tax impact may be much less than you think. A good tax preparer can help you navigate these rules correctly and make sure you're taking advantage of all legitimate deductions while staying compliant.

I understand the temptation to not report it since it's through Venmo, but you really need to report this rental income. The $27k you collected is significant income that the IRS expects to see on your return. Here's what you should know: You'll report this on Schedule E (Rental Income), but the good news is you can offset a lot of it with deductions. Since you're renting out rooms in your primary residence, you can deduct the rental percentage of expenses like mortgage interest, property taxes, insurance, utilities, repairs, and even depreciation. For example, if the rented rooms represent 25% of your home's square footage, you can deduct 25% of your qualifying home expenses against that rental income. With your $12,400 in mortgage interest alone, that could be around $3,100 in deductions right there. Don't risk tax evasion charges over this - the penalties and interest aren't worth it, especially when proper reporting with deductions will likely result in much less tax than the 25% you're estimating. The IRS has been cracking down on unreported income, and payment apps are reporting more transactions than ever before. I'd strongly suggest getting help from a tax professional for your first year doing this to make sure you capture all the deductions you're entitled to and set up good record-keeping practices going forward.

Besides the tax savings, also consider that if you genuinely need the laptop for your business, the actual effective cost is lower than retail because of the tax deduction. So a $1300 laptop with a 25% tax savings effectively costs you $975 after you factor in the tax benefit. Not free, but definitely a discount on something you need anyway.

Just to add another perspective - make sure you're keeping detailed records of any business purchases! I learned this the hard way when I got audited a couple years ago. The IRS wanted receipts, proof of business use, and documentation showing the laptop was used exclusively (or what percentage) for business vs personal use. For IT consulting work like yours, a laptop is usually pretty straightforward to justify, but keep records of when you use it for business, any business software installed, client work done on it, etc. A simple log or even calendar entries can help establish the business use pattern. Also consider whether you might want to finance or lease equipment instead of buying outright - sometimes the monthly payments are easier to manage cash flow wise, and you still get the tax benefits spread over time.

Has anyone successfully gotten the penalties removed in a CP23 situation? I had a similar issue last year and got the payments sorted out, but they wouldn't remove the failure-to-pay penalty even though it was their mistake.

I went through this exact same CP23 nightmare two years ago! The IRS somehow "lost" three of my quarterly estimated payments despite having valid EFTPS confirmation numbers. What saved me was being extremely persistent and documenting everything. Here's what worked: I sent a certified letter to the IRS address on the CP23 notice with copies of ALL my EFTPS confirmations, bank statements showing the withdrawals, and a detailed timeline of when each payment was made. I also included a formal request for penalty and interest abatement citing "reasonable cause" since the error was entirely on their end. The key is to be very specific about the dates, amounts, and confirmation numbers. Don't just say "I made payments" - give them every single detail they need to trace the payments in their system. It took about 8 weeks, but they eventually found all my payments and reversed everything including penalties and interest. Also, if you have to call again, ask to speak with a "payment tracer specialist" - they have more authority to research misapplied payments than regular customer service reps. Good luck, and don't give up! You're definitely not at fault here.

I've been dealing with IRS payment plans for years and can confirm that calling them is definitely still a viable option, especially if you're uncomfortable with the biometric requirements. The online system's ID.me verification has been a real barrier for many taxpayers who value their privacy. When you call the IRS at 1-800-829-1040, have your Social Security number, current year tax return, and the notice you received ready. The agent will verify your identity using information from your tax records rather than biometric data. They can set up your installment agreement right over the phone. You're correct that you can make payments without an account through their Direct Pay system - it's essentially the same third-party processor system you used before, just rebranded. No registration required, just your SSN and bank details for each payment. The main trade-offs are: phone setup costs $107 vs $31 online for non-direct debit plans, but you avoid the privacy concerns. Also, wait times can be brutal, so consider calling early in the morning or using one of those callback services others mentioned if you don't want to sit on hold for hours. Bottom line: your privacy concerns are valid, the phone option still exists, and plenty of people successfully manage their payment plans this way without ever creating an online account.

I totally understand your privacy concerns about the biometric data - that's exactly why I ended up going the phone route when I had to set up my payment plan last year. The whole ID.me facial recognition thing felt way too invasive for something as basic as paying taxes. Here's what worked for me: I called the IRS early on a Tuesday morning (around 7:30 AM) and got through in about 45 minutes, which honestly wasn't too bad compared to some horror stories I'd heard. The agent was actually really helpful and walked me through the whole process without any pressure to create an online account. The key things that made it smooth: I had my Social Security number, last year's AGI, and the current balance due amount ready before calling. The agent verified my identity just using that info - no biometric nonsense required. For the $76 extra fee ($107 vs $31), I figured it was worth it for peace of mind. And like others mentioned, you can absolutely make your monthly payments through Direct Pay without any account - I've been doing it for over a year now with zero issues. One tip: when you call, specifically tell them you want to avoid creating any online accounts and prefer to handle everything by phone and mail. They're used to this request and will note it in your file so future agents know your preference. The whole "non-direct debit" setup means you'll get payment coupons in the mail, but honestly Direct Pay is way more convenient than mailing checks anyway.

I've been following this thread closely because I'm dealing with a very similar situation. The IRS processing delays are absolutely ridiculous right now - it's like they're operating with a skeleton crew while drowning in paperwork. One thing that hasn't been mentioned yet is that you might want to contact the Taxpayer Advocate Service (TAS) if this drags on much longer. They're an independent organization within the IRS that helps taxpayers resolve problems when normal channels aren't working. Since you've already been waiting 13-14 weeks for a payment to process (well beyond their stated 12-week timeframe), and you're now receiving incorrect notices, this could qualify as a "significant hardship." You can reach them at 1-877-777-4778 or submit Form 911. They have more authority to cut through the bureaucratic mess and actually get things moving. I had to use them last year for a similar issue and they were able to resolve in about 3 weeks what the regular IRS couldn't fix in 6 months. The key is documenting everything - which it sounds like you're already doing. Keep records of all your calls, the CP23 notice, proof of payment, and any written correspondence. TAS will want to see that you've made reasonable attempts to resolve this through normal channels first. Hang in there - this is unfortunately becoming the norm rather than the exception with IRS processing right now.

I'm going through almost the exact same situation right now! Made my quarterly payment back in January and it's been radio silence ever since. The IRS phone reps keep telling me "it's in the system" but nothing shows up online or on my transcripts. What's really concerning me after reading through this thread is that even when people get through to agents who can "see" the payment, it's still taking months to actually process and apply to accounts. I'm worried I'm going to get hit with a similar notice soon. The advice about the Taxpayer Advocate Service is gold - I had no idea that was even an option. Definitely going to keep that in my back pocket if this drags on much longer. The 877-777-4778 number and Form 911 could be a lifesaver. Has anyone tried making their response to these notices via certified mail? I'm wondering if that helps create a stronger paper trail or if regular mail is sufficient for the 60-day response window.