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Just wanted to add - make sure you check your e-file status on the IRS website directly too. Go to https://www.irs.gov/filing/wheres-my-refund and put in your info. Sometimes the tax software shows "completed" on their end but the actual submission to the IRS failed for some technical reason. Always save the final confirmation page as a PDF and the email confirmation from both the tax software AND the IRS. Tax software isn't perfect and ultimately the IRS holds you responsible for making sure your return is actually filed, which is totally unfair but that's how they see it.
Thanks for this tip. I just checked the IRS website and there's definitely no record of my 2022 return. I didn't know I needed to specifically check the IRS site after filing through TaxAct - I thought the "completed" status meant everything was done. Do you know if TaxAct has any responsibility here since their interface was misleading?
Unfortunately, if you read the fine print in TaxAct's terms of service, they probably have language that places the responsibility on you to verify successful transmission. Most tax software companies include clauses stating they're not liable for transmission failures or penalties. You might still have recourse though. Check if your TaxAct account shows any specific error codes related to your 2022 return. Sometimes there are failed submission codes that can help prove you attempted to file but their system had an issue. Also, print out your complete 2022 return from TaxAct to show it was completed on time, which will help with your penalty abatement request to the IRS.
This happened to my sister too! She used TaxAct for 2021 taxes and thought everything went through but found out a year later nothing was ever filed. She called the IRS Taxpayer Advocate Service at 877-777-4778 and they were super helpful. They assigned her a case worker who helped get the penalties removed since she could prove she completed the return in TaxAct before the deadline. Make sure you file ASAP and then immediately request penalty abatement using IRS Form 843. Include screenshots showing you completed the return in TaxAct before the deadline last year. The key is filing the correct form and explicitly requesting "First Time Penalty Abatement" if you've had no penalties in the past 3 years.
Before everyone scares you too much, I just want to mention that the IRS has programs specifically for people in your situation. Look into the Voluntary Disclosure Program - it's designed for taxpayers who want to come clean and get back on track. Don't forget to check state taxes too! Everyone's talking about federal, but your state might have separate penalties and procedures.
Don't stress too much about this. I went through almost exactly this in 2024. Hadn't filed for 4 years, was a 1099 contractor making about $70k/yr. One thing nobody mentioned - pull your IRS transcripts BEFORE you file anything. This shows what income the IRS already knows about. You might find some 1099s you forgot about or didn't receive. The worst part is the self-employment taxes + penalties, but it's all manageable with a payment plan. I'm paying $400/month on about $31k total debt including penalties.
How do you get your IRS transcripts? Do you have to call them or can you get them online?
Quick tip from someone who messed this up last year: don't just give the W-2 to your employee and think you're done! The SSA and IRS will still flag you for non-filing of the employer copies. I learned this the hard way when I got a CP215 notice with penalties six months later. Make sure you complete BOTH steps: give employee their copy AND submit Copy A with W-3 to Social Security Administration. The deadline has passed, but filing late is much better than not filing at all.
Do the penalties keep getting worse the longer you wait? I'm in the same boat but haven't done anything about it yet...embarrassed to admit I've been procrastinating dealing with this for months.
Yes, the penalties definitely increase the longer you wait. They start at $50 per form if you're less than 30 days late, then jump to $110 per form if you're between 30 days and August 1, and finally to $290 per form after August 1. Plus, if they determine you intentionally disregarded the filing requirement, it can go up to $580 per form! So my advice is to stop procrastinating and file ASAP. Even if you're already in the higher penalty bracket, it's better to file now than wait and risk being accused of intentional disregard.
Has anyone here used the "reasonable cause" exception to get the penalties waived? I had a medical emergency that prevented me from filing on time, wondering if anyone has had success with that approach?
I successfully used reasonable cause last year! Had to include a letter explaining the situation (in my case, a family emergency and a computer crash that lost my records) along with Form 843. Took about 2 months but they waived all penalties. Make sure to be specific about exactly how your situation prevented timely filing, and include any documentation you can.
Just want to add something that hasn't been mentioned yet - you'll also need to pay self-employment tax on your 1099 income! This catches a lot of new contractors by surprise. Self-employment tax is basically both the employer and employee portions of Social Security and Medicare taxes (15.3% total). When you're a W-2 employee, your employer pays half of this, but as a contractor, you pay the whole thing. The good news is you get to deduct half of your self-employment tax on your 1040, which helps a bit. And making estimated quarterly tax payments can help avoid a big tax bill at the end of the year.
Is there a minimum amount of 1099 income before you have to pay self-employment tax? I'm only doing very occasional freelance work.
If your net self-employment income is $400 or more for the year, you need to pay self-employment tax. It's a much lower threshold than for income tax. So even very occasional freelance work can trigger self-employment tax requirements. For income tax purposes, you'd only need to file if your total income exceeds the standard deduction amount, but self-employment tax kicks in at just that $400 level. This catches many part-time contractors off guard.
One thing I learned as a freelancer - tracking expenses throughout the year is WAY better than trying to gather everything at tax time! I use a simple spreadsheet with categories like: - Home office (sq footage, rent, utilities) - Internet & phone (% used for work) - Software subscriptions - Equipment/supplies - Professional development - Mileage Take photos of ALL receipts with your phone right away. Future you will be so grateful when tax season comes around!
Luca Esposito
I went through this exact situation with a medical GoFundMe in 2021. The important thing to remember is that even if you don't get a 1099-K (which you wouldn't for under $20k in 2021), the nature of the funds determines taxability, not whether you received a form. For your flood damage fundraiser, those contributions are almost certainly considered gifts if donors didn't receive anything in return. Gifts aren't taxable income to you. Just keep good records of what the campaign was for and documentation of your flood damage in case you're ever questioned about it.
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Freya Thomsen
ā¢Thanks for the insight! So just to be clear, since the GoFundMe was specifically to help with flood damage repairs and donors didn't get anything in return, I probably don't need to report it as income? Do I need to keep any specific documentation besides the withdrawal statements from my bank?
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Luca Esposito
ā¢That's correct - funds received as gifts to help with your personal hardship (like flood damage) with no goods or services provided to donors would generally be considered non-taxable gifts. The IRS doesn't require you to report gifts you receive on your tax return. I would recommend keeping documentation that clearly shows the purpose of the GoFundMe campaign (screenshots of the campaign page would be ideal), records of the deposits to your bank account, and documentation of how you used the funds for flood repairs (receipts, invoices, etc.). While this might seem excessive, having this documentation will make things much easier if questions ever arise.
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Nia Thompson
Just wanted to add that the reporting thresholds for 1099-K forms changed after 2021. For 2022, it was supposed to drop to $600 with no minimum transaction count, but then the IRS delayed implementing that. So if you have another fundraiser in the future, don't assume the same rules apply!
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Mateo Rodriguez
ā¢Actually the $600 threshold has been delayed AGAIN for 2023 tax year too! They're still using the $20,000/200 transactions threshold. The $600 threshold keeps getting pushed back because of all the confusion it would cause.
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