I had this happen to me a couple years ago and it was from overpaid quarterly estimated taxes. The IRS automatically refunded the excess amount after they processed my annual return. Like others mentioned, you typically don't need to do anything - they'll either apply it to any outstanding balance you might have or send a direct deposit/check. Just keep that letter safe in case you need to reference it later!

Just wanted to chime in as someone who works in tax prep - these credit letters are actually pretty common, especially during tax season! The IRS sends them out when there's an overpayment on your account from things like excess withholding, estimated tax payments, or refundable credits. The good news is you literally don't have to do anything - they'll process the refund automatically. If you're curious about the timeline, most people see their refund within 2-4 weeks if you have direct deposit set up, or 4-6 weeks if they're mailing a check. Just make sure your address is current with them!

I'm in a very similar situation - dissolved my S-corp about 4 months ago and just realized I completely forgot about Form 966! Reading through all these experiences has been such a relief. It's incredible how many of us made the same oversight, but the consistent pattern of positive outcomes is really reassuring. What gives me the most confidence is seeing that whether people were 4 months late or over a year late, as long as they properly filed their final 1120-S and handled distributions correctly, the IRS processed the late Form 966 without any penalties. It really does seem like they recognize this as a paperwork formality rather than actual tax non-compliance. I filed my final 1120-S on time and distributed all assets properly, so based on everyone's experiences here, I should be in good shape. I'm planning to file the Form 966 next week with a simple explanation letter following the template others shared - just acknowledge the oversight was inadvertent and confirm all final obligations were met. Thanks to everyone who shared their real experiences - this thread has been a game-changer for my stress level! It's so much better getting actual outcomes from people who went through this rather than just generic warnings about potential penalties. The IRS clearly has much bigger priorities than chasing down late informational returns from small businesses that made good faith efforts to handle everything else properly.

I'm in almost exactly the same situation - dissolved my S-corp about 6 months ago and just realized I never filed Form 966! This thread has been incredibly helpful to read through. It's amazing how consistent everyone's experiences have been. What really gives me confidence is seeing so many people who were 6+ months late with zero penalties or issues. It's clear that when you've properly filed your final 1120-S and handled asset distributions correctly (which I did), the IRS treats this as a minor paperwork oversight rather than a serious compliance violation. I'm definitely going to follow the approach that worked for everyone else - file the Form 966 this week with a brief explanation letter acknowledging it was an inadvertent oversight and confirming all final tax obligations were met. I'll also double-check that my asset values match exactly between the 966 and my final 1120-S like others recommended. Thanks to everyone who shared their real experiences - this thread has saved me so much stress! It's proof that sometimes we overthink these situations when the reality is much more straightforward than we imagine.

This is such great information! I'm in a similar situation as a single parent and was worried about the same things. It's really reassuring to hear that SNAP benefits don't count as taxable income and that family help through payment apps is considered gifts, not income. I also want to echo what others said about the tax credits - definitely look into the EITC and Child Tax Credit! As someone who's navigated this before, those credits can make a huge difference for families like ours. The EITC especially is designed to help working families with lower incomes, and with two kids you should qualify for a substantial credit. One tip I learned: when you file your taxes, make sure to claim both kids as dependents if they live with you more than half the year. This ensures you get the full benefit of both the Child Tax Credit and the EITC. With your income level, you might even qualify for additional credits like the Child and Dependent Care Credit if you pay for childcare while working.

I'm a single parent too and went through this exact same confusion last year! Everyone's advice here is spot on - SNAP benefits are definitely not taxable income, and those family transfers through Venmo/Zelle are gifts, not income you need to report. One thing I learned the hard way is to keep your payment app transactions organized. Even though the family gifts aren't taxable, I started adding notes in Venmo like "birthday money from grandma" or "help with school supplies" just so I could easily explain them if anyone ever asked. It takes two seconds but gives you that extra peace of mind. Also, definitely take advantage of those tax credits everyone mentioned! With your income and two kids, you're likely looking at getting money back rather than owing anything. The EITC alone could be worth $3,000+ for your family situation. I use the IRS's online tool to estimate my credits before filing - it helps me plan ahead and know what to expect. Don't stress too much about this - sounds like you're being really responsible by asking these questions ahead of time. Most of us single parents are in similar boats with family help and government assistance, and the tax system actually has some good benefits built in for families like ours!

This thread has been incredibly helpful! I'm dealing with the exact same situation where my state tax refund is showing up differently between TurboTax and another tax software. After reading through all the explanations here, it's clear that both programs are likely calculating correctly - they just display the information differently in their interfaces. The key insight is that if you took the standard deduction last year (which most people did due to the higher amounts), your state tax refund isn't taxable at all, even though it has to be reported on the return initially. I think the real issue is that tax software could do a much better job explaining WHY certain numbers appear where they do. It would save taxpayers a lot of confusion if there was just a simple note saying "This refund appears as income but will be calculated as $0 taxable since you took the standard deduction last year." Thanks everyone for sharing your experiences and knowledge - this community is a lifesaver during tax season!

This is exactly the kind of confusion that trips up so many taxpayers! I went through the same thing last year and it took me forever to understand what was happening. The key thing to remember is that the IRS has specific rules about when state tax refunds become taxable income - it's all about whether you got a federal tax benefit from deducting those state taxes in the first place. Since the standard deduction increased significantly in recent years, most people are taking that instead of itemizing, which means their state refunds aren't taxable at all. What I found helpful was looking at my actual 2023 return to confirm I took the standard deduction. If you did, then even though your state refund shows up in the income section initially, the final calculation should zero it out. Both TurboTax and FreeTaxUSA should handle this correctly - they just present the information differently on their screens. The $800 difference you're seeing might be from this issue, but it could also be from how they handle other deductions or credits. I'd recommend double-checking all your entries in both programs to make sure everything matches up. Sometimes small differences in how you answer questions can lead to bigger differences in the final refund calculation.

bruh why even offer this if they deny everyone lmaooo been seeing so many ppl get denied this year

Sorry you got denied! That's so frustrating when you really need the money. Just wanted to mention that even though the refund advance didn't work out, you can still track your actual tax refund once the IRS starts processing returns. The IRS Where's My Refund tool usually updates within 24 hours after they receive your return. Hang in there - at least you'll get your regular refund once processing begins! 💪