Anyone else notice that the IRS seems to be auditing way more returns lately? I've had more clients get audit notices in the past 6 months than the previous 3 years combined.

I'm dealing with a similar situation right now - my 2024 return got flagged for audit in February and the examiner assigned to my case has been completely unresponsive. My tax preparer has tried calling the practitioner priority line at least a dozen times over the past two months with zero success. What's worked for me so far is documenting everything. I keep a detailed log of every call attempt, including dates, times, and how long we waited on hold before giving up. This documentation has been crucial when escalating the issue. A few things that might help in your situation: 1. Request a case transfer if your examiner continues to be unresponsive. You can do this in writing and cite the lack of communication as grounds for reassignment. 2. The Taxpayer Advocate Service threshold is usually when you can demonstrate that normal IRS procedures aren't working. Two months of no response definitely qualifies. 3. Make sure your written response includes a statement about the communication attempts and requests a phone conference within a specific timeframe (like 30 days). 4. If you have TurboTax audit defense, make sure they're documenting all of this for potential escalation to higher levels within the IRS. The whole system is overwhelmed right now, but persistence and good documentation usually pay off eventually. Don't let the silence make you panic - keep pushing through the proper channels.

For anyone else filing corrected 8606 forms for their backdoor Roth IRA: I just went through this process and prepared a simple cover letter to attach to my corrected forms that read: "Please find enclosed corrected Forms 8606 for tax years 2020, 2021, and 2022. These corrected forms properly reflect the basis of non-deductible IRA contributions and Roth conversions that were made in each year. The original forms contained calculation errors but the corrections do not change my tax liability for any year." The IRS processed them without issue and I received confirmation letters about 8 weeks later.

Just wanted to add my experience for anyone else dealing with this - I was in the exact same boat with backdoor Roth 8606 forms and found that the biggest mistake I made was not zeroing out my basis each year after full conversions. The key thing I learned is that if you're doing a "clean" backdoor Roth (contribute $6,000 to traditional IRA, then immediately convert the full amount to Roth), your basis should reset to $0 on line 14 of Form 8606 after each conversion. I was mistakenly carrying forward the $6,000 basis year after year, which completely messed up my calculations. What really helped me was creating a simple spreadsheet tracking: - Year of contribution - Non-deductible contribution amount - Any growth before conversion - Full conversion amount - Remaining basis (should be $0 if you convert everything) This made it much easier to see where I went wrong in previous years and prepare the corrected 8606 forms. The IRS processed my amendments without any issues.

Has anyone had experience with actually getting audited over this kind of situation? I've been worried about the same thing - my sister sends me her half of our parents' birthday gifts through Venmo and it adds up to a few thousand per year. Wondering if the IRS really goes after small personal transfers or if they're more focused on actual businesses trying to hide income.

Just to add another perspective - I work as a bookkeeper and see these payment app issues all the time with my clients. The key thing to remember is that the burden of proof is on YOU to show these weren't taxable transactions if you get a 1099-K. For your specific situation with your roommate, I'd strongly recommend creating a simple written agreement between you two documenting that you're acting as a cash withdrawal intermediary for his family support funds. Something like "I [your name] am helping [roommate's name] convert digital transfers from his family into cash to avoid withdrawal fees. These funds belong to [roommate's name] and are not income to me." Have you both sign and date it, and keep copies of his family's transfer records if possible. This creates a paper trail showing the money flow: family → roommate's CashApp → your CashApp → cash to roommate. If you ever need to explain it to the IRS, you'll have documentation that clearly shows you were never the beneficial owner of these funds. Also, consider having your roommate Venmo you small amounts for "cash withdrawal service" to cover any bank fees you incur - this makes the arrangement more obviously legitimate and creates a record that you're providing a service, not receiving income.

Which tax software would be better for a sole proprietor LLC? I've heard mixed things about both TurboTax and H&R Block. Anyone try both?

I'm in a very similar situation - made about $18k from my freelance marketing business this year and also totally neglected the quarterly payments (oops!). After reading through all these responses, I'm definitely going with TurboTax Self-Employed. One thing I'd add that hasn't been mentioned - if you have any business-related subscriptions or software you pay for monthly (like Adobe Creative Suite, project management tools, etc.), make sure you have those receipts ready. Those add up quickly and are fully deductible. I went through my credit card statements and found almost $800 in software subscriptions I had forgotten about. Also, don't beat yourself up about the quarterly payments thing - apparently it's super common for first-year freelancers. The penalty really isn't that scary at our income levels. Just get it done and set up those quarterly payments for next year!

Have you considered filing Form SS-8 with the IRS? It's the "Determination of Worker Status" form. Based on what you described, you're almost certainly misclassified. Your employer is saving a ton of money by not paying their share of your taxes. The downside is that filing this form can create tension with your employer, but it could save you thousands. The IRS will make an official determination on whether you should be classified as an employee.

I went through something very similar last year! Making around $30k as a "contractor" but working exclusively in their office - my tax bill was shocking too. Here's what helped me: First, definitely look into the misclassification issue others mentioned. The IRS has a 20-factor test, and working only at their location with no remote work option is a big red flag for employee status. Second, even if you stay classified as a contractor for now, make sure you're claiming every legitimate business expense. Things like: - Portion of your cell phone bill used for work - Any work-related supplies you purchased - Mileage if you drive anywhere for work - Professional development or training costs Third, consider setting up quarterly estimated payments for next year so you don't get hit with this massive bill again. You can calculate roughly 25-30% of your gross income and pay that quarterly. The medical expenses are frustrating - at your income level, they'd need to exceed about $2,400 (7.5% of $32k) before you could even start deducting them, and then only if itemizing beats the standard deduction. Definitely talk to that tax professional, but don't panic - there are options to address both this year's bill and prevent this situation next year.