i feel ur pain... i'm in literally the exact same situation except i filed back in february. the whole system is just a complete dumpster fire 😩

I'm going through almost the exact same thing! Filed electronically in March, got accepted immediately, but now it's been over 6 weeks with completely blank transcripts. The "Where's My Refund" tool hasn't budged at all. I tried the online identity verification tool multiple times and keep getting that same error message you posted. It's so frustrating that their own system tells you to verify your identity but then won't let you actually do it online. I haven't been able to get through to anyone at the IRS yet - every time I call I either get disconnected or the wait times are insane. Did the rep give you any timeline for when the verification letter might arrive? I'm really hoping mine doesn't take as long as some of the other people here are saying. This whole process is absolutely ridiculous - we shouldn't have to jump through all these hoops just to get our own money back!

I went through this exact same nightmare with my daughter's 1098-T two years ago and want to share what ended up being the key issue in our case - make sure you're looking at the right tax year! What happened to us was that my daughter's spring 2024 tuition was actually paid in December 2023, but her scholarships for spring 2024 weren't disbursed until January 2024. So the 1098-T showed all the scholarship money in 2024 but only fall 2024 tuition in Box 1, making it look like she had huge taxable scholarship income. The school's 1098-T reporting is based on when payments were actually made/received, not when they were supposed to be applied. This timing issue is super common and can make the numbers look completely wrong. When you call the bursar's office (which you absolutely should), specifically ask them to show you the payment dates for both tuition charges AND scholarship disbursements. If there's any cross-year timing issues, they can provide documentation that explains the discrepancy. Also, keep in mind that you can sometimes elect to treat scholarships received in one year as applying to qualified expenses paid in a different year if it results in a better tax outcome. A tax professional who deals with education issues regularly would be able to help you figure out if this election makes sense in your situation. Don't panic - these 1098-T discrepancies are way more common than you'd think, and there's usually a logical explanation once you dig into the details!

I'm a tax professional who specializes in education-related tax issues, and I see these 1098-T discrepancies constantly - you're definitely not alone in this confusion! Based on what you've described, it sounds like you're dealing with a very common scenario where scholarships covered both qualified expenses (tuition, required fees) AND non-qualified expenses (room, board, health insurance, activity fees, etc.). The $15,600 difference doesn't necessarily mean you owe taxes on that full amount. Here's what I recommend you do immediately: 1. Contact the bursar's office (not just financial aid) and request a complete "student account activity report" for the entire 2024 tax year 2. Ask them to specify which expenses were paid by which scholarships and the exact dates 3. Get documentation showing what was considered "qualified education expenses" versus other charges The key thing to understand is that only scholarship money used for non-qualified expenses is taxable. Things like mandatory health insurance, meal plans, housing, parking, and activity fees don't count as qualified education expenses for tax purposes, even though scholarships can pay for them. Also check if any scholarship money was applied to balances from previous semesters or future terms - this timing issue often causes 1098-T numbers to look completely wrong for the current tax year. Don't file your return until you get these details sorted out. A $15,600 taxable scholarship amount seems unusually high for someone who paid additional money out of pocket, so there's likely a logical explanation once you get the detailed breakdown.

I just went through this exact scenario with my craft business! I purchased $3,750 in materials in December 2023 but didn't sell anything until January 2024. My accountant had me file a Schedule C showing zero income, and we listed the inventory on Part III but didn't claim it as COGS yet since nothing sold. We did deduct my $850 in legitimate business startup expenses like my LLC filing fee, website costs, and business cards. The inventory will become COGS when I file my 2024 taxes as items sell.

Thanks for all the helpful responses everyone! Just to clarify a few additional points that might help other newcomers in similar situations: Make sure you keep detailed records of your inventory purchases with receipts and invoices - the IRS will want to see documentation if questioned. Also, don't forget about the business use of home deduction if you're operating from your residence. Even with zero sales, you can still claim a portion of your home expenses if you have a dedicated business space. And regarding accounting methods - you typically need to choose cash vs accrual when you file your first Schedule C, so research which makes more sense for your business type before filing.

What a nightmare situation, but I'm impressed by how methodically you're handling it! I went through something very similar with my consulting LLC a few years ago where the IRS had no record of our S-Corp election despite us filing 1120-S returns that were accepted. One thing I'd strongly recommend is requesting a complete Entity & Account Information Letter (Form 8940) from the IRS Business & Specialty Tax Line. This will show you exactly what entity type they have on file and what elections (if any) they've processed. It's much more comprehensive than just calling and asking - you'll get an official document showing their records. Also, when you do your protective 1120 filing, consider including Form 8832 (Entity Classification Election) as well, electing to be treated as a corporation. This creates a clear record that you're acknowledging the corporate status while your S-Corp election is pending. Some practitioners recommend this approach to show you're being completely transparent about the classification uncertainty. The good news is that with losses in both years and consistent S-Corp filings, you have a very strong case for reasonable cause relief. The IRS really doesn't want to create a mess by denying backdating when there's no tax avoidance motive and clear good faith compliance. Document everything, stay patient, and remember that these administrative tangles do get resolved - it just takes persistence!

This is exactly the kind of complex tax situation that makes me grateful for communities like this where people share real experiences and practical solutions. Reading through all the advice here has been incredibly educational! One aspect I haven't seen fully addressed yet is the timing consideration for when to submit the protective Form 1120. Given that you mentioned it's been 3 weeks since you submitted your backdating request, you might want to consider whether filing the protective return now gives the IRS enough processing time before any potential deadlines. Also, I'd recommend keeping a detailed timeline of everything - original S-Corp election filing date, when each 1120-S was submitted and accepted, when the 2022 return was rejected, all phone conversations with IRS representatives, and when you submitted the backdating request. This chronology will be invaluable if you need to escalate or if there are any questions about reasonable cause for penalty relief later. The consistency of your filings really does work in your favor here. The fact that you've been operating in good faith as an S-Corp for multiple years, with accepted returns, creates a strong foundation for your case. The IRS generally recognizes that taxpayers shouldn't be penalized for administrative oversights in their own systems. Keep us posted on how this resolves - your experience will definitely help others who find themselves in similar situations!

Make sure to get a new CPA! I had a similar situation where my accountant messed up my S-corp election. I went through 3 different accountants before finding someone who actually knew how to handle the correction properly. Look for someone who specifically has experience with entity election corrections and IRS abatement requests. A good CPA will know exactly what documentation to prepare and what procedures to follow for your specific situation.

This is an incredibly frustrating situation, and I feel for you. The good news is that you're not the first person to deal with this kind of CPA error, and there are established procedures to fix it. I'd strongly recommend starting with the Revenue Procedure 2013-30 route for the late S-corp election. Given that you have documentation showing you reasonably relied on your CPA's advice and filed returns consistent with S-corp status, you have a strong reasonable cause argument. The IRS is generally sympathetic to situations where a professional made the error. Before deciding between your two options, I'd suggest getting quotes for both scenarios. For the retroactive payroll route, contact a few payroll service companies that handle corrections - they can give you estimates for filing all the missing 941s, calculating reasonable compensation, and handling penalty abatement requests. For the Schedule C amendment route, calculate the additional self-employment taxes you'd owe. Also, definitely document everything about your CPA's error and consider whether they should be covering the costs to fix this. Most professional liability policies cover exactly this type of mistake. Don't let them off the hook for what is clearly their professional negligence. The key is acting quickly and getting the right professional help to navigate whichever route proves most cost-effective for your situation.