Have you checked if you qualify for IRS Free File? Its a free way to file your taxes if you make under a certain income threshold. No hidden fees!

I went through something very similar with a 2016 CP2000 notice last year. The key thing to understand is that you absolutely can and should fight this if you believe it's incorrect, even this many years later. Here's what I'd recommend doing immediately: 1. **Gather your 2016 brokerage statements** - You'll need the detailed transaction records showing both purchase dates/prices and sale dates/prices for all stock transactions that year. 2. **Compare line by line** - Match what's on your Schedule D/Form 8949 against your actual brokerage statements to see if there really are missing transactions totaling that $12,500. 3. **Check for cost basis issues** - Often the IRS receives reports of gross proceeds from brokers but not the cost basis (what you paid). This makes it look like pure profit when it might not be. 4. **Respond before the deadline** - Even if you're not 100% sure, it's better to respond with what information you have than to ignore it. The fact that you already paid additional taxes for 2015 and 2016 stock issues back in 2018-2019 is actually relevant here. Include that information in your response - it shows you've been compliant and already addressed similar issues. Don't let the fact that your accountant's firm is gone discourage you. You can handle this yourself with the right documentation, or hire a new tax professional to help with just this specific notice.

OMG I literally just went through this last week! My transcript showed 846 with February 19th date, but WMR was stuck on processing for another FIVE DAYS after I got my refund! 🤦‍♀️ The money hit my account exactly on the date shown on my transcript, but the WMR tool didn't update until almost a week later. I was so stressed checking both systems multiple times daily! Trust your transcript date - it's the more accurate system. I'm so impressed with how knowledgeable people are in this community about all these technical details!

I can relate to this frustration! I had a similar experience two years ago where my transcript showed code 846 with a specific date, but WMR didn't update for nearly a week. What I learned from that experience is that the transcript system is essentially the "master record" - when you see that 846 code with your issue date, your refund has been approved and scheduled for release. The WMR tool is more of a public-facing interface that updates on a different schedule. In my case, the direct deposit hit my account exactly 2 business days after the transcript date, even though WMR was still showing "processing." I'd recommend checking your bank account daily rather than relying on WMR for now. Also, make sure there aren't any other codes on your transcript that might indicate holds or adjustments. The 846 code is generally good news though!

Wait I'm confused. If all company profits increase basis, and distributions decrease basis, how would you ever have a tax problem? Wouldn't your basis always be at least as high as your undistributed profits?

Your accountant is definitely confused about S-Corp distribution rules. As a sole owner, you're absolutely correct - the 15% dividend tax doesn't apply to S-Corp distributions that are within your basis. Here's what's actually happening: When your S-Corp earns income, 100% of that income flows through to your personal tax return (since you're the sole owner), and you pay ordinary income tax on it whether you distribute it or not. This income also increases your basis dollar-for-dollar. So if your S-Corp made $150k profit this year, you'll pay taxes on that full $150k on your personal return, AND your basis increases by $150k. You could then distribute that entire $150k tax-free because it's already been taxed and is within your basis. The 15% dividend tax only applies to C-Corps or in the extremely rare case where S-Corp distributions exceed your total basis (which would be very unusual for a profitable company with a sole owner). I'd suggest asking your accountant to show you the specific basis calculation they're using. They might be confusing reasonable compensation requirements with distribution taxation, or mixing up C-Corp and S-Corp rules. Either way, their advice as stated doesn't align with S-Corp tax law.

11 Question about Nanny taxes in general - we just hired our first nanny and I'm trying to figure out all the tax implications. Do most people use a payroll service or DIY the taxes? And how does the mileage reimbursement get reported (or not reported) on end-of-year tax forms?

Just wanted to add one more perspective as a tax professional who works with many families employing nannies. The key points mentioned here are spot-on, but I'd emphasize a few additional considerations: 1) Make sure your nanny agreement explicitly states that mileage will be reimbursed at the IRS rate for work-related driving. This protects both parties and sets clear expectations. 2) Consider requiring pre-approval for longer trips (like day trips to the zoo) to avoid surprise large reimbursements. 3) Keep all mileage documentation for at least 3 years in case of an IRS audit - this includes the logs, receipts, and any app records mentioned. 4) Remember that if your nanny occasionally uses your family car for work trips, those miles obviously wouldn't be reimbursed since she's not using her personal vehicle. The automated tracking solutions mentioned by other parents sound helpful for busy families, but a simple notebook system works just fine too if you prefer to keep things low-tech. The most important thing is consistency and proper documentation, regardless of the method you choose.

I'm surprised nobody has asked this yet - but what tax software is your accountant using? Some programs organize the information differently. In Drake Tax software, for example, all the detail about owner payments might be in a supplemental worksheet that doesn't print with the final return unless specifically selected. Ask your accountant for the "full return with all worksheets" rather than just the filing copy. That might show more detail about how your payments were categorized.

Just wanted to add that you should also check if your accountant provided you with a "client organizer" or summary sheet that breaks down how your payments were treated. Many accountants create these internal documents that show the logic behind how owner compensation was handled, even if it doesn't appear explicitly on the tax forms themselves. Also, don't feel bad about not understanding this - the tax treatment of LLC owner payments is genuinely confusing and even some accountants don't explain it clearly. The key thing to remember is that if you're a regular LLC (not S-Corp elected), your "salary" and "draws" are treated the same way for tax purposes - they're just you taking your share of the profits, which you owe tax on whether you take the money out or not. If you're still concerned, you could always get a second opinion from another tax professional. Sometimes a fresh perspective can help clarify things your current accountant might have assumed you understood.