If you have any capital gains from investments, check if you have any losing positions you could sell to offset those gains. Tax-loss harvesting can reduce your AGI by up to $3,000 against ordinary income after offsetting capital gains. Just watch out for wash sale rules if you plan to rebuy similar investments.

Don't overlook estimated tax payments if you haven't made them yet! If your unexpected income means you'll owe more than $1,000 when you file, you might face underpayment penalties. Making a large estimated payment by January 15th (for Q4) can help reduce penalties and effectively gives you a bit more time to implement some of these AGI reduction strategies. Also, since you mentioned self-employment income - make sure you're deducting the employer portion of your self-employment tax (Schedule SE). This is an above-the-line deduction that directly reduces AGI and many people forget about it. It's roughly half of your total self-employment tax liability. One more thing - if you haven't already, consider timing any business income or expenses. If you're on cash basis accounting (most small businesses are), you might be able to defer some December invoice payments until January or accelerate some January business expenses into December to help balance things out.

Has anyone actually called the number on the 2802C letter? I got one last month, called the number, and a very helpful IRS agent explained exactly what triggered it and how to fix my W-4. Took maybe 20 minutes total. The letter is basically a warning that if you don't fix your withholding, they might send a "lock-in letter" later, which forces your employer to withhold at a specific (usually high) rate. But the 2802C itself is just an advisory notice with no penalties attached.

I had a very similar situation last year - got the 2802C letter right after setting up my first payment plan with the IRS. The timing wasn't coincidental at all. The IRS has automated systems that flag accounts when there's a pattern of underwithholding followed by payment arrangements. They'd rather have you withhold correctly throughout the year than collect large payments later. The blank fields on your letter are totally normal - these are system-generated notices based on patterns, not specific form reviews. Your suspicion about the new HR person could definitely be part of it too. I'd recommend having your husband download a fresh 2024 W-4 directly from irs.gov and fill it out completely from scratch. Don't rely on the HR person to have the current form or know how to process it correctly. One thing that helped me was using the IRS withholding calculator online to figure out exactly how much additional withholding we needed for the rest of the year. Since you're mid-year and have been underwithholding, you'll probably need to withhold a bit extra in the remaining paychecks to avoid owing again next April. The good news is this is just a warning - no penalties or immediate action required. Just get that W-4 updated within the next month or so and you should be fine.

Maya, I've been following this thread and wanted to add one more possibility that hasn't been mentioned yet. Sometimes CP171 notices are triggered by automatic matching programs where the IRS computer systems flag discrepancies between different databases. For example, if your nonprofit received any government grants or payments that were reported to the IRS via 1099-G forms, but those amounts weren't properly reflected or explained on the 990EZ, it can trigger an automated assessment. The IRS system assumes unreported income and generates a balance due notice. Also check if they received any Form 1099-MISC for things like awards, prizes, or certain types of payments that might need special handling on the 990EZ. Even small amounts can trigger these notices if not properly categorized. Given all the great suggestions in this thread (especially the Claimyr and taxr.ai options), you should be able to get this resolved fairly quickly once you identify the root cause. The key is having all your documentation ready when you do get through to someone at the IRS.

Maya, one additional resource that might help while you're working through this issue - the IRS has a specific webpage for exempt organizations that includes common CP171 triggers and resolution steps at irs.gov/charities-non-profits. They also have a dedicated email address for exempt organization questions where you can submit documentation and get written responses, which can be helpful when phone lines are jammed. Also, if this turns out to be a systemic processing error (which happens more often than you'd think), you might want to have your client register for an IRS online account at irs.gov/payments/your-online-account. Once verified, they can view their account transcripts online, which will show exactly what transactions and assessments the IRS has on file. This can help you identify discrepancies between what you filed and what the IRS processed. Keep us posted on what you find - these cases are always good learning experiences for everyone in the community!

Another thing to consider that I learned the hard way - don't forget about selling expenses when calculating your gain! Things like real estate agent commissions (typically 5-6% of sale price), attorney fees, title insurance, recording fees, and any repairs you make specifically to sell the house can all be subtracted from your sale proceeds when calculating your taxable gain. In your case, if you sell for $475k, you're probably looking at around $25-30k in selling expenses just for agent commissions alone, plus other closing costs. These reduce your net proceeds and therefore your taxable gain. So your calculation would be: Sale Price - Selling Expenses - Adjusted Basis (purchase price + improvements + purchase closing costs) = Taxable Gain. With your numbers, you're very likely to fall well under the $250k exclusion threshold, which means no tax owed despite what the scary-looking 1099-S might show!

I'm glad this discussion has been so helpful! Just to add one more piece of advice as someone who recently went through this process - start organizing all your documentation NOW rather than waiting until after you close. Create a dedicated folder (physical or digital) with: 1. Your original purchase documents (settlement statement, deed, etc.) 2. All improvement receipts and invoices 3. Photos of the improvements if you have them 4. Any permits you pulled for major work 5. Insurance claims if improvements were related to damage Having everything organized ahead of time will make your life so much easier when tax season comes around. Even though you'll likely qualify for the full exclusion based on your numbers, the IRS could still ask for documentation to support your basis calculation if they have questions. Also, don't stress too much about having perfect records for every improvement. The IRS understands that homeowners don't always keep meticulous records, especially for work done years ago. Do your best to reconstruct what you can using bank statements, credit card records, or even reasonable estimates for smaller items. The key is being able to show you made a good faith effort to accurately calculate your basis. You're definitely in great shape with your situation - congratulations on what sounds like a very successful investment in your home!

I'm glad to see this thread has been so helpful for people! As someone who's dealt with similar tax filing confusion, I wanted to add one more perspective. The key thing to remember is that the IRS requires tax software to ask comprehensive questions to cover all possible scenarios, which is why you're seeing these 1095-A prompts even though they don't apply to your Medicaid situation. If you're still feeling uncertain about any aspect of your tax filing, don't hesitate to double-check with the IRS website (irs.gov) or consult with a tax professional. The IRS has clear guidance that Medicaid coverage satisfies the health insurance requirement, and you won't need any marketplace insurance forms. You should be able to file confidently knowing that your Medicaid coverage is all you need for health insurance compliance. Good luck with your filing!

I'm really grateful for all the detailed explanations in this thread! As someone who's been on Medicaid for the past few years, I had the exact same panic when my tax software started asking about Form 1095-A. It's so confusing when the software doesn't explain WHY they're asking these questions - they just make it seem mandatory for everyone. What I found helpful was learning that Medicaid is considered "minimum essential coverage" under the ACA, which means it fully satisfies the health insurance requirement. The 1095-A form is completely separate and only applies to people who purchased insurance through the Healthcare Marketplace and received advance premium tax credits. For anyone else in this situation: you can confidently select "No" when asked about receiving a 1095-A form, and continue with your normal tax filing process. Your Medicaid coverage is all the health insurance documentation you need. I successfully filed last year this way and had no issues at all with my refund or the IRS. Thanks again to everyone who took the time to explain this - it really helps when people share their real experiences rather than just guessing!