Filed jointly for first time, but IRS sent my unemployed husband a balance due letter. Why?!

Thanks for the reply! I looked at the notice more carefully and it does mention "Tax Year 2023" at the top. My husband wasn't working then either, but he did cash out an old 401k from his previous job to help pay for school. Could that be related? The notice doesn't mention anything specific about retirement accounts though.

That's very likely the issue! When your husband cashed out his 401k, there would have been mandatory withholding, but it's often not enough to cover the full tax liability. The distribution is considered taxable income plus there's typically a 10% early withdrawal penalty if he was under 59½. When you filed jointly, that 401k distribution should have been reported on your joint return. If it wasn't included, the IRS would have received a Form 1099-R showing the distribution, but not seen it reported on your return, triggering this notice.

Does it actually connect you with a real tax professional or is it just some AI thing? I've gotten burned before with tax "help" tools that just give generic advice.

How accurate is it with identifying notice codes? The IRS sent me something last month with like three different reference numbers and I have no idea which one matters.

It's AI-powered but surprisingly specific to your situation. It doesn't just give generic advice - it analyzes your actual documents and identifies the exact issues. I was skeptical too until it pointed out exactly which form and line number was causing my problem. For notice codes, it was spot-on. It recognized my CP2000 notice immediately and explained each section, including all those confusing reference numbers. It tells you which ones you need for follow-up communications with the IRS and what each code means in plain English.

Wait, how does this actually work? Does the IRS even allow third parties to get in line for you? Seems like there would be privacy issues with that.

This sounds like a scam. Why would you need to pay someone to call the IRS? Just keep calling until you get through. I don't trust any service that charges just to make a phone call for you.

They don't actually talk to the IRS for you - they just handle the hold time. It's like having someone wait in a physical line for you. When they reach an agent, they call and connect you directly. You're the one who speaks with the IRS, so there are no privacy issues. I was hesitant too, but after sitting on hold for hours multiple times and never getting through, it was worth trying. The IRS phone system is completely overwhelmed, especially during tax season. With how specific your husband's notice seems to be, getting accurate information directly from an IRS representative could save you from making a costly mistake.

I think you're right! I just found a 1099-R from his old employer's retirement plan that came in January. With everything going on with the wedding and moving, we must have missed it when doing our taxes. But shouldn't the letter have come to both of us since we filed jointly?

Even though you filed jointly, the IRS sometimes sends notices to the specific person associated with the unreported income. Since the 1099-R was issued in your husband's name and SSN, their automated system probably generated the notice specifically to him. You should definitely file an amended return (Form 1040-X) to properly report the 401k distribution. You might end up owing less than the notice states because you'll get to apply joint filing tax rates and any deductions/credits you're eligible for. Just don't ignore it - penalties and interest will keep adding up.

This is super important advice! My husband used his 401k for education expenses and we were able to avoid the 10% penalty by filing Form 5329 and claiming the exception. Saved us over $2,000. The IRS doesn't automatically know what you used the money for.

Thank you! He definitely used the funds for tuition and books for his master's program. I didn't realize there might be an exception for education expenses. I'll look up that publication right away. Does anyone know if we need to file a separate form for this exception?

Yes, you'll need to file Form 5329 to claim the education expense exception for the early withdrawal penalty. You can file it along with your amended return (1040-X) to report the 401k distribution properly. Make sure to keep all receipts and documentation for tuition, fees, books, and other qualified education expenses - you'll need to show that the withdrawal amount didn't exceed your qualified expenses for that tax year. The form has specific instructions on how to calculate and report the exception.