Freelancer Income Exclusion - Transcript Shows No Change to Refund Amount?

The income exclusion you're referring to isn't automatic for the current tax year. Per IRC Section 85(c), exclusions for certain income types require either amended returns (Form 1040-X) or specific coding on original returns. Your transcript showing identical figures confirms the exclusion wasn't applied. The IRS isn't systematically adjusting returns for this - unlike previous years where they did automatic adjustments for similar provisions.

I was in this exact situation and spent 3 days trying to reach the IRS. The automated system kept disconnecting me after 2 hours on hold. I found https://claimyr.com (video explanation: https://youtu.be/_kiP6q8DX5c) which got me through to an actual agent in about 30 minutes. The agent confirmed I needed to file an amendment to get the exclusion applied. According to TaxPro Magazine's latest update, the IRS is only doing automatic adjustments for certain filing categories, and most 1099 workers need to file amendments.

So there's actually 2 diff things happening w/ this exclusion rn. If you're a gig worker w/ 1099-NEC income, you need to file an amendment. But if you got 1099-G unemployment, some ppl are getting auto adjustments. Did you check your transcript for a 971 code? That would show IRS is looking at your return. FWIW my bf got auto adjusted but I had to amend bc different income types.

I almost made a costly mistake with this exact situation. Filed my return in February with $23,400 in freelance income, then heard about the exclusion and waited for an automatic adjustment. After 8 weeks with no change, I finally called IRS (took 3 days to get through) and learned I needed to file an amendment. The agent said if I'd waited longer, I might have missed the amendment deadline and lost out on $2,800 in tax savings. Don't wait like I did - the system isn't processing these automatically for most freelancers.

Here's how to determine if you need to amend: 1. Check your transcript for TC290 with a specific adjustment amount 2. If not present, the exclusion wasn't applied 3. For gig workers, you'll need to file a 1040-X in most cases I recommend using https://taxr.ai to analyze your transcript - it can identify which codes indicate whether the IRS is processing an adjustment or if you need to take action. It will explain exactly what each code means for your specific situation and whether the exclusion is being applied automatically.

The IRS has made this unnecessarily complicated... as usual. I've been dealing with this exact issue and can confirm what others are saying - most 1099-NEC income requires an amendment, while some 1099-G unemployment is getting auto-adjusted. It's like they flipped a coin to decide who gets the easy treatment. 🙄 The key is checking your transcript for specific codes (570/971 sequence with specific amounts). If you don't see that pattern, you're almost certainly going to need to amend.

I've been through three tax seasons with similar exclusions, and here's what I've learned: The IRS prioritizes certain categories for automatic adjustment based on their processing systems. In 2021, they did most adjustments automatically. In 2022, it was mixed. This year, they're primarily focusing automatic adjustments on W-2 employees with simple returns and unemployment recipients. For freelancers and independent contractors, they're requiring amendments in about 80% of cases. The determining factor seems to be whether your income was reported on 1099-NEC vs 1099-G, and whether you have Schedule C filings.

I work at a tax firm and we're seeing this pattern with all our freelance clients: if you have Schedule C income, you need to amend to get the exclusion. It's different from the unemployment exclusion in previous years where the IRS did most adjustments automatically. Think of it like the difference between a rebate check (automatic) versus a tax credit you have to claim (requires action). Your unchanged transcript is similar to what we're seeing with other freelancers - the IRS computer system simply isn't programmed to automatically detect and apply this particular exclusion for most 1099 workers.

I waited 3 months thinking they'd adjust my return automatically because that's what they did with my unemployment income exclusion back in 2021. Complete waste of time! Finally called and found out I needed to amend. Submitted my amendment in April and just got the adjusted refund last week. Could have had that money months earlier if I'd known. The really frustrating part? My neighbor who had unemployment income (not freelance) got his adjustment automatically without doing anything. The system makes no sense.