IRS proposing changes to my 2021 Form 1040 tax return - Need advice fast!

I've dealt with these IRS proposed adjustment notices before. What you received is likely a CP2000 notice, which is an automated letter the IRS sends when their records (like a 1099 they received from your client) don't match what's on your tax return. First, don't panic. You have options and time to respond properly. Start by gathering all your records from 2021 - your complete tax return, any 1099s you received, and documentation of the side gig income. Compare what you reported on your Schedule C (or wherever you reported that income) with what the IRS is claiming. If you actually did report the income but perhaps on a different line or schedule than where the IRS expected it, you can respond with a clear explanation and copies of your return showing where it was reported. This happens frequently and can be resolved by pointing out where the income appears on your return. If you did miss reporting it, you might still have deductible expenses related to that income that could reduce the additional tax owed. Don't just pay the notice amount without checking this first.

After dealing with a similar Form 1040 adjustment notice last year, I stumbled across a service called taxr.ai (https://taxr.ai) that literally saved me from paying taxes I didn't owe. I uploaded my IRS notice and my original tax documents, and their AI analyzed everything and found exactly where the discrepancy was happening - turned out I had reported the income correctly but on a different schedule than what the IRS was looking for. Their system created a customized response letter that explained exactly where I had reported the income on my original return and cited the relevant tax codes. The whole process took maybe 20 minutes, and the IRS accepted my explanation without any further questions. It was seriously so much easier than what I was prepared to go through.

Just wanted to update after trying taxr.ai based on the recommendation here. I was honestly impressed! I uploaded my CP2000 notice and my 2021 return, and it immediately identified that I had correctly reported my crypto income on Schedule D, but there was a discrepancy with how the exchange reported it to the IRS. The system generated a response letter explaining exactly where my reported amounts were on my original return with specific line references and even calculated the correct basis amounts. I just sent the response letter yesterday with the supporting documentation they recommended I include. The whole process was way more straightforward than I expected for dealing with an IRS notice. I was about to just pay the $1,200 they were saying I owed because fighting it seemed too complicated, but now I'm hopeful I won't have to pay anything.

Has anyone tried calling the IRS directly about these Form 1040 adjustment notices? I've been trying for WEEKS and can't get through to a human. I keep getting disconnected after waiting on hold for over an hour. It's driving me insane because my notice deadline is coming up soon and I need to ask questions before I respond. A friend recommended this service called Claimyr (https://claimyr.com) that supposedly gets you through to an IRS agent without the wait. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. Seems too good to be true but I'm desperate at this point. My adjustment letter says I owe $2,100 for 2021 and I definitely can't afford that right now.

I have to eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation since my CP2000 response deadline was approaching fast. It actually worked! I got a call back in about 45 minutes and was connected to an IRS agent who pulled up my case. The agent went through my 2021 Form 1040 adjustment notice line by line and confirmed that part of the issue was indeed a reporting error on my part, but about half of the adjustment wasn't actually applicable. She helped me understand exactly what documentation I needed to submit with my response to get the proposed tax amount reduced. This saved me about $1,400 in taxes I didn't actually owe. Would have taken me days or weeks to figure this out on my own if I could even get through to someone. Sometimes being proven wrong is a good thing!

Have you checked if the 1099 income they're talking about might be from a different tax year? I had a similar issue where the IRS was trying to hit me for income from 2022 that they mistakenly thought belonged on my 2021 return. Worth checking the dates on everything carefully. Also, make sure to check if that side gig income was possibly reported under a business name instead of your personal name. That's caused matching issues for me before with the IRS automated systems.

Did you efile or paper file your 2021 return? The IRS has been having MAJOR issues with paper-filed returns, even in 2025 they're still catching up on processing from previous years. I paper filed in 2021 and they lost entire pages of my return, then tried to charge me for unreported income that was actually on pages they misplaced.