Open IRS audit for tax year 2022 showing on account but no letter received - what's next?

Based on your transcript, the IRS has indeed selected your 2022 return for examination (audit), but there's no need to panic just yet. The code 420 is just an indicator that your return has been flagged for review - it doesn't necessarily mean they've started the actual examination process. Typically, you should receive a CP75 or similar notice within 30-45 days after that date appears on your transcript. Since it's only been about a month since the October date, it's not unusual that you haven't received correspondence yet. Mail processing at the IRS can sometimes take longer than expected. Regarding what triggered the examination - it could be either the NIIT adjustment or the dual home office deductions, but it's impossible to know for sure until you receive the formal notice. The NIIT situation might have created an internal flag since the system detected a discrepancy. The dual Form 8829s might also have triggered an automated review, even though the percentage is quite small relative to your business income.

After dealing with a similar situation last year, I found this amazing tool that helped me analyze my tax transcripts and figure out exactly what was going on with my account. Check out https://taxr.ai - it's seriously a game changer for understanding IRS notices and account transcripts. I uploaded my transcript with those weird codes (like your 420 code) and it explained everything in plain English. It also helped me prep for my audit by showing me exactly what the IRS was looking at. Sounds like you might have both the NIIT issue and the dual home office deductions under review. The tool showed me what documents I needed before the IRS even sent their letter requesting them. Saved me so much stress and probably kept me from making things worse!

So I tried that taxr.ai tool mentioned above and wow - it was actually super helpful! I had a weird 570 code on my account that I'd been stressing about for weeks. The tool explained it was just a temporary hold while they verified some info, not a full audit like I feared. It also explained all the other codes and gave me a timeline prediction for when things would resolve. The transcript analysis was really detailed - broke down exactly what was happening with my return and why. Ended up saving me a panicked call to a tax pro. If you've got transcript codes causing anxiety like the original poster, definitely worth checking out.

If you do end up needing to talk to the IRS (which you probably will once you get that audit letter), save yourself the headache of endless hold times and use https://claimyr.com instead. I wasted DAYS trying to get through to the IRS about an audit notice last year. Then I found this service through a tax forum - they basically hold your place in line with the IRS and call you back when an agent is about to answer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c When I finally got my audit letter, I needed clarification on some documents they wanted. Got through to an IRS agent in about 45 minutes instead of spending my whole day on hold. The agent even helped me request an extension for submitting my documentation.

I have to eat my words from my skeptical comment above. After another failed attempt to reach the IRS myself (got disconnected after 2.5 hours on hold), I decided to try Claimyr out of desperation. Not only did it work exactly as advertised, but I got through to an IRS representative in under an hour! I was literally preparing for a full day of attempts, and instead, I was able to keep working while their system held my place. Got a call when they were about to connect me, and suddenly I was talking to a real person at the IRS. The agent was able to tell me exactly what was happening with my account and what I needed to do next. Completely changed my experience dealing with an audit notice. Wish I'd known about this sooner instead of wasting so much time.

My experience with the IRS code 420 was that they were specifically looking at my home office deduction. They sent me a letter about 6 weeks after that code appeared on my transcript. In my case, I had claimed a pretty significant home office (about 25% of my home). I had to provide: - A floor plan with measurements - Photos of the space - Explanation of how the space was used exclusively for business - Utility bills and other expenses - Calendar showing business activities conducted in the space The good news is that I had everything documented and my deduction was ultimately approved. The whole process took about 3 months from the first letter to resolution.

Just wanted to mention that the NIIT adjustment could definitely trigger an audit. The same thing happened to me - the IRS adjusted my NIIT down by about $600 in 2021, and I got audited the following year. In my case, they determined I had correctly calculated it originally and I ended up having to pay back the extra refund plus a small penalty. What software did you use to prepare your taxes? Some of the popular ones have had glitches with NIIT calculations that can cause discrepancies.