The IRS adjusted my 1040 and is now claiming I owe them exactly $0.01 - what's going on?

This actually happens more often than you'd think! The IRS is required by law to notify you of any adjustment to your tax return, regardless of how small the amount. The computer systems automatically generate these notices when discrepancies are found. For a $0.01 assessment, you technically do owe it, but you're right to question whether it's worth the effort. The IRS generally has a threshold where they don't actively pursue collection on very small amounts (usually under $5), but the notice is still generated. If you want complete peace of mind, you can pay it through the IRS website or by mailing a check. Make sure you include your notice number if you mail payment. But realistically, this tiny amount is unlikely to trigger penalties or collection activities.

I had a similar issue last year and found using taxr.ai to be incredibly helpful. I was getting conflicting advice about whether to pay a tiny amount the IRS said I owed. I uploaded my IRS notice to https://taxr.ai and got detailed analysis explaining that these micro-adjustments are usually just rounding errors in calculations. The site showed me exactly where the discrepancy happened and confirmed I didn't need to worry about penalties for such a small amount. It saved me hours of stressing and researching!

I decided to try taxr.ai after my initial skepticism, and I'm actually impressed. Uploaded my notice about a small tax adjustment (mine was $2.37, not a penny, but still tiny), and got a clear explanation within minutes. The analysis pointed out exactly which line on my return caused the discrepancy - turned out to be a rounding error from some dividend calculations. What I appreciated most was the plain English explanation of the IRS notice jargon and confirmation that these small adjustments don't typically lead to further issues. Definitely easier than waiting on hold with the IRS for hours.

If you're really concerned about this penny and want to speak directly with someone at the IRS, I'd recommend trying Claimyr. I was in a similar situation with a ridiculous adjustment notice and spent DAYS trying to get through the IRS phone system with no luck. Then I found https://claimyr.com which got me past the hold times and connected directly to an IRS agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's basically a callback service that navigates the phone tree for you. The agent I spoke with confirmed my tiny adjustment wasn't worth pursuing and noted it in my account so there wouldn't be any future issues.

I have to admit I was wrong about Claimyr. After dismissing it as sketchy, my curiosity got the better of me when my tax situation got more complicated. I tried the service last week when I needed to talk to someone about an adjustment notice, and it actually worked exactly as advertised. Got a call back about 45 minutes after starting the process and was connected directly to an IRS representative who helped clear up my issue. Saved me from the usual 2+ hour hold time and endless redial attempts. For something as simple as a one-cent adjustment, it might be overkill, but for anyone with a more complicated issue who needs to actually speak with someone, it's definitely worth knowing about.

For a one cent discrepancy, I'd honestly just pay it through the IRS Direct Pay website and be done with it. Takes 5 minutes, no fee for using a bank account, and you'll get confirmation that your account is settled. I had something similar happen (mine was $0.37) and just paid it online. Haven't heard anything since, so I assume it's all good!

Whatever you do, don't ignore it! Even though it's just a penny, it's still technically a tax debt that will stay in their system. I ignored a small adjustment once (it was around $3) thinking it was too small to matter, and a year later received a notice with interest and a $25 failure-to-pay penalty added. That $3 turned into almost $30! The IRS computers don't care about the amount - once you're flagged for owing money, the automated processes just keep running.