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I'm dealing with this exact same nightmare right now! Filed my return two weeks ago and got hit with this rejection message yesterday. What's really frustrating is that I actually DID get acknowledgment letters from most of my charities when I made the donations, but they're all in different formats and some don't have the specific language the IRS apparently wants. One thing I discovered is that the acknowledgment needs to include specific elements: the charity's name, date of contribution, location of the contribution, and a description of any non-cash property donated. Some of my letters were missing one or two of these elements, which I think is why my return got flagged. I'm now going back to each organization to request updated acknowledgments with all the required language. It's ridiculous that they changed this requirement in the middle of tax season with basically zero notice. Has anyone found a template or standard language that works for requesting these from charities?
I'm new here but just went through this exact same situation! For the template language, I found that asking the charity to include these specific elements worked well: "This letter acknowledges that [Charity Name] received a charitable contribution from [Your Name] on [Date] at [Location/Address]. The contribution consisted of [Description of items donated]. No goods or services were provided in exchange for this contribution." Most charities were familiar with this format once I explained the new IRS requirement. Hope this helps save you some time!
This whole situation is absolutely maddening! I'm a tax preparer and have been dealing with dozens of clients getting hit with these rejections over the past few weeks. What makes it worse is that the IRS issued this new enforcement quietly through their electronic filing system without any formal announcement or guidance update on their website. For anyone still struggling with this, here's what I've learned works best: Contact each charity and specifically request a "donee acknowledgment letter per IRS Publication 526." Most established charities know exactly what this means and can provide the proper format. Make sure the letter includes the charity's legal name (exactly as it appears on their tax-exempt determination), your name, donation date, and a clear description of what you donated. The frustrating part is that many people actually received these acknowledgments when they made their donations but didn't realize they'd need them attached to their tax return. The IRS has always required charities to provide these, but now they're actually checking that taxpayers include them with their filings. It's enforcement of an existing rule, not technically a "new" rule, but the practical effect is the same for all of us scrambling to gather documentation. If you're running out of time before the deadline, definitely consider filing an extension to give yourself more time to collect proper documentation rather than rushing and potentially making errors.
Thank you so much for this detailed explanation! As someone who's completely new to dealing with tax issues this complex, your breakdown of requesting a "donee acknowledgment letter per IRS Publication 526" is incredibly helpful. I had no idea there was specific language I should use when contacting the charities. I'm definitely going to reach out to my organizations today using that exact terminology. It's reassuring to hear from a tax preparer that this really did come out of nowhere - I was starting to think I had somehow missed obvious guidance somewhere. The fact that it's enforcement of an existing rule rather than a completely new requirement makes sense, but like you said, the practical effect is still a huge headache for everyone involved. One quick question - when you mention making sure the charity's name appears "exactly as it appears on their tax-exempt determination," is there an easy way to verify this? Some of the organizations I donated to use shortened names in their everyday communications that might not match their official legal names.
Slightly different perspective here - I started with single-member LLC but elected S-Corp status after my business grew. Made a HUGE difference in self-employment taxes. Maybe not relevant for your first year, but something to consider for the future if your business becomes profitable enough!
At what income level did you find S-Corp election worthwhile? I've heard you need to make enough to offset the extra accounting costs and payroll requirements.
As someone who went through this exact confusion when I started my single-member LLC, I can confirm what others have said - you absolutely can take the standard deduction personally while deducting business expenses on Schedule C. They're completely separate! The key thing that clicked for me was understanding that Schedule C isn't "itemizing" - it's calculating your business profit/loss. Your business expenses reduce your Schedule C income, and then that net income flows to your personal return where you still get to choose standard vs itemized deduction. One thing I wish I'd known earlier: keep meticulous records of what's business vs personal. The IRS is pretty strict about the "exclusive business use" requirement for things like home office deductions. Also, don't forget about mileage tracking if you drive for business - that adds up fast! For your first year, I'd definitely recommend working with a tax pro or at least using good tax software that can guide you through Schedule C. It's not terribly complicated once you understand the flow, but getting it right the first time saves headaches later.
The fact that they couldn't even tell you how to access Form 8949 for crypto is a huge red flag. I used Cash App Taxes (when it was still Credit Karma) and they completely messed up my foreign income reporting. I ended up getting a letter from the IRS and had to pay penalties. For anyone dealing with crypto, I HIGHLY recommend using a dedicated crypto tax software like Koinly or CoinTracker to generate your 8949 forms first, then input those totals into whatever tax software you use. That way you have documentation if you ever get audited.
How do those crypto tax programs work? Do they connect to exchanges automatically or do you have to upload transactions manually?
Most of the good crypto tax programs can connect directly to exchanges through API connections, so you authorize them to pull your transaction history automatically. For exchanges that don't support direct connections, you can usually upload CSV files of your transaction history. They then calculate your cost basis, identify which transactions are taxable events, and generate a completed Form 8949 that you can either print or import into your tax software. The big advantage is having proper documentation of how your gains/losses were calculated if you ever get questioned by the IRS.
I'm dealing with a similar nightmare with Cash App Taxes right now. Filed my return in February and just got a CP2000 notice from the IRS saying my crypto transactions were reported incorrectly. Cash App apparently didn't include some of my cost basis information properly, so the IRS thinks I owe way more than I actually do. Their customer support has been completely useless - they keep telling me to "just respond to the IRS notice" but won't explain how their software calculated my gains in the first place. I can't even see the actual Form 8949 they submitted on my behalf! Now I'm scrambling to gather all my transaction records to prove the correct cost basis to the IRS. This is exactly why transparency matters - you should always be able to see the actual tax forms being filed in your name. Lesson learned the hard way.
One option nobody's mentioned yet is TaxHawk - it's basically the same company as FreeTaxUSA but with a slightly different interface. Federal is free and state is $14.99 just like FreeTaxUSA. I've used it for 3 years with multiple 1099s and Schedule C. I like that they don't constantly try to upsell you on stuff you don't need. The interface is basic but gets the job done, and their help content is actually really clear for self-employment questions.
Does TaxHawk handle crypto transactions? I did some small gig work on platforms that paid in Bitcoin and I'm completely lost on how to report it.
Yes, TaxHawk does handle crypto transactions. They have a specific section for it where you can enter each transaction. If you only have a few, it's pretty straightforward to enter manually. If you have a lot of crypto transactions, you might want to use a service like CoinTracker or Koinly first to generate the necessary tax forms, then enter the summary into TaxHawk. For just a few transactions from gig work, the built-in tool should be fine.
Watch out for the Free File income limits! I got burned last year thinking I qualified but my AGI was like $200 over the limit and ended up having to pay. The 2024 filing limit should be around $73k but check the IRS site to be sure. Also, if you go with FreeTaxUSA, search for coupons! I found a 25% off code that brought the state filing down to about $11. Every little bit helps when you're on a tight budget.
The Income limits are so annoying. I was literally $83 over last year and got disqualified. Do you know if the Free File income limits look at gross income or after deductions? With all my business expenses my net income is way lower than my gross.
The Free File income limits are based on your Adjusted Gross Income (AGI), not your gross income before deductions. So if you're doing gig work with a lot of business expenses, your AGI should be significantly lower than what you actually earned. For example, if you made $50k in gross 1099 income but had $15k in legitimate business expenses (like mileage, equipment, etc.), your AGI would be around $35k, which would definitely qualify you for Free File. The key is making sure you're tracking and deducting all your legitimate business expenses. With gig work, mileage is usually the biggest deduction - at 65.5 cents per mile for 2023, it adds up fast!
Yara Abboud
the irs website is literally unusable rn. keeps giving me an error message saying try again later smh
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PixelPioneer
ā¢try early morning or late night, less traffic š
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Miguel Castro
Have you tried calling the IRS refund hotline at 1-800-829-1954? It's automated and you can check your status over the phone using your SSN and refund amount. Sometimes it works when the website is down. Just be prepared for long wait times if you need to speak to someone.
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Malik Jackson
ā¢good tip! didn't know about the phone option. does it give you the same info as the website or just basic status?
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