I went through this exact same process about 6 months ago and totally understand the anxiety! The good news is that it's really not as scary as it seems at first. I called the number on my 5747C letter and yes, the wait time was brutal - about 2.5 hours on hold - but once I got through, the actual verification was pretty straightforward. The agent asked me to confirm basic info like my address, filing status, and some line items from my current and prior year returns. They also asked about my employer and a few specific deductions I claimed. The whole conversation took maybe 20 minutes once I was connected. My refund was issued exactly 6 weeks after the call, which was actually faster than they initially told me to expect. Just make sure you have your tax documents handy when you call - both this year's and last year's returns. The IRS agent was actually pretty helpful and explained that my return was flagged because I had moved states and changed jobs, which created an unusual pattern in their system. Don't stress too much about it - it's really just a verification process to make sure you are who you say you are!

I got a 5747C letter about three weeks ago and finally made it through the verification process yesterday. I wanted to share what worked for me since I know how stressful this can be! I tried calling multiple times but kept getting disconnected or couldn't get through at all. Finally decided to schedule an in-person appointment at my local Taxpayer Assistance Center, which was honestly the best decision. The appointment was scheduled for about 10 days out, but the actual process was so much smoother than trying to call. The IRS representative was really professional and walked me through everything step by step. She explained that my letter was triggered because I had claimed the Earned Income Tax Credit for the first time this year after getting a new job. Apparently that's a common trigger for their fraud detection system. I brought my driver's license, Social Security card, current year tax return, last year's return, and all my W-2s. The whole appointment took about 25 minutes, and she was able to verify my identity on the spot. She told me to expect my refund within 6-9 weeks, but honestly just having it resolved felt like a huge weight off my shoulders. If you're struggling with the phone lines, I'd really recommend trying the in-person route if you have a Taxpayer Assistance Center nearby. Much less frustrating than sitting on hold for hours!

I'm dealing with a somewhat similar situation right now! My case involves proving I'm related to my nephew through my half-brother, and it's been such a headache. What really helped me was contacting my state's vital records office to see if they had any pre-adoption documentation or records that might show biological family connections - sometimes these exist separately from the sealed adoption records. Also, don't overlook things like old family photos, Christmas cards, or even social media posts that might help establish the family relationship over time. I know it sounds silly, but I actually included some old family photos with names written on the back as part of my documentation package, along with more formal documents. One thing I learned is that it's really important to be super clear in your cover letter about WHY you're the appropriate person to claim your niece. The IRS wants to see that you're not just related, but that you actually provided the majority of her support and care. Document everything - housing costs, food, medical expenses, school supplies, etc. Good luck with this! The whole process is frustrating but you'll get through it.

I went through almost the exact same situation a couple years ago with my nephew - complicated by adoption records being sealed. What finally worked for me was submitting a comprehensive package that included: 1. DNA test results (I used AncestryDNA and got the official report) 2. Affidavits from three family members who knew about the biological relationships 3. Any old family documents I could find (even things like insurance policies where we were both listed) 4. A detailed timeline showing when my nephew came to live with me and all the support I provided 5. School enrollment forms where I was listed as guardian/family contact The key was overwhelming them with evidence rather than trying to find one perfect document. I also wrote a very detailed cover letter explaining the whole situation chronologically - adoption, family circumstances, why I became the caregiver, etc. It took about 3 months to get approved after I submitted everything, but they did accept it. The DNA test was probably the strongest piece of evidence, but I think having multiple supporting documents made the difference. Also seconding the Taxpayer Advocate Service recommendation - they were much more helpful than regular IRS agents in understanding these non-traditional family situations.

Has anyone had the IRS actually correctly process Form 8960 for 2022 yet? I'm still waiting on my refund and have the same issue - filed with investment income tax but my transcript is showing they're not calculating it correctly.

I'm dealing with almost the exact same situation! Filed my 2022 return in February with Form 8960, and my transcript is showing the same weird discrepancies - negative investment income on their end while I reported positive amounts, and their system calculating zero NIIT when I clearly owe it. What's frustrating is that I've filed Form 8960 successfully for the past three years without any issues. This definitely seems to be a systematic problem with how the IRS updated their 2022 processing rules. I also have the code 570 on my transcript dated March 15th. Based on what others are saying here, it sounds like we just need to wait for manual review to fix their computer errors. I'm keeping detailed screenshots of everything in case they send the wrong refund amount and try to collect it back later. Has anyone gotten any timeline estimates from IRS representatives about when these Form 8960 reviews might be completed?

Just want to add a practical tip from someone who's been through this exact scenario - make sure you document everything properly! Even though your $15k draw from your $50k contribution should be straightforward tax-wise, you'll want clear records showing: 1. Your original capital contributions ($50k) 2. The distribution amount and date ($15k) 3. Your remaining capital account balance I learned this the hard way when my partnership got audited a few years later. The IRS wanted to see a clear paper trail showing that distributions were properly tracked against each partner's basis. A simple spreadsheet tracking each partner's capital account movements (contributions, distributions, allocated income/losses) will save you headaches down the road. Also, since you mentioned your accountant is on vacation, consider having your partnership formally document this distribution in your meeting minutes or a simple partnership resolution. It doesn't need to be fancy, but having it in writing shows you're treating the business professionally and following proper procedures. The tax code sections others mentioned (731 and 705) are spot on, but good documentation is what will actually protect you if questions arise later!

I want to emphasize something that's been touched on but deserves more attention - the importance of understanding your partnership's loss allocation. Since you mentioned this is a startup that hasn't turned a profit, your partnership has likely been generating losses over these 3 years. These losses flow through to your personal tax return and can offset other income, but they also reduce your tax basis in the partnership. So while you started with $50k in basis from your capital contribution, if you've been allocated your share of partnership losses over the years, your current basis might be less than $50k. For example, if the partnership has lost $60k total over 3 years and you're a 50% partner, you would have been allocated $30k in losses. This would reduce your basis from $50k to $20k, meaning you could only take $20k in tax-free distributions rather than the full $50k. You'll want to look at your K-1s from previous years to see what losses have been allocated to you. This is crucial for determining how much you can withdraw without tax consequences. If your basis is lower than you think, you might want to consider the loan structure others mentioned, or potentially make an additional capital contribution before taking the distribution.

Pro tip: if you call FreeTaxUSA directly and explain what happened, they will often refund the state preparation fee. I accidentally paid but didn't file last year (was comparing prices between services), and they gave me a full refund when I explained the situation. Their customer service is actually pretty good compared to most tax prep companies. I think their number is 1-800-585-3926 or something like that. Just be super nice and explain you didn't understand you were being charged without filing.

I had almost the exact same thing happen to me with FreeTaxUSA last year! The key thing to understand is that they charge you for the "preparation" service as soon as you agree to pay, even if you haven't actually filed yet. It's definitely confusing because most people think the charge happens when you submit. Since you can see "Ready to file" in your account, your taxes definitely haven't been submitted to the IRS yet. You have two options: 1) Go ahead and e-file since you've already paid for the preparation, or 2) Print the forms and mail them yourself (but you won't get the $14.99 back). I'd recommend just e-filing at this point since you've already paid and it's much faster than mailing. But for next year, definitely look into the IRS Free File program since you qualify based on your income - it would have saved you that $14.99 completely.