Hey, just wanted to add another perspective. We had the same issue in 2022 and ended up owing about $5k in healthcare subsidies. We didn't know about the income threshold either until it was too late. What we did was amend our tax return to include some overlooked deductions (home office for self-employment, some business expenses we initially thought weren't deductible). This brought our MAGI down juuuust enough to qualify for the repayment cap. Ended up paying back only about $2,700 instead of the full amount. Definitely talk to your tax person about any possible deductions you might have missed!

One thing nobody mentioned yet is that the marketplace subsidies are totally separate from the Premium Tax Credit you calculate on your return. If you can show that your income increase was unpredictable (like your bonus or sudden business growth), you might qualify for the IRC Section 6662 "reasonable cause" exception for the underpayment penalty. It won't help with paying back the actual subsidy, but could save you hundreds in penalties. Just make sure to include a detailed letter explaining the circumstances with your return.

Has anyone used TurboTax with this same issue? I'm having the exact same problem but with TurboTax and their customer service was useless. They just said to contact SSA but didn't offer any solution for filing my taxes now.

This is such a frustrating but surprisingly common issue! I work for a tax prep company and we see this all the time during filing season. The birthdate mismatch rejection usually means there's a one-day discrepancy in SSA's records, often due to clerical errors made when the SSN was originally issued. A few things that might help while you're working on getting this fixed: 1. You can still file a paper return by mail to meet the deadline - just print, sign, and send it in. The IRS will manually verify your info against your birth certificate if there are discrepancies. 2. When you go to the SSA office, bring both your original birth certificate AND a certified copy. Sometimes they need to keep documentation on file. 3. Ask the SSA rep to give you a printout or confirmation letter showing the correction was made. This can be helpful if you have issues next year or need to prove the change was processed. The whole process usually takes 2-4 weeks for the SSA and IRS systems to sync up, so you should be good to e-file next year without any problems. Hope this helps!

The whole system is a joke tbh. We shouldn't have to wait this long for OUR money 🤡

Same situation here - filed in late January and still stuck on "processing" 😩 Been checking the VA tax website daily like it's social media at this point lol. At least now I know about the new fraud detection system causing delays. Guess we're all in this waiting game together!

Just wanted to chime in with some encouragement! I know getting that CP5071 notice is super stressful, but you've got this! 💪 Reading through all these responses, it sounds like everyone who stuck with the process got it resolved. A few things that haven't been mentioned yet: if you're married filing jointly, make sure your spouse is available during the call too - they might need to verify both of you. Also, I'd recommend calling from a quiet place where you can focus and take notes. The verification process can feel overwhelming but the agents really are there to help you, not to make your life difficult. One last tip - if you get disconnected or the call doesn't go well the first time, don't give up! Sometimes it just takes a second attempt with a different agent. You'll get your refund, it's just taking the scenic route! 😊

I just went through this exact situation a couple months ago and wanted to share what worked for me! The CP5071 notice is definitely scary at first, but it's really just the IRS being extra cautious about identity verification. Here's my step-by-step experience: I called the number on the notice at exactly 7:59am (they open at 8am) and got through after about 20 minutes on hold. The agent was actually really professional and walked me through everything patiently. They asked for my SSN, DOB, filing status, and then some questions about my tax history - like amounts from previous years' returns and addresses I've lived at in the past 3-4 years. The whole call took maybe 30-40 minutes, and my refund was released exactly 9 days later! Pro tip: have your last 2-3 years of tax returns pulled up on your computer or printed out, along with this year's return if you filed already. Also write down your address history with approximate dates beforehand. Don't panic - thousands of people go through this every year and it gets resolved! You've got this! 💪

Has anyone formed an LLC just for the prototype phase? I'm wondering if I should form an LLC now to start getting these deductions, or if I can just track my expenses and form the LLC later when I'm closer to having a sellable product?

Great question about startup costs! One thing I haven't seen mentioned is the timing aspect of when you can actually claim these deductions. You can't just spend money on prototype development and immediately deduct it - the IRS requires that your business has "begun operations" to claim startup cost deductions. For your prototype situation, here's what I learned when I went through something similar: The expenses you incur before your business begins operations are considered "startup costs" under Section 195. However, you can only deduct them in the tax year when your business actually starts operating (even if you don't have sales yet). The good news is that "beginning operations" doesn't require sales - it just means you're actively engaged in the business activity you intend to pursue. So if you're seriously developing prototypes with the intent to launch a business, that could qualify. My advice: Start keeping detailed records NOW of all prototype expenses, even if you haven't formed a business entity yet. Include invoices, receipts, and documentation of your business plan/intent. When you do officially start operations, you'll be able to claim up to $5,000 of those pre-operational costs as a current year deduction, with any excess amortized over 15 years. Also consider consulting with a tax professional about whether some of your prototype costs might qualify for R&D credits instead of (or in addition to) startup cost treatment - sometimes that can be more valuable depending on your situation.