Wait im confused. What if i have to pay for parking at different client sites? Im a w2 employee but i travel to different locations for my job during the day?

Your coworker is likely making a mistake that could get him in trouble with the IRS. As others have confirmed, W-2 employees cannot deduct parking expenses at their regular workplace - this has been the case since the 2017 Tax Cuts and Jobs Act eliminated unreimbursed employee expense deductions. I'd suggest having a friendly conversation with your coworker about this. He might be confusing old tax rules (pre-2018), or maybe he has some 1099 income on the side that he's legitimately deducting parking for. Either way, if he's deducting regular commuting parking as a W-2 employee, he's setting himself up for potential issues if audited. Your best bet is to ask your employer about pre-tax commuter benefits if they offer them - that's the only legitimate way for W-2 employees to get tax savings on parking expenses. Don't risk taking deductions you're not entitled to!

Thank you all for sharing your experiences! This has been incredibly helpful. I'm feeling much more confident now about my situation. Based on what everyone has shared, it sounds like the 570/971 combination is pretty common and usually resolves within a few weeks. I checked my transcript again and noticed that both codes do share the same cycle date (20250221), which based on Mateo's explanation suggests it's likely just a verification process. The home improvement credits I claimed were for energy-efficient windows and insulation, so that could definitely be what triggered the review. I think I'll wait for the actual notice from the 971 code before taking any action, but it's reassuring to know that most people here had positive outcomes. Really appreciate this community - you've all saved me from spending hours on hold with the IRS! 🙏

As someone who just went through this exact scenario last month, I can confirm that the energy efficiency credits are definitely a common trigger for the 570/971 combo. I claimed the residential clean energy credit for solar panels and got the same codes with matching cycle dates. The key thing that helped me was keeping detailed records of all my expenses and receipts. When I got the notice (which took about 10 days to arrive), they just wanted me to verify the amounts I claimed and provide documentation. I uploaded everything through their secure portal and the 570 hold was released within 8 business days. One tip that saved me time: organize all your home improvement receipts and invoices now while you're waiting for the notice. That way you can respond immediately when it arrives. The IRS usually gives you 30 days to respond, but the sooner you provide what they need, the faster your refund gets processed. Your cycle dates matching is definitely a good sign - it means they flagged it for review right when they processed your return, rather than it sitting somewhere for weeks before anyone looked at it.

call your local tax advocate! they might be able to help speed things up

Been through this before - typically takes 3-4 weeks for the paper check to arrive after rejection. You can also track it on the IRS website using "Where's My Refund" tool. Just make sure your address hasn't changed since you filed!

Just thinking outside the box - could you set up a separate Venmo/Cash App account specifically for work tips? Maybe label it clearly like "[Company Name] Valet Tips" so it's obvious it's not your personal money? Might make the accounting cleaner at least.

I work for a tax preparation firm and see situations like this regularly. You're absolutely right to be concerned - this setup is creating a significant tax liability risk for you personally. The fundamental problem is that payment apps report based on the account holder's SSN, regardless of the actual ownership of the funds. So you'll likely receive 1099-K forms showing the full amount of tips as YOUR income, even though most of it gets distributed to others. Here's what I recommend: First, immediately start documenting EVERYTHING. Create a spreadsheet tracking every digital tip received, the date, amount, and exactly how much went to which valet (including yourself). Keep screenshots of all transactions and payouts. This documentation will be crucial if the IRS questions anything. Second, you need to have a serious conversation with your employer about restructuring this arrangement. Ideally, the company should either set up a business account for receiving digital tips OR formally document that you're acting as their agent in collecting these payments. Without proper documentation from your employer, you could be personally liable for taxes on money that was never really yours. The $600 reporting threshold mentioned in other comments makes this even more urgent. With $4000/month flowing through your accounts, you're looking at potentially owing taxes on $48,000+ annually that you never actually kept. Don't wait on this - the longer the current system continues, the bigger the potential tax problem becomes.

Has anyone successfully gotten the IRS to remove these penalties? I'm in a similar situation after selling some land last year and got hit with a $2,800 penalty even though I paid everything I owed by April.

I went through this exact same situation two years ago when I sold my small business. The frustration is real - you pay a massive tax bill and then get hit with penalties on top of it! What helped me was understanding that the IRS views this as "pay as you go" rather than "pay by the deadline." Even though it feels unfair for one-time events, the system treats all income the same way. A few things that might help: First, definitely look into the first-time penalty abatement if you haven't had penalties in the past 3 years. Second, you can also request reasonable cause relief by explaining that this was an unexpected one-time transaction. I filed Form 843 with a letter explaining my situation and got about 60% of my penalty removed. For future reference, when you have large capital gains, you generally need to make the estimated payment by the end of the quarter when the transaction occurs. So if you sold in Q3, the payment would have been due September 15th. It's annoying but now you know for any future large transactions!