Code 971 just means they generated and sent you some kind of notice - could be routine like identity verification, a math error correction, or requesting additional documentation. The key is to look at the date and any other transaction codes around the same time. Don't panic until you actually receive and read the notice! Most of the time it's something simple that can be resolved quickly.

Had the same thing happen to me a few months back and it turned out to be nothing major - just needed to verify some info on my return. The 971 code itself is pretty generic, but like others mentioned, definitely check what other codes show up around the same date. That'll give you a better idea of what to expect. The waiting game sucks but try not to stress too much until you actually get the letter!

I went through this exact same situation last month! Code 570 froze my refund and 971 meant they sent me a notice (which took forever to arrive in the mail). Turned out they just needed to verify my W-2 income against what my employer reported. The whole process took about 5 weeks total, but once it cleared, I got my full refund plus a small amount of interest. Definitely check your mail daily and don't stress too much - these codes are way more common than you'd think!

I had the exact same codes show up on my transcript about 3 weeks ago and just got an update yesterday - my 570 hold was released! Turns out they were just verifying my educational credits. The letter (CP05) took almost 2 weeks to arrive and basically said they were doing routine verification. I didn't have to do anything except wait it out. My refund should hit my account within the next few days according to WMR. Hang in there, most of these resolve on their own! 🤞

Has anyone used the "retail inventory method" for this kind of situation? I heard it can be useful for small retailers.

I'm dealing with a very similar situation with my online electronics resale business! What really helped me was creating a simple spreadsheet to track my inventory purchases by month, then using the weighted average method that others mentioned. Here's what I did: I calculated the total cost of all inventory purchased during the year, divided by the total number of items purchased, which gave me an average cost per item. Then I multiplied that average by the number of items I actually sold. It's not perfect, but it's a reasonable and defensible method that the IRS accepts. The key is being consistent and documenting your methodology clearly. I kept notes explaining exactly how I calculated everything in case I ever get audited. One tip: if you have receipts in Korean, consider using Google Translate's camera feature to get rough translations of the key information like dates and amounts. It's not perfect but it helped me organize my records better for this year. Good luck with your vintage clothing business! The first year is always the hardest for getting organized.

Does anyone know how the audit rates compare between CRA and IRS? I've heard the IRS is much more likely to audit low-income taxpayers while the CRA focuses more on wealthy individuals and businesses. Is that accurate?

Having dealt with both agencies as a US expat living in Canada, I think the key difference comes down to resources and scope. The IRS operates on a massive scale - they process nearly 10x more returns than the CRA - but they're chronically underfunded relative to their mandate. This creates the paradox where they're technically sophisticated but often inaccessible. The CRA benefits from serving a smaller population and generally has better funding per capita. Canadian taxpayers can usually reach someone by phone within a reasonable time, while getting through to the IRS can take hours or days of trying. From a compliance perspective, both agencies are getting more aggressive, but the IRS has always had more of a "fear factor" in American culture. Movies, TV shows, and political rhetoric have built up the IRS as this intimidating enforcement agency, while the CRA maintains a more bureaucratic, less threatening public image. Interestingly, both agencies are dealing with similar challenges around cryptocurrency, digital assets, and remote work taxation that became huge issues during the pandemic.

7 One thing nobody's mentioned yet - remember you can choose SPECIFIC LOTS when selling RSUs. You don't have to sell entire batches. Many brokers default to FIFO (first in, first out) but you can typically select exactly which shares to sell. This lets you fine-tune your tax strategy even further.

5 Just adding another consideration - if you've got other income/loss events this year, that might influence your decision. I ended up selling some underwater RSUs (at a loss) to offset gains from other investments. Tax-loss harvesting can be a powerful strategy!