Experienced tax pro here with a detailed breakdown. The 971 code is just one piece of the puzzle. You really need to look at the whole transcript to understand whats happening. Common reasons for 971: - Identity verification needed - Income verification - Dependent verification - Math error corrections - General processing delays Honestly, the best way to know exactly what's happening is to use taxr.ai - it analyzes your whole transcript and gives you a clear timeline. Saves everyone time instead of guessing. I recommend it to all my clients now.

Same thing happened to me last month! Got the 971 code and was panicking thinking something was wrong. Turns out it was just a simple verification letter asking me to confirm my identity online. Took like 5 minutes to complete and then my refund processed within 3 weeks. Don't stress too much - the majority of 971 notices are routine stuff, not anything serious. Just keep checking your mail and transcript regularly!

ugh the IRS is such a mess this year. my return has been stuck since january smh

I've been dealing with IRS transcripts for years and these codes are actually pretty routine. The 570 just means they're taking a closer look at something on your return - could be as simple as verifying your identity or checking if your withholdings match what employers reported. The 971 notice will tell you exactly what they need. In most cases, you don't need to do anything unless the notice specifically asks for documentation. Try not to stress too much, the majority of these holds get released automatically once their systems finish cross-checking everything.

Has anyone else noticed that FreeTaxUSA sometimes gives different results from other tax software? I entered the same info in both FreeTaxUSA and TurboTax for my LLC and got different amounts. Not sure which one is right.

I had this exact same confusion last year! The key thing to understand is that FreeTaxUSA's "attach to business" feature is essentially asking whether this income should go on Schedule C (business income) or somewhere else on your return. Since you're doing freelance work through your single-member LLC, those 1099-NECs should definitely be attached to your business and reported on Schedule C - even though they have your SSN instead of your EIN. The IRS treats single-member LLCs as "disregarded entities" by default, so for tax purposes, you and your LLC are the same entity. The big jump in your tax bill when you attach them is because Schedule C income is subject to self-employment tax (15.3% for Social Security and Medicare) in addition to regular income tax. When you don't attach them, the software might be treating it as "other income" that doesn't trigger SE tax - but that would be incorrect for freelance work. Here's what I learned: Yes, you'll pay more in taxes by doing it correctly, BUT you can also deduct all your legitimate business expenses (home office, equipment, software, business meals, etc.) which will significantly reduce that taxable income. Make sure you're claiming every expense you're entitled to - it makes a huge difference!

This is such a helpful thread! I'm dealing with a similar situation where my client filed Form 966 but now wants to continue operations. One thing I wanted to add from my experience - make sure to document the timing of when the abandonment decision was made versus when any liquidating distributions might have already occurred. If partial distributions were made after the Form 966 filing but before the abandonment, those might need special treatment. The IRS could view those as liquidating distributions even if the overall plan is later abandoned. I learned this the hard way when a client had already distributed some assets to shareholders before changing their mind. Also, keep detailed records of the corporate decision-making process. The IRS may want to see evidence that the abandonment was a legitimate business decision and not just tax avoidance. Board minutes, shareholder resolutions, and documentation of the changed business circumstances can all be important if you're ever questioned about the abandonment. The guidance about sending a statement to the IRS service center is spot on - just make sure it's comprehensive and references all the relevant dates and corporate actions.

Great thread everyone! I'm a tax advisor who's handled several Form 966 reversals, and I wanted to add a few practical points that might help others in similar situations. First, timing is crucial when documenting the abandonment. The IRS generally wants to see that the decision to abandon was made for legitimate business reasons, not just to avoid tax consequences. Make sure your corporate minutes clearly state the business justification for continuing operations. Second, if you're in a state that requires annual franchise tax filings, check whether your Form 966 filing affected your state tax status. Some states automatically change your filing requirements once they're notified of dissolution plans, so you may need to update your state tax registration as well. Finally, consider the impact on any tax elections that might have been made in conjunction with the liquidation plan. For example, if you made a Section 338 election or any other special elections related to the liquidation, you'll need to evaluate whether those need to be addressed separately. The advice about sending a signed statement to the IRS service center is absolutely correct - just make sure it includes the EIN, original Form 966 filing date, and a clear statement that the plan has been formally abandoned by appropriate corporate action with the date of that action.

One thing nobody's mentioned - make sure the specific EV truck model you're looking at actually qualifies for the Commercial Clean Vehicle Credit. Not all EVs qualify anymore due to battery component and mineral requirements in the Inflation Reduction Act. For the commercial credit, the rules are a bit different than the personal credit, but there are still requirements about where the vehicle is manufactured and where battery components come from. The dealer should be able to provide documentation about whether it qualifies.

Great question Emma! I went through something very similar last year with my construction business. You absolutely can claim the Commercial Clean Vehicle Credit as a sole proprietor - the IRS doesn't require you to have an LLC or corporation to qualify for business tax credits. A few key things to keep in mind: 1. **Business use documentation is critical** - Since you're claiming 100% business use, keep detailed records from day one. I use a simple app to track every trip and its business purpose. 2. **Vehicle registration** - You can register it in your personal name since that's how you operate as a sole proprietor. No need to complicate things with DBA registration for the vehicle. 3. **Form 8936** - You'll claim the credit on this form when filing your taxes, and the credit flows through to reduce your overall tax liability. 4. **Double-check vehicle eligibility** - Make sure the specific truck model you're buying actually qualifies. Some models lost eligibility due to the updated battery component requirements. One bonus tip: If you're buying the truck outright, consider how Section 179 depreciation might work alongside the credit to maximize your first-year tax benefits. With your $95K business income, you have plenty of room to work with. The fact that you're planning to form an LLC next year is smart for liability protection, but don't let that delay your truck purchase if you need it for business now!