I had a roommate who worked as a bartender and never reported tips for years. IRS eventually caught up with him and hit him with back taxes, penalties and interest. They definitely go after smaller fish too, just might take longer.

Former IRS compliance officer here (retired). The $2 million threshold is a common misconception that gets people in trouble. While it's true that whistleblower awards are structured differently above and below that amount, the IRS investigates tax evasion at ALL income levels. What many people don't realize is that the IRS has multiple detection methods beyond whistleblower reports - lifestyle audits, third-party information matching, bank deposit analysis, and industry-specific compliance programs. Those cash-only contractors and service providers you mentioned are actually prime targets for these automated screening systems. The agency uses something called the "Unreported Income DIF" (Discriminant Function) that flags returns with statistical anomalies. If someone's reported income doesn't match their apparent standard of living or industry norms, they'll likely get flagged eventually - no whistleblower needed. Bottom line: there's no safe amount of unreported income. The consequences (penalties, interest, potential criminal charges) far outweigh any short-term benefits of tax avoidance.

Is it worth filing these forms if the FICA amount is only about $500? I'm in the same situation (F-1 student, employer withheld FICA incorrectly), but everyone tells me it's such a hassle that might not be worth it for a smaller amount. Has anyone successfully gotten a refund for a smaller amount?

I went through this exact situation last year as an F-1 student on OPT! My employer also withheld FICA taxes incorrectly and wouldn't fix it. I successfully filed Forms 8316 and 843 myself and got my $890 refund after about 10 weeks. A few tips that really helped me: 1. **Get organized first**: Create a checklist of all required documents before you start filling out forms. You'll need your W-2, I-94, passport visa page, and a letter from your university's international student office. 2. **Calculate quarterly amounts carefully**: For Form 843 Line 4, I used my pay stubs to break down exactly how much FICA was withheld each quarter. This seemed to speed up processing. 3. **Be specific in your explanation**: In the explanation section, I wrote something like "I am an F-1 student on Optional Practical Training exempt from FICA taxes under IRC Section 3121(b)(19). I have been in the US for less than 5 calendar years and maintain non-resident alien status for tax purposes." 4. **Mail everything certified**: Send your forms via certified mail so you have proof they received it. The IRS doesn't always send confirmation that they got your paperwork. The whole process was definitely confusing at first, but it's absolutely doable without paying a CPA $275! Your $1,350 refund is definitely worth pursuing. Just take your time with the forms and double-check everything before mailing.

I went through the exact same panic when I got my CP49! The most important thing is to carefully read through the entire notice - it should have a section that breaks down exactly what happened to your refund and where the money went. In my case, it turned out they applied my refund to an old balance from 2019 that I had completely forgotten about. The notice will show the tax year and amount of the debt they paid off with your refund. Don't worry about responding unless the notice specifically asks for a response - most CP49s are just informational. But definitely keep the notice for your records and consider checking your IRS account online to see your full payment history. That way if something looks wrong, you'll have the documentation you need to dispute it. The key thing to remember is that a CP49 isn't punitive - they're not penalizing you, they're just explaining how they used your refund to pay off another debt you owed. Take a deep breath and read it through section by section!

Miguel, I totally understand your panic - I had the same reaction when I got my first CP49! The good news is that this notice is actually pretty routine and not something to lose sleep over. A CP49 is essentially the IRS saying "Hey, we used your refund to pay off another debt you had with us." This could be from a previous tax year where you owed money, or even non-tax federal debts like defaulted student loans or back child support. The notice should have a detailed breakdown showing exactly where your refund went. Look for sections that explain the offset amount and which debt it was applied to. You'll typically see the original refund amount, the offset amount, and any remaining refund (if applicable). Since you filed in February and got your refund months ago, this notice is probably just catching up with some administrative processing. Sometimes these notices are delayed, especially if the offset involved coordination between different government agencies. The main thing is to verify that the offset was correct by checking your records for the debt year mentioned in the notice. If everything checks out, you're all set - no response needed. If something seems wrong, that's when you'd want to contact the IRS to dispute it.

Anyone know how options trading affects your MAGI for things like Roth IRA contribution limits? I'm planning to do some NVDA calls like OP but worried it might push me over income limits if I'm successful.

Great question about getting started with options trading! One thing I'd add to the excellent tax advice already given - make sure you understand the assignment risk with options, especially if you're holding them close to expiration. If your NVIDIA calls get assigned (which can happen early with American-style options), you'd suddenly own 100 shares per contract at the strike price. This creates a much larger tax event than just selling the option for a profit. The tax treatment changes too - instead of just capital gains on the option premium, you'd have basis in the stock that affects future gains/losses. Also, consider starting smaller than $13K for your first options trade. Even experienced traders can get burned by the leverage and time decay (theta). Maybe try a $2-3K position first to get comfortable with how options behave, especially with a volatile stock like NVIDIA. Keep detailed records of every transaction from day one - your broker's cost basis reporting for options can sometimes be incomplete, and you'll thank yourself during tax season!

I'm a bit confused about what the 3219A notice actually means. If I get one after already paying a CP2000, does that mean I'm being audited? Should I be worried?

I went through almost the exact same situation last year! Got a CP2000 in March, paid immediately, then received a 3219A in October showing additional interest through the notice date. It was really frustrating because I thought paying right away would end the matter. Here's what I learned: the 3219A is basically the IRS's formal way of closing the examination, even if you already paid the CP2000. The key issue is that their computer systems don't always sync up properly between departments. When I responded to the 3219A, I included: - Copy of my canceled check from March - Screenshot from IRS.gov showing my payment was processed - A simple letter stating "Payment was made in full on [date] as evidenced by the attached documentation. Interest should not accrue beyond this payment date per IRC Section 6601." Within 6 weeks, I received a letter confirming they had adjusted my account and removed the incorrect interest charges. The whole process was much smoother than I expected once I provided the payment proof. Don't stress too much about it - this seems to be a common administrative hiccup rather than anything you did wrong. Just respond promptly with your documentation and you should be fine.