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Don't forget that if you do end up owing money, the IRS interest clock is already ticking from the original due date of that return. If you're going to contest it, do it quickly and thoroughly the first time. If you eventually have to pay, look into the First Time Penalty Abatement program - if you've had a clean tax record for the past 3 years, they might waive the penalties (but not the interest).
Hey Luca, I went through something very similar with a CP2000 notice last year - it's definitely scary at first but totally manageable! The key thing to remember is that this is just a "proposed" change, not a final bill. For investment income discrepancies, the most common issue is that the IRS receives a 1099-B showing your gross proceeds from stock sales, but they don't automatically know your cost basis (what you originally paid). So if you sold $1,000 worth of stock that you bought for $700, they might think you made $1,000 in profit when you really only made $300. Since you mentioned you "barely used" that brokerage account, definitely log into your old account online (most brokerages keep records for years) or call them directly to get copies of ALL the tax documents they sent for 2022. You might have missed a 1099-B or 1099-DIV that got sent to an old address. Don't pay anything until you've thoroughly reviewed their calculations. I almost paid $1,800 I didn't owe because I panicked. Take your time, gather your documents, and respond within their deadline. You've got this!
Just FYI - eBay is changing their reporting thresholds. For 2022 tax year the threshold was $600 before they issue a 1099-K, but the IRS delayed implementing that. Just be prepared that you might get 1099s in the future for much smaller amounts of selling.
The threshold change keeps getting delayed tho. Wasn't it supposed to start in 2022, then 2023, and now 2024? I don't think they'll ever actually implement it tbh.
I've been dealing with similar eBay tax confusion myself. One thing that really helped me was keeping detailed records of everything - not just the sale prices, but also what I originally paid for each item, when I bought it, and any selling expenses like shipping and eBay fees. The key distinction everyone's mentioned between hobby vs business is crucial. If you're just selling personal collectibles you've owned for years (like cleaning out your collection), that's very different from regularly buying items with the intent to flip them for profit. The IRS has specific tests for this - they look at whether you're doing it regularly, if you depend on the income, and if you're putting significant time and effort into making a profit. For your $1100 net profit, definitely keep all your documentation. Even if you don't get audited, having those records makes filing much easier and gives you confidence you're reporting correctly. And like others said, you still need to report the income even without a 1099 - the IRS expects you to report all income regardless of whether you receive tax forms.
This is really helpful advice! I'm new to all this tax stuff but I'm in a similar boat - sold some old Pokemon cards and comic books I've had since I was a kid. The record-keeping part seems overwhelming though. Do you have any tips for organizing everything after the fact? I have PayPal records and eBay transaction history, but matching up what I originally paid for things years ago is proving difficult. Should I estimate based on what similar items were selling for back then, or is that not acceptable to the IRS?
Has anybody here used the IRS withholding calculator on their website? Is it actually accurate? I'm trying to figure out how much to put in box 4(c) like mentioned above.
The IRS Tax Withholding Estimator is actually pretty good. I used it last March after getting hit with a surprise tax bill. You need your most recent pay stub and last year's tax return to get the most accurate results. It will tell you exactly what to put on each line of the W-4.
Thanks for the recommendation! I'll check out the estimator. I was worried it would be complicated but it sounds doable if I have my documents ready.
I went through almost the exact same thing last year - totally missed section 1c and ended up owing $900 when I was expecting a refund. It's such a gut punch when you're counting on that money! Here's what I learned: the IRS doesn't really negotiate on mistakes like this. You pretty much have to pay what you owe, but you do have options for HOW you pay. If $1,400 is a lot for you to come up with at once (it definitely was for me), you can set up a payment plan online through the IRS website. The fees are pretty reasonable - I think I paid like $30 to set up a 6-month plan. The most important thing is to fix your W-4 ASAP so this doesn't happen again. I actually had my HR department help me fill out a new one to make sure I got it right this time. Don't feel bad about asking for help - they see this stuff all the time. One silver lining: now that you know about this, you'll never make the same mistake again. And honestly, owing taxes isn't the worst thing - it means you had more money in your paycheck throughout the year instead of giving the government an interest-free loan. Try to think of it that way!
Have you tried contacting your local Taxpayer Assistance Center instead of the national number? Sometimes you can get an in-person appointment and avoid the phone system entirely. I had a similar issue with my first tax return after college.
As someone who just went through this nightmare last month, I feel your pain! Here's what actually worked for me after trying everything else: Call 800-829-1040 at exactly 7:00 AM EST on a Wednesday or Thursday. When you get to the automated menu, press 1 for English, then immediately press 2-1-3-2. Don't enter your SSN when prompted - just wait through the silence. This usually gets you to a human in about 45-60 minutes instead of the usual 2+ hours. Pro tip: Use speaker phone and do something else while you wait. I cleaned my entire apartment during one call lol. Also, since you filed in February and it's now been over 2 months, you might want to check your tax transcript online first at irs.gov. There could be a processing code that explains the delay. Sometimes they need additional verification for first-time filers, especially recent graduates. Good luck! The adult tax world is definitely a learning curve but you've got this! šŖ
Zadie Patel
Anyone else notice the IRS "Where's My Refund" tool sometimes glitches out? Last year it showed "still processing" for 6 weeks, then suddenly I had a deposit in my account without the tracker ever updating. This year it worked fine, but last year it was useless.
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A Man D Mortal
ā¢Yeah the IRS systems are ancient. Their main database runs on code from the 1960s. I read an article that said they still have to manually enter data from paper returns. No wonder things get delayed.
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Mohamed Anderson
I'm going through the exact same thing! Filed on February 3rd through FreeTaxUSA and it's been 16 days now with just the generic "still processing" message. Really frustrating because I planned to use my refund for some home repairs that I've been putting off. What's weird is that I filed almost identically to last year - same job, similar income, standard deduction - and last year I had my refund in 8 days. The only difference is I moved and updated my address with the IRS in December, so maybe that's causing some kind of verification delay? Has anyone heard if there are particular issues this tax season causing longer processing times? I'm trying to decide if I should just wait it out or if there might actually be a problem with my return.
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StarSailor
ā¢Moving and updating your address could definitely be part of the delay! The IRS has to verify address changes, especially when there's a refund involved, to prevent fraud. This is pretty common and usually adds a few extra days to processing time. 16 days isn't unusual this year - I've seen a lot of posts about longer wait times across different tax software platforms. The IRS seems to be taking extra time for verification this season. Since your return is straightforward like last year, it's probably just working through their queue. If you hit the 21-day mark and still see "processing," that's when I'd consider using one of the services mentioned above to get more details or call the IRS directly. But for now, the address change is likely the culprit for the extra delay.
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