Thanks for this suggestion! I didn't even know I could request a transcript. Would this show if they actually sent notices or just that they generated them? Because if they generated notices but sent them to the wrong address, I'd think that still supports my case.

The transcript would show when notices were generated and what address they were sent to. This can be crucial evidence if you're claiming lack of notification - if the transcript shows they were sending notices to an outdated address while having your current address on file for other purposes (like your stimulus payment), that strongly supports your argument. The transcript also shows exactly what type of investment was reported and the amount of gain calculated, which might help you determine if there were any special exemptions that could apply based on the nature of the educational fund.

I second this! The Taxpayer Advocate Service helped me when I had a similar issue with incorrect notices. They assigned me a specific advocate who dealt with the IRS on my behalf. Saved me so much time and headache.

Do the adjustments also apply to income limits for Roth IRA contributions? I'm right at the cutoff and wondering if I can still contribute for 2024.

Yes, the income limits for Roth IRA contributions also increased for 2024. The phase-out range for single filers is now $146,000 to $161,000 (up from $138,000 to $153,000 in 2023). For married filing jointly, it's $230,000 to $240,000 (up from $218,000 to $228,000). So if you were right at the cutoff before, you might now be under the threshold thanks to these adjustments. This is exactly why these inflation adjustments are so important - they prevent "bracket creep" across all aspects of the tax code, not just the income tax brackets themselves.

Yes, the standard filing deadline for your 2024 taxes (which you'll file in 2025) is still April 15, 2025. The inflation adjustments only affect the tax brackets, deductions, and credits - not the filing deadlines.

Oh no, I had no idea about quarterly payments! So I should have been paying throughout 2024 already? How do I even calculate how much to pay each quarter when my income varies so much month to month?

Yes, you should have been making quarterly payments for 2024, but don't panic too much - first-time business owners often miss this. The payments are due in April, June, September, and January of the following year. For calculating the amount, you have a few options. The safest way is to pay 100% of your previous year's tax liability divided by four (or 110% if your income was over $150,000). Since this is your first year, you can estimate based on your projected annual profit. The IRS Form 1040-ES has worksheets to help you calculate this. If your income varies a lot, you can also use the "annualized income installment method" which lets you pay based on what you actually earned each quarter.

The QBI is huge! But doesn't it phase out at certain income levels? I think there are also limitations based on business type.

You're right about the phase-outs, but they start pretty high - around $170,700 for single filers or $341,400 for married filing jointly (for 2024). Since OP mentioned making about $24,000, they should be well under the threshold. There are limitations for certain service businesses like law, medicine, consulting, etc., but a woodworking business making physical products would generally qualify without those restrictions. The basic calculation is straightforward for most small businesses under the income thresholds - typically 20% of your net Schedule C income.

Thanks for the reminder! I almost sent it to the address from last year's instructions without checking. Do you know if the processing time is affected by using priority vs certified mail?

Processing time isn't affected by the shipping method you choose. Once your return reaches the IRS facility, it enters the same processing queue regardless of how it arrived. The only timing advantage with Priority Mail is that it typically arrives at the IRS 1-3 days faster than regular Certified Mail. What DOES affect processing time is the complexity and format of your return. Paper returns generally take 6-8 weeks minimum to process, compared to 2-3 weeks for electronic filing. Within paper returns, those with many schedules, attachments, or amendments tend to take longer as they often require manual review.

E-filing doesn't work for everything. I tried to e-file an amended return last year and the software wouldn't allow it because of some specific schedules I had to include. Some prior year returns also can't be e-filed after a certain date.

Thanks for this advice! I just pulled out my Form 4549 and compared it to the CP22. You're right that there are penalties listed on the CP22 that weren't on the examination report, but they only account for about $1,200 of the difference. There's still $1,550 unaccounted for, which seems to be an additional tax assessment that wasn't in our agreement.

That's concerning. When you and the auditor reached an agreement, you should have signed a form acknowledging the additional tax assessment. Check if you have a copy of this agreement - it's your strongest evidence. With that $1,550 unexplained difference, you should definitely contact the IRS promptly. When you call, ask specifically for the "examination department" and reference your audit case number. They should be able to pull the records and see what was actually agreed upon. Be prepared to fax or mail copies of your documentation showing the original agreed amount.

This is excellent advice. The IRS often combines multiple issues in a single notice, especially if they're doing a multi-year review. I've seen CP22s that reference adjustments from completely different issues all bundled together.