Thank you so much for this suggestion! I didn't know the SSA would have that information. Do they show the tax withholding amounts too or just the total income? And how quickly does that information get updated?

The SSA only shows your total earnings, not the withholding amounts. So it will help confirm your income, but you'll still need to estimate your federal and state tax withholding from the pay stubs you have. It typically gets updated a few months after the end of each quarter, so there might be some lag. But it's a good way to verify your total earnings when you don't have complete records. Even partial confirmation is better than nothing when you're filing a substitute W-2 form.

This is definitely an option, but there can be a significant delay. W-2s aren't required to be filed with the IRS until January 31st, and then it takes time for them to be processed and appear in your transcript. If the company closed and never filed them at all (which sounds possible in OP's case), they won't show up at all.

Would it be better to file as a Schedule C business loss or just take the casualty loss directly? Does it make a difference tax-wise? I'm in a sorta similar situation with my small side business.

You'll definitely want to file Schedule C to report all your business income and expenses, including the equipment that was destroyed. The casualty loss is reported on Form 4684, but since these were business assets, the loss ultimately flows to your Schedule C. Filing the business loss on Schedule C is generally more advantageous than taking a personal casualty loss because personal casualty losses are highly restricted under current tax law (only federally declared disasters qualify). Business casualty losses don't have these same limitations and can offset your other income.

The key difference between a hobby and a business isn't whether you made money yet, but whether you had a reasonable expectation of making a profit and were operating it in a businesslike manner. Plenty of legitimate businesses have losses in their first year or even several years.

Thanks for mentioning this! I'll double check my EFTPS payments right away. Did you have to do anything special to get them to reallocate the payments to the correct years?

You'll need to call the IRS Business Tax line and specifically request a payment transfer. Have your EFTPS confirmation numbers ready along with the dates of the payments and the tax periods they should be applied to. I found it helpful to prepare a simple spreadsheet showing the payment date, amount, confirmation number, and which tax period each payment should apply to. The agent I spoke with appreciated having all the information organized, and it made the process much smoother.

What's the best way to word a reasonable cause request? My situation was similar but I'm not eligible for first time abatement.

Thank you for the specific steps! This makes a lot of sense. I checked my tax software again and I think I discovered the issue - there's a specific question about "Do you qualify to deduct your IRA contributions?" that I must have answered incorrectly. Previous years I knew to say "No" but this year with the job change and severance, I might have clicked "Yes" by mistake. I'll try redoing those steps in the correct order. Would it also make sense to just delete all my IRA entries and start fresh with these steps in mind?

Yes, I'd recommend deleting all the IRA-related entries and starting fresh. That's the cleanest approach. Some tax software doesn't handle corrections well when it comes to the 8606 form. When you restart, just follow those steps in order. The key is definitely that "Do you qualify to deduct" question - that's the exact one that determines how the software handles everything downstream. Always answer "No" for a backdoor Roth strategy since the whole point is you're over the income limits for deductible contributions. And don't worry about the severance - it's just regular income. It doesn't change how backdoor Roth contributions work. The W-2 Box 13 check is typically for retirement plan participation at that employer, which is separate from your individual IRA strategy.

I haven't heard about increased scrutiny, but I can tell you that reporting Backdoor Roth incorrectly is definitely a red flag. When your 1099-R shows a distribution (the conversion) but there's no corresponding basis tracking on Form 8606, it creates a mismatch that their systems can easily detect.

Did you contact TurboTax customer support about it? I wonder if they even know their system is doing this to people and causing anxiety.

I did try reaching out to their customer service about it. Got a generic response saying "refund status is provided by the IRS and we recommend checking the IRS website for the most accurate information." Pretty much confirmed they know their tracker has issues but don't really do anything to fix it or warn users. The representative didn't seem surprised at all when I mentioned the status randomly changing, so I'm guessing they get these complaints all the time during tax season.

Does this happen with other tax prep services too or just TurboTax? I've been using H&R Block and wondering if I should expect the same issues.