That's actually exactly what's happening - it's investment income from a stock sale. How did you prove to them that you did report it correctly? Did you have to send in a specific form or just explain it in the response letter?

I sent them a copy of the original 1099-B I received (the one I used when filing), along with my Schedule D and Form 8949 that showed I had reported the transactions. Then I explained in my response letter exactly which line items were being questioned and where they could find those exact amounts on my return. The key was being super specific and making it extremely easy for them to verify what I was saying. I literally wrote things like "The $12,345 amount referenced in paragraph 2 of your notice can be found on line 3 of my Schedule D, which matches line 1 of Form 8949 as shown on the attached documents." I basically created a roadmap that connected their questions directly to my filing documentation. That approach worked well because it minimized the work they had to do to verify my explanation.

100% agree! Those companies are predatory. My colleague went with one of the big national firms and paid $2,500 for them to basically fill out a form response. The commercials make it sound like they have some special relationship with the IRS but they absolutely don't. If you do need professional help, look for a local CPA or Enrolled Agent who specializes in tax controversy. They'll charge a reasonable hourly rate instead of those massive upfront fees, and you'll get personalized help from someone who actually looks at your specific situation.

Thanks for the warning! I actually got a call from one of those companies right after I got my letter (no idea how they knew?) and they wanted $2,800 upfront. Felt super sketchy so I didn't go with them. Good to know my instincts were right!

Thanks for mentioning this! I definitely made under $10k for the year, so maybe I'd qualify for that credit? And you're right - I never got any forms from the company, so maybe they didn't report it. Would that make my penalties less severe?

You should definitely check if you qualify for the EITC. For 2023, a single filer with no children could qualify with income up to about $17,640, so you're well within that range. This could potentially give you a refundable credit of several hundred dollars. Regarding the unreported income, it's a double-edged sword. If they didn't report it, the IRS might not know you were supposed to file, which means they haven't been actively pursuing you for non-filing. However, you're still legally obligated to report all income regardless of whether you received a 1099. The safest approach is always to file and report everything accurately, even if it's late.

Definitely good to know. I'm in Texas so I think we don't have state income tax, but I'll double check to make sure I'm not missing anything else!

That makes a lot of sense. For the prior years, should I try to file them all at once or do them one by one? And for the stock losses, do you know how many years I can carry those forward? I lost quite a bit in 2021-2022.

You can file them all at once - that's actually better since it shows you're making a comprehensive effort to get compliant. Just make sure each year is in its own separate envelope if mailing them. For capital losses, you can deduct up to $3,000 per year against ordinary income, and carry forward any excess losses indefinitely until they're used up. So those 2021-2022 losses could potentially offset your income for several years to come, which might really help with your current tax situation.

This isn't entirely accurate advice. While audit rates are low for most people, failing to file returns for several years does significantly increase your chances of getting IRS attention, regardless of income level. The IRS does have automated systems that flag non-filers.

Thanks for mentioning this! My tax payment is around $12k so hopefully that's under the limit, but I'll definitely check my account settings to make sure. Do you know if there are monthly limits too or just daily?

There are monthly limits as well, which are typically 3-4 times the daily limit in my experience. For a $12k payment you should be fine unless you've already made other large transfers this month. You can check your specific limits by logging into your Marcus account, going to the profile section, and looking at "Transfer Limits." It's usually shown right there, or you might need to click on account details depending on if you're using the app or website.

This is so true! I freaked out last year thinking my payment didn't go through, even called Marcus support. They explained that tax payments process differently than regular transfers. As long as you got the confirmation email from TurboTax, you should be good.

This is super helpful! I was just checking my Marcus account and didn't see anything pending yet, so was starting to worry. I'll give it a day before I start panicking. Thanks for sharing that!

Yikes, that's scary. Do you know if the payment plan stops the penalties from accumulating? I'm definitely calling them this week.

The payment plan doesn't completely stop penalties and interest, but it does prevent further collection actions like liens and levies as long as you keep making payments. The failure-to-pay penalty drops from 0.5% to 0.25% per month when you're on a plan, which helps a little. Interest (currently around 5%) continues regardless. Still way better than ignoring it though - I learned that lesson the hard way!

This is great advice! I got first-time abatement for a similar situation. Just call the IRS and specifically ask for "first-time penalty abatement" - many agents won't offer it unless you specifically request it.