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Another suggestion - check if you qualify for a First Time Penalty Abatement. If you've had a clean tax record for the past 3 years (filed and paid on time), you might be able to get the failure-to-pay penalties removed, which could save you a few hundred dollars on a $6,000 balance. You have to specifically ask for this though - the IRS won't automatically apply it.
Thanks for mentioning this! I've definitely filed and paid on time for the last several years. How do I request this abatement? Is it something I ask for when setting up the payment plan, or is it a separate process?
You can request it when you call to set up your payment plan. Just specifically mention that you'd like to request a "First Time Penalty Abatement" based on your history of compliance. The agent should be able to check your eligibility on the spot. If they approve it, they'll remove the failure-to-pay penalties, though interest will still apply to your balance. If you set up your payment plan online, you'll need to call separately to request the abatement. Make sure to do this sooner rather than later - it's easier to get penalties removed before you've paid them than to get a refund afterward.
Make sure you adjust your withholding or make estimated tax payments this year so you don't end up in the same situation next year! The IRS gets really annoyed if you have back-to-back years with big underpayments. Use the IRS Tax Withholding Estimator on their website to figure out how much you should be paying throughout the year.
This is super important! My brother had to pay penalties two years in a row because he didn't adjust his withholding after the first time he owed a lot. The second time, the IRS was way less forgiving about waiving penalties.
TaxSlayer has worked great for me for prior year returns! Their interface is straightforward and they charge way less than TurboTax. I used it last year for a similar situation (had filed an extension and then needed to submit). One thing to remember: if you owe any money for 2023, you'll likely have some penalties and interest since those continued accruing even with the extension. The extension only gives you more time to file, not more time to pay. The software should calculate this for you though.
Thanks for mentioning the penalties! I wasn't aware of that distinction with extensions. Do you know roughly how much those penalties typically run? I'm worried now because I definitely didn't pay anything back in April when I filed the extension.
The failure-to-pay penalty is usually about 0.5% of your unpaid taxes per month, with a maximum of 25%. There's also interest that compounds daily at the federal short-term rate plus 3%. It's not catastrophic for most people with simple returns, especially if you're due a refund (in which case there's no penalty at all). But if you owe a significant amount, it can add up. Most tax software will calculate this automatically once you input when you're filing.
Just want to throw in another option that nobody's mentioned yet - the IRS has VITA (Volunteer Income Tax Assistance) sites that can help file prior year returns for FREE if you make under $60,000. Since you're still a dependent, you might qualify.
VITA is amazing, but most sites are only operational during the regular tax season (Jan-Apr). It can be hard to find VITA services for prior year returns in October.
Just to add another possibility - are you sure the farmer isn't paying you for some kind of service rather than actual rent? Sometimes farmers will pay people for easements, rights of way, or even administrative services related to the property without it being actual rent. The fact that it's in Box 1 (Rents) on the 1099-MISC is pretty clear, but it might be worth double-checking if there's any other arrangement you might not be aware of.
This is an excellent point. I previously worked for a farming cooperative and sometimes payments were categorized as "rent" when they were actually for other services. One family had their grandson handle paperwork and communication with us, and he received a 1099 for his administrative services while the actual landowners got a separate payment.
Why not just call the farmer directly and ask? Seems like a lot of guessing going on when the person issuing the 1099 could clarify exactly why they're sending it to you instead of your grandparents.
Just a heads up - I went through this exact same thing with a small client who suddenly needed my SSN after 2 years. Make sure you ONLY provide it on an official W-9 form, not just in an email or text. And make sure they're actually registered as a legitimate business. I learned the hard way that my "client" was actually operating without proper business registration and couldn't legally issue 1099s anyway.
What happened in your situation? Did you get in trouble with the IRS? Im worried about something similar.
I didn't get in trouble since I'd been reporting all my income properly on my Schedule C forms each year. But it created a mess because they tried to issue me 1099s under a business name that wasn't properly registered with the state or IRS. I ended up having to provide additional documentation during tax filing to explain the mismatch between the 1099 information and the business information the IRS had on file. It was a paperwork headache but not a financial or legal problem since I'd been honest about my income all along.
Anyone know what the current threshold is for 1099s? I thought it changed recently from $600 to something higher?
NebulaNinja
One important thing to note: make sure you're checking your mailbox regularly through April 2025. After these kinds of corrections, the IRS sometimes sends a follow-up CP2000 notice or requests additional information. The worst thing you can do is miss a deadline because you didn't open mail promptly. These notices often have 30-day response windows, and missing them can lead to default assessments or lost appeal rights. Also, double check that the address the IRS has on file for you is current. You'd be surprised how many people move and forget to update their address with the IRS, then miss important notices.
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Andre Dupont
β’Good call - we're actually planning to move in March. What's the best way to update our address with the IRS? Is that something we should do before filing our 2024 taxes?
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NebulaNinja
β’You should definitely update your address before you move. The easiest way is to file Form 8822 (Change of Address) directly with the IRS. You can download it from IRS.gov and mail it in. While putting your new address on your 2024 return will eventually update their records, that could take months to process, and you don't want to risk missing any correspondence in the meantime. If you're moving in March, I'd recommend sending the Form 8822 about 2-3 weeks before your move. Also make sure you file a change of address with USPS so they forward any IRS mail that might still go to your old address during the transition period.
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Fatima Al-Suwaidi
This exact thing happened to my cousin! It was closer to $13k though. He spent the money right away (bad move) and then had to scramble to pay it back plus the fee. His accountant explained it was due to a duplicate processing of something on the return. The IRS computer systems are honestly ancient and these errors happen more than they should. I think they're still using code from like the 1960s for some of their systems.
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Dylan Mitchell
β’The IRS is actually running on systems from the 1960s in some departments! I worked with a government contractor who helped maintain their systems and it's SCARY how outdated some of their infrastructure is. They're still using programming languages most developers have never even heard of.
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