This thread has been incredibly helpful! I'm dealing with a similar situation where my employer reported my state taxes to the wrong state. Based on what everyone's shared, it sounds like the key points are: 1. Use ONLY the W2C for filing (not the original W2) 2. File a non-resident return in the wrong state to get those taxes back 3. File normally in your correct state using the W2C info 4. Make sure the W2C shows corrections for both states before filing One question I haven't seen addressed - does anyone know roughly how long it takes to get the refund from the wrong state? I'm wondering if I should expect it to take longer than a normal state refund since it's essentially correcting an error. Also, has anyone had issues with the wrong state questioning why they're getting a non-resident return when they have withholding records showing you as having worked there? I'm worried they might flag it as suspicious.

This is such a frustrating situation to deal with, but you're asking all the right questions! I went through something similar last year when my employer somehow reported my California income to Texas (where I've never even visited). The most important thing to remember is that since you haven't filed yet, you're actually in a better position than people who have to amend. Just wait for the W2C and use ONLY that form for all your filings - federal and both state returns. For the state filing strategy, you'll essentially be telling the wrong state "this was a mistake, give me my money back" through a non-resident return, while filing normally in your actual state. Most tax software handles this pretty well once you input the W2C information correctly. One thing I learned the hard way - double-check that your W2C has the correct state code and employer identification numbers. My first W2C had the right dollar amounts but still had some incorrect state codes, which would have caused more problems down the line. Don't be afraid to push back on your HR department if the correction looks incomplete! The whole process took about 3 months to get my refund from the wrong state, but it all worked out in the end. Hang in there - your employer's mistake will get resolved!

I went through almost the exact same thing last year! The 826 code with that specific format (201312) definitely indicates a federal tax debt from December 2013. What helped me was requesting my Account Transcript for tax year 2013 directly from the IRS website - it'll show you exactly what happened that year. In my case, there was an automated adjustment made to my 2013 return that I never knew about because the notice went to an old address. The IRS had corrected something on my original return (I think it was related to education credits) and I apparently owed additional tax plus penalties and interest that had been growing for 10+ years. The good news is that if this is truly the first time you're hearing about this debt, you may have grounds to request penalty abatement for "reasonable cause" since you were never properly notified. I was able to get about 40% of my offset refunded by filing Form 843 and explaining the situation. Definitely get that 2013 Account Transcript first though - it'll give you the full picture of what triggered this debt originally.

I'm dealing with something very similar right now! Just got my refund and it was $3,800 less than expected with the same 826 code showing "Credit transferred out to 1040 201311" - so mine is referencing November 2013. Reading through all these responses has been incredibly helpful. I never would have known that the number format meant a specific month/year. Like you, we've never received any notices about owing money from 2013, and we've been filing jointly since 2016 with no issues until now. I'm definitely going to try getting the 2013 Account Transcript like Oliver suggested, and maybe look into that Treasury Offset Program number that Natalie mentioned. It's so frustrating that they can just take thousands of dollars without any clear explanation, especially after so many years! Has anyone here had success actually getting money back once it's been offset like this? Or is it pretty much gone once they take it?

This is a fascinating discussion! I've been following professional poker for years as a hobby, and the tax implications have always intrigued me. One thing I'm curious about - for those who have successfully filed as businesses, how do you handle the psychological/emotional aspect that the IRS sometimes considers? I've read that they look at whether you derive personal pleasure from the activity as a factor in the business vs. hobby determination. It seems like with gambling, there's always going to be some element of enjoyment involved, even if you're approaching it systematically. How do you document that your primary motive is profit rather than recreation? Do you need to somehow prove you don't enjoy what you're doing, or is it more about demonstrating that profit is the dominant motive despite any incidental enjoyment? Also, has anyone dealt with the question of how "games of chance" vs "games of skill" affects the business classification? I imagine poker has a stronger case than something like slot machines, but I'm wondering if the IRS makes those distinctions when evaluating these cases.

The distinction between games of skill vs. chance is absolutely crucial for your case! As someone who's helped several poker players navigate this exact situation, I can tell you that poker and sports betting with systematic analysis have much stronger legal precedent than pure games of chance. The landmark case Groetzinger v. Commissioner established that gambling CAN qualify as a trade or business, and subsequent court cases have generally been more favorable to skill-based games. For poker specifically, courts have recognized that consistent long-term profitability demonstrates skill rather than luck. Your situation sounds very promising for business classification - 30-40 hours/week, detailed records, consistent profit over 3 years, and treating it as your primary income source all check the right boxes. The fact that you're doing both poker (clearly skill-based) and systematic sports betting (analytical approach) rather than purely chance-based games strengthens your position significantly. One practical tip: document not just WHAT you're doing, but WHY you're making specific decisions. Keep notes on your thought process, strategy adjustments based on results, and continuous learning efforts. This helps demonstrate the skill element and business-like approach that distinguishes you from recreational gamblers. Given your profit level ($68K) and time commitment, the self-employment tax hit might still be worth it for the expanded deduction opportunities, but definitely run the numbers both ways before deciding.

One thing nobody's mentioned yet - you should really clarify if you're truly an independent contractor (1099 worker) or if you should be classified as an employee (W-2). Based on what you described, it sounds like you're working regular hours for one company. The IRS has specific criteria for who can be classified as a 1099 worker vs. an employee. Many employers incorrectly classify workers as contractors to avoid paying employment taxes. If you're misclassified, you're paying extra taxes that your employer should be covering. You might want to look at the IRS guidelines on worker classification and see if your situation fits.

Hey Caleb! You're absolutely right to be concerned about this. I went through something similar when I was freelancing and getting paid through various apps. First thing - definitely keep ALL those Zelle screenshots and bank records. Print them out and keep digital copies too. When your 1099 arrives in January, compare it line by line with your own records immediately. One tip that saved me: create a simple spreadsheet now with the date, amount, and Zelle transaction ID for every payment you've received. This makes it super easy to spot discrepancies when the 1099 comes. If there is a mistake on the 1099, don't panic! Your employer can issue a corrected form (1099-C) to fix it. Most small business owners will work with you on this - they don't want IRS problems either. And honestly, the fact that you're only 22 and already thinking about this stuff puts you way ahead of most people your age. You've got good instincts here. Just stay organized with your records and you'll be fine even if there are bumps along the way. The payment method (Zelle vs direct deposit) doesn't really matter for tax purposes - what matters is accurate reporting of the amounts. You're doing the right thing by keeping track of everything!

Great thread with lots of solid advice! I'd emphasize getting those forms filed ASAP - every day you wait adds more penalties. One thing I haven't seen mentioned yet is to make sure you're filing the correct versions of the forms for each tax year. The IRS sometimes updates form layouts between years, and using the wrong year's form can cause processing delays. Also, when you mail the returns, send each quarter's 941 in a separate envelope to avoid processing confusion. I learned this the hard way when a client's multiple quarters got mixed up in IRS processing and we had to spend months sorting out which payments were applied to which periods. If your client's business is still operating, make sure they stay current on all 2023 filings while you're catching up on 2022. The last thing you want is to fall behind again while trying to resolve the old issues. Set up quarterly reminders and consider having them make estimated deposits to avoid future problems.

As someone who's dealt with this exact scenario multiple times, I want to stress the importance of acting quickly but methodically. Here's my step-by-step approach: 1. **Immediate Priority**: Get all 2022 forms prepared and filed within the next 30 days. The failure-to-file penalty is 5% per month (up to 25%), so every month you delay costs your client more money. 2. **Payment Strategy**: If your client can't pay the full amount immediately, still file the returns with whatever payment they can make. Partial payment shows good faith and reduces the failure-to-pay penalty from 0.5% to 0.25% per month on the remaining balance. 3. **Communication**: Once filed, don't wait for notices to pile up. Call the IRS proactively to set up a payment plan before they start collection actions. This positions your client as cooperative rather than evasive. 4. **Documentation**: Keep copies of everything - certified mail receipts, payment records, and any correspondence. You'll need this paper trail when dealing with penalty abatement requests later. The key is moving from "delinquent" to "working toward compliance" as quickly as possible. The IRS is generally reasonable when taxpayers take initiative to resolve issues rather than waiting to be caught.