Thanks for all the helpful advice everyone! I'm leaning toward putting $6,000 for the child tax credits instead of the full $8,000 to ensure I get that refund. Just to make sure I understand - when I file my actual tax return next year, I'll still claim all 4 kids and get the full $8,000 credit regardless of what I put on the W-4, right? The W-4 just affects how much they take out of my paychecks during the year? Also @Emma Johnson, thanks for the tip about checking the box in Step 2(c) since my spouse doesn't work - I definitely would have missed that!

One more thing to consider - since you mentioned your household income is around $135K, you should be aware that the Child Tax Credit starts to phase out at $150K for married filing jointly (in 2025). You're well under that threshold, so you'll get the full $2,000 per child, but it's something to keep in mind if your income increases in future years. Also, with 4 kids, don't forget you might be eligible for the Child and Dependent Care Credit if you have any childcare expenses (even though your spouse stays home, you might have summer camps, after-school care, etc.). That's another credit that could affect your overall tax picture, though it won't change what you put on the W-4 since that credit can't be anticipated in withholding. Your plan to put $6,000 instead of $8,000 sounds solid for getting that refund you're looking for!

Another thing to consider - has your sister changed her direct deposit information or banking details recently? Sometimes payroll systems get confused when there are banking changes and accidentally apply withholding settings from a previous employee or default settings. Also, if she's contributing to a 401(k) or other pre-tax benefits, make sure those aren't being double-counted somewhere in the system. I've seen cases where the payroll software incorrectly calculates withholding by treating pre-tax deductions as if they reduce the tax liability instead of just the taxable income. The $78 per paycheck figure is so specific and low that it almost seems like the system is applying some kind of minimum withholding amount rather than calculating based on her actual salary and filing status. Definitely have her print out a detailed pay stub that shows all the line items - sometimes the issue becomes obvious when you can see exactly how each deduction is being calculated.

I've been following this thread and wanted to add one more potential cause that I haven't seen mentioned yet - bonus or commission withholding settings affecting regular paycheck calculations. If your sister's position involves any variable compensation (even if she hasn't received any yet), some payroll systems will apply "supplemental income" withholding rates to the base salary by mistake. The supplemental rate is typically a flat 22% for federal taxes, but if the system incorrectly applies this as a cap rather than a rate, it could result in dramatically lower withholding amounts. Also, since she's only 3 months in, I'd suggest she ask HR if there were any recent payroll system updates or migrations. Companies sometimes lose employee tax settings during system transitions, reverting everyone to default configurations that may not match their actual W-4 elections. The combination of being a new employee + potential system issues + the very specific $78 amount really suggests this is a technical error rather than a form completion problem. She should definitely escalate this to HR ASAP, and if they can't resolve it quickly, she might want to consider making estimated tax payments for Q2 to avoid underpayment penalties while they sort it out.

Random question but related - I'm actually doing the opposite (Traditional to Roth recharacterization). Anyone know if the same rules apply in reverse? My earnings in the Traditional were like $12.

Just wanted to confirm what others have said - you're absolutely right to be confused because recharacterization rules are pretty complex! But the good news is that those $8 in earnings won't create any current-year tax issues for you. When you recharacterize from Roth to Traditional, the IRS treats it as if you made the Traditional IRA contribution originally. Both your $2500 contribution and the $8 in earnings will simply become part of your Traditional IRA balance. No current-year income to report, no distribution treatment, and no automatic need for Form 8606. The only thing you'll need to figure out is whether your Traditional IRA contribution will be deductible based on your income and the fact that you mentioned having a 401k at work. If it's fully deductible, you just take the deduction on your tax return. If it's non-deductible (because you're over the income limits), then you'd file Form 8606 to track your basis - but that's about the contribution itself, not those earnings. Fidelity should handle all the paperwork correctly and send you the proper forms showing the recharacterization. The earnings piece really is the easy part of this whole process!

Great question! Yes, you can absolutely convert the entire $14,500 from your Traditional IRA to Roth IRA in 2025. There are no annual limits on conversion amounts - only on contributions. Since you mentioned your Traditional IRA contributions are non-deductible (after-tax), you'll have minimal tax consequences. You'll only owe taxes on any earnings that accumulate between contribution and conversion. Given that you're doing this as part of a backdoor Roth strategy with minimal growth, your tax hit should be very small. A few tips from my experience: - Convert soon after contributing to minimize taxable earnings - Keep detailed records and file Form 8606 for each year you make non-deductible contributions - Consider doing the 2025 contribution and conversion early in January to maximize your Roth growth time This is a perfectly legitimate strategy that many people use to get around the Roth IRA income limits. Just make sure you don't have any other Traditional IRA balances (like old 401k rollovers) that could trigger the pro-rata rule and complicate your taxes.

You're absolutely right that there's no limit on conversion amounts! I did exactly what you're describing last year - converted about $13,000 from my Traditional IRA to Roth in one go after making contributions for both 2023 and 2024. One thing I learned the hard way: make sure you understand how your brokerage handles the conversion process. Some require you to call them, others let you do it online. I assumed I could just transfer money between accounts, but it needs to be processed as an official "conversion" for tax reporting purposes. Also, keep really good records of your contribution dates and amounts. When tax time comes, you'll need to report the non-deductible contributions on Form 8606, and having clear documentation makes everything much smoother. I created a simple spreadsheet tracking contribution dates, amounts, and conversion dates - saved me a lot of headaches come April! The backdoor Roth is such a great strategy for high earners who can't contribute directly to Roth IRAs. You're on the right track!

Based on my experience as a fee basis official for a federal agency, I want to emphasize the importance of getting your classification sorted out ASAP. The distinction between employee and independent contractor has huge implications beyond just withholding. If you're truly a fee basis official who's an employee, you should have access to workers' compensation, unemployment benefits, and potentially other employment protections. Independent contractors don't get these benefits. One thing that helped me was looking at the actual IRS factors for worker classification: Do they control HOW you do your work or just WHAT work you do? Do you use their equipment/office space? Are you integrated into their regular operations? These factors matter more than just the payment structure. Also, don't forget about potential deductions if you are classified as an independent contractor - home office, professional development, equipment, etc. Keep detailed records of all work-related expenses from day one, regardless of your classification, because you might need them later. The quarterly estimated tax payments are crucial if you're 1099 - missing them can result in penalties even if you pay everything at year-end. Set aside money immediately from each payment you receive.

As someone who recently went through a similar classification challenge with my municipal position, I'd strongly recommend getting everything in writing from your HR department about your status. Don't just accept verbal explanations - ask for documentation that clearly states whether you're classified as an employee or independent contractor. One thing that really helped me was requesting to see the actual job description and any internal memos about how positions like yours are supposed to be handled. Sometimes there's a disconnect between what HR tells you verbally and what their official policies actually say. Also, keep detailed records of everything - your work schedule, supervision level, equipment provided, training requirements, etc. This documentation could be crucial if you ever need to challenge your classification with the IRS or Department of Labor. From a practical standpoint, if you're not having taxes withheld, I'd recommend opening a separate savings account immediately and transferring 25-30% of each payment into it for taxes. Even if you later find out you're misclassified as a contractor, you'll have the money set aside and won't be scrambling at tax time. The uncertainty is stressful, but getting proper documentation and keeping good records will protect you either way the classification goes.