Sorry to jump in with a basic question, but can someone explain WHY law partners have to pay self-employment tax in the first place? I thought that was just for independent contractors and freelancers. If they're partners in a big established firm, why aren't they just considered employees for tax purposes?

This is a really helpful thread! I'm a CPA who works with several law firm partners, and I wanted to add a few practical considerations that might be useful: 1. **Quarterly estimated payments are crucial** - Partners earning $1.9M need to be very careful about underpayment penalties. The IRS expects you to pay 110% of last year's tax liability (or 90% of current year) through withholdings and estimated payments. 2. **State taxes vary significantly** - Some states don't have self-employment tax equivalents, while others (like California) have additional taxes that can really add up for high earners. 3. **Retirement planning is actually a huge advantage** - Partners can often contribute much more to retirement plans than W-2 employees. For 2025, SEP-IRA contributions can go up to 25% of net self-employment income or $70,000, whichever is less. 4. **Business expense deductions** - Partners can deduct things like continuing legal education, bar association dues, professional subscriptions, and even portions of home office expenses if they work from home regularly. The tax burden is definitely substantial, but the flexibility and deduction opportunities often make it more manageable than it initially appears. I always recommend partners work with a CPA familiar with partnership taxation - the rules are complex and mistakes can be expensive.

I've been through this exact situation! The key is to act quickly and be prepared when you call. Here's what worked for me: Call the IRS at 1-800-829-1040 early in the morning (7-8 AM) for shorter wait times. Have your SSN, payment amount, payment date, and confirmation number ready. Ask specifically for a "payment reallocation between tax years" - that's the exact terminology they use. The agent should be able to process it during the call, though it takes 4-6 weeks to show up in your account. Make sure to get a case/confirmation number for your records! Also, if you paid electronically, grab screenshots of your bank transaction or payment confirmation beforehand - it helps them locate your payment faster in their system. This is actually a pretty common issue, so don't stress too much. The IRS deals with payment reallocations regularly and the process is straightforward once you get through to someone. Good luck!

As someone new to dealing with IRS issues, I really appreciate everyone sharing their experiences here! It's clear that calling early in the morning (7-8 AM) with all your payment details ready is the way to go. The specific terminology "payment reallocation between tax years" seems crucial too. One question I have - for those who've been through this process, did you notice any impact on penalties or interest while waiting for the reallocation to process? I'm worried that having the payment applied to the wrong year might trigger additional charges on the year that's now showing as unpaid. Thanks for all the helpful advice so far!

I've been dealing with similar transfer delays with Wise, and it's usually related to their internal compliance checks rather than anything you did wrong. They have automated systems that flag transactions based on various factors - amount, frequency, recipient country, etc. In my experience, transfers over $5,000 to new recipients or countries you haven't sent to before often get reviewed. Even repeat transfers can sometimes get flagged if they're larger than your usual amounts or if there's been a gap in your transfer history. The good news is that once you're verified and have an established transfer pattern, future transfers usually go through much faster. I now regularly send $10,000+ to family in Canada and they typically process within hours rather than days. If you're planning regular larger transfers, it might help to contact Wise support proactively to verify your account for higher amounts. They can sometimes pre-approve you for larger transfers which reduces the chance of delays.

One important thing to consider is the timing of your transfers if you're planning to send larger amounts. I learned this the hard way when I sent $15,000 to my parents in Canada last year - the timing matters for both US gift tax reporting and Canadian tax implications for the recipients. From the US side, if you're sending more than the annual gift exclusion amount ($17,000 for 2023, $18,000 for 2024) to any one person, you need to file Form 709 by April 15th of the following year. But here's what caught me off guard: if your Canadian recipients receive large gifts, they might need to report it on their Canadian tax return too, even though gifts aren't typically taxable in Canada. Also, consider spreading larger gifts across tax years if possible. Instead of sending $30,000 to one family member in December, you might send $17,000 in December and $13,000 in January to stay within the annual exclusion limits and avoid the Form 709 filing requirement altogether. The key is planning ahead rather than just focusing on the transfer mechanics. The actual transfer through services like Wise is straightforward - it's the tax implications on both sides of the border that require more thought.

OMG this happened to me and I found a workaround! If you act FAST, you might be able to use the IRS's "Get My Payment" tool to update your bank info before they process the deposit! I literally caught mine just in time last year. Otherwise, if the deposit gets rejected, don't stress too much - they'll automatically mail you a check, but it'll take an extra 2-4 weeks. Another option is setting up mail forwarding with USPS if you're moving soon, so you don't miss the paper check. Whatever you do, DON'T file an amended return for this - it would only delay things more!

I understand your anxiety about this situation! As someone who works in tax preparation, I see this issue fairly regularly. The good news is that name mismatches on direct deposits are actually quite common with joint returns, and the IRS has established procedures to handle them. When the deposit attempt fails (which it likely will since Walmart MoneyCard confirmed they don't allow joint accounts), the IRS system will automatically convert your refund to a paper check. This typically adds 2-3 weeks to your timeline, but it's completely automatic - no action needed on your part. Just make sure your mailing address is current with the IRS. Also, definitely don't amend your return for this issue - it would only cause more delays. The IRS considers this a payment processing issue, not a filing error. Keep checking the "Where's My Refund" tool, and it should update you when the status changes from direct deposit to paper check being mailed.

I've seen this happen with TurboTax plenty of times. The software is just following the tax code, which says you need to pay throughout the year. What most people dont know is that your inheritance itself isnt taxable income! But if you sold investments or property that you inherited, the gains are taxable. And there's something called "step-up in basis" where inherited assets get valued at the date of death, not the original purchase price. So only gains after that point are taxable. Check if maybe you sold some stocks or something after inheriting them? That would explain the capital gains tax. But either way, the penalty is about WHEN you paid, not IF you paid enough total.

Great thread everyone! I'm dealing with a similar situation and this has been super helpful. One thing I want to add is that you can also use Form 2210 to request a waiver of the underpayment penalty if you had reasonable cause - like a sudden change in income, casualty loss, or other circumstances beyond your control. Also, for anyone making estimated payments, remember that the IRS allows you to pay online through EFTPS (Electronic Federal Tax Payment System) or IRS Direct Pay. Just make sure to keep records of when you made each payment since the timing is so important for avoiding penalties. The safe harbor rules mentioned earlier are really key - if your AGI last year was under $150k, you just need to pay 100% of last year's tax liability through withholding and estimated payments to avoid any penalty, regardless of how much you actually owe this year.