Just a heads up - everyone is suggesting adding deductions on line 4(b), but remember these should be ACTUAL deductions you qualify for beyond the standard deduction, like mortgage interest, large charitable contributions, etc. If you're just claiming the standard deduction, technically you should be using line 4(c) instead by putting a NEGATIVE number for additional withholding. But honestly, most payroll systems don't accept negative numbers there. This is why so many people with variable income end up using line 4(b) as a workaround, even though it's not technically the correct approach according to IRS instructions. Just be aware this is a gray area.

I've been dealing with this exact same issue! Variable income withholding is such a pain. One thing that really helped me was keeping a simple spreadsheet tracking my actual withholding percentage vs. my gross pay each week. I noticed my withholding would spike to like 35%+ on weeks where I worked 60+ hours, but drop to around 15% on my lighter weeks. What I ended up doing was calculating my expected annual income (sounds like you're thinking $85k), then figuring out what my actual tax liability should be. For $85k single with standard deduction, you're looking at roughly $14,500 in federal taxes for the year. I put about $18,000 in additional deductions on line 4(b) of my W4, which brought my withholding down to a more reasonable 20-22% range even on the big weeks. The key is monitoring it every few months and adjusting if needed. Also, don't stress too much about being "perfectly" accurate - as long as you're close and not massively underwithholding, you can always adjust throughout the year. The worst case is you owe a small amount at tax time, which beats giving the IRS an interest-free loan!

Code 291 can be super confusing! I had the same issue last year and it drove me nuts trying to figure out what was going on. From what I learned, code 291 usually means they made an adjustment to your return - could be a math error, missing forms, or they corrected something. The key is looking at the amount column next to it. If it's a credit (positive), they owe you. If it's a debit (negative), you might owe them. Also check if there are any follow-up codes like 766 (credit to your account) or 768 (earned income credit). The IRS phone lines are absolutely terrible right now so don't feel bad about not getting through. Have you tried looking at your account transcript online? Sometimes that gives more detail than the return transcript.

Code 291 is definitely confusing! I went through this same thing a few months ago. What helped me was looking at the "amount" column next to the code 291 - if it shows a positive number, that's usually good news (they owe you), but if it's negative, you might owe them. Also look for the cycle date on that line - that tells you when the adjustment was processed. The transcript format is honestly terrible and makes no sense until someone explains it. Have you been able to find any other codes like 846 (refund issued) or 570 (additional account action pending)? Those usually appear after a 291 and give you a better picture of what's happening. Definitely don't rely on calling - I was on hold for 4 hours just to get disconnected 🙄

Another thing to consider - Tencent specifically has had some complex corporate actions recently that can affect how these distributions are treated. I dealt with a similar situation with my Tencent ADRs last year. The key is to look at the specific corporate action notices from both Tencent and your broker. Sometimes these "Unissued Rights Redemption" payments are related to spin-offs or other restructuring activities that have special tax treatment rules. I'd recommend checking Tencent's investor relations page for any recent corporate action announcements around that March timeframe. This context can help you (or a tax professional) determine the correct tax treatment beyond just the generic 1099-B classification. Also, keep in mind that even if it's treated as a return of capital now, you'll eventually pay taxes when you sell the shares - you're just deferring the tax liability by reducing your cost basis.

I've been through this exact scenario with Tencent ADRs! The key is understanding that "Unissued Rights Redemption" payments are almost always treated as return of capital distributions, not taxable dividends or capital gains. Here's what you need to do: 1. Contact Fidelity and request the specific tax characterization letter for this distribution - they're required to provide this 2. If confirmed as return of capital, reduce your cost basis in the Tencent ADRs by $1,023.75 (spread across your 600 shares, so about $1.70 per share reduction) 3. Don't report this as income on your current tax return 4. Keep detailed records of your adjusted cost basis for when you eventually sell The 1099-B classification is misleading here - brokers often default to showing these as sales/gains when they're actually basis adjustments. You have the right to correct this based on the actual tax character of the distribution. One more tip: make sure to check if any foreign taxes were withheld on this distribution, as you may be eligible for foreign tax credits even if the distribution itself isn't immediately taxable.

This is absolutely terrifying! I can't imagine getting a notice like that out of nowhere. Thank you everyone for the detailed advice - I'm taking notes on all of this. Quick question though - should I be worried about this affecting my credit score? And when I call that IRS Identity Protection number, do I need to have specific documents ready, or can I just explain the situation first to get guidance on what they'll need from me? Also, has anyone dealt with the aftermath of this? Like, once it's resolved, do you need to do anything special when filing future tax returns to make sure it doesn't happen again?

This is such a scary situation! I'm really sorry you're dealing with this, but you're definitely not alone. I had something similar happen to a friend where someone used their SSN to set up a business entity. One thing I'd add to all the excellent advice here - when you file Form 14039, make sure to keep copies of EVERYTHING you send to the IRS. Mail it certified with return receipt so you have proof they received it. The IRS can be notoriously slow with identity theft cases, and having documentation of when you submitted everything will be crucial if you need to follow up. Also, don't panic about the $16K tax bill - you won't be responsible for taxes on income you never received once this gets sorted out. It's just going to take some patience and paperwork. The fact that you caught this quickly and are taking action right away puts you in a much better position than people who ignore these notices. Keep us updated on how it goes! Rooting for you to get this resolved quickly.

Just wanted to chime in as someone who made this transition a couple years ago! The advice about setting aside 25-30% is solid, but don't forget about state taxes if you're in a state that has them - that percentage might need to be higher depending on where you live. One thing that really helped me in the beginning was using the IRS withholding calculator (https://www.irs.gov/individuals/tax-withholding-estimator) after my first few freelance gigs. You can input both your W2 income and estimated freelance income, and it'll tell you if you need to adjust your W4 withholding at your main job or make quarterly payments. Also, since you mentioned TurboTax - they have a pretty good quarterly tax calculator tool that can help you figure out those estimated payments once you get a few paychecks under your belt. The key is not to stress too much about getting it perfect the first year - you're learning a new system and the IRS understands that. Just make sure you're setting aside something from each freelance payment and you'll be in much better shape than most people starting out! Good luck with the film work - it's such a fun industry to freelance in!

One thing I haven't seen mentioned yet is the importance of getting an EIN (Employer Identification Number) for your freelance work, even if you're a sole proprietor. While you can use your SSN, having an EIN makes you look more professional when clients ask for tax documents, and it adds a layer of privacy protection. You can apply for an EIN online directly through the IRS website for free - it literally takes about 10 minutes and you get it immediately. Some clients prefer working with freelancers who have EINs, and it makes the whole W-9 process smoother. Also, since you're in film production, consider joining relevant professional organizations like your local film commission or industry groups. The membership fees are tax-deductible business expenses, and they often provide valuable networking opportunities that can lead to more work. Plus, some offer resources or workshops on freelance business practices that could help with the tax and business side of things you're navigating. The learning curve feels steep at first, but once you get through your first year of managing both income sources, it becomes much more routine. You've got this!