To add some perspective with precise numbers: In 2023, approximately 94.3% of taxpayers chose direct deposit for their refunds, and a significant portion of married filing jointly returns had deposits going to individual accounts. The IRS processed over 109 million refunds last year with an average refund amount of $3,167. Not once in their processing procedures do they validate account ownership against tax return names. They're concerned with accuracy of routing and account numbers, not whose name is on the account. As long as you have access to the account where the funds are deposited, there's absolutely no issue with your approach.

This is such valuable information to share! As someone who just went through tax season myself, I can definitely relate to the stress of wondering if you're doing everything correctly. I had a similar situation where I was second-guessing whether to use our joint account or my individual account for the refund. Your pizza delivery analogy really puts it in perspective - the IRS just wants to get the money delivered to a valid address, they're not checking who's home to receive it! It's really helpful when experienced community members share these practical insights. Tax season is stressful enough without worrying about technicalities that turn out to be non-issues. Thanks for taking the time to educate the rest of us! Did you end up getting your refund processed without any delays using your individual account?

I'm actually in the middle of dealing with this exact scenario right now! My company's educational assistance program has the same timing issue where my Spring 2024 semester reimbursement won't be processed until January 2025, which would put me over the $5,250 limit for that year. After reading through all these responses, I reached out to my company's benefits administrator (not just HR) and discovered they actually have a "tax year adjustment" option that they don't widely advertise. They can expedite year-end payments if you can demonstrate it would create adverse tax consequences due to Section 127 limits. I had to submit a written request explaining the situation along with documentation of my course timeline and expected reimbursement amounts. They were able to process my final payment in December instead of waiting for the January cycle. It required manager approval and some extra paperwork, but it saved me from having taxable income on the excess. Not all companies will have this flexibility, but it's definitely worth asking! The key was framing it as a tax compliance issue rather than just a personal preference about payment timing. I also mentioned that it helps the company too since they can claim the full deduction in the year the education actually occurred. If your company can't adjust the payment timing, definitely explore the working condition fringe benefit classification that others have mentioned. My benefits team said they've reclassified payments for other employees when the courses clearly related to current job functions. The whole system is frustratingly rigid for these real-world timing issues, but there might be more flexibility available than appears on the surface!

As someone who's navigated similar educational reimbursement timing issues, I want to add a few practical considerations that might help with your specific situation. First, regarding your question about reporting - you're correct that you'll report $2,625 for 2023 (tax-free under Section 127) and $7,875 for 2024 (with $2,625 being taxable). However, before accepting this outcome, I'd strongly recommend having a detailed conversation with your benefits administrator about payment flexibility, as several others have mentioned. One angle that hasn't been fully explored - if your company's reimbursement policy states that benefits are "earned" when you successfully complete courses (even if grades aren't posted until later), you might have grounds for constructive receipt in 2023. The key question is whether the delay was purely administrative on their end or genuinely waiting for your academic completion. Also consider asking your benefits team about alternative classifications for the January payment. If your Fall 2023 courses relate directly to your current job responsibilities (not just career advancement), they might be able to process it as a working condition fringe benefit instead of Section 127, which wouldn't be subject to the annual limit. Even if you can't avoid the tax consequences, make sure you're maximizing any available education credits on your 2024 return. The Lifetime Learning Credit could help offset some of the additional tax burden from the excess reimbursement. Document everything thoroughly - course schedules, grade release dates, payment request submissions, and any communications about timing. This creates a clear record of the legitimate educational timeline versus administrative delays. The situation is frustrating, but don't let it discourage you from continuing to use this valuable benefit!

Has anyone used the "last-month rule" instead of prorating in situations like this? From what I understand, if you're eligible on December 1st, you can contribute the full annual amount (individual or family based on December status) as long as you remain eligible through the end of the following year. Would that work in the original poster's situation?

This is a great breakdown of how to handle HSA contributions with mid-year coverage changes! I wanted to add one important point about timing that might help others in similar situations. When making these prorated contributions, you have until the tax filing deadline (typically April 15th of the following year) to make HSA contributions for the previous tax year. So even though you're figuring this out now, you still have time to make the calculated $6,450 contribution for 2023 if you haven't already maxed it out. Also, make sure to keep detailed records of the coverage change dates and your calculations. The IRS may want documentation if they ever question your contribution amounts, especially with the complexity of mid-year switches between family and individual coverage. Your insurance company should be able to provide letters or statements showing exactly when coverage types changed. Congratulations on the pregnancy, by the way! Once your little one arrives, you'll likely be able to switch back to family HDHP coverage and family contribution limits if that makes sense for your situation.

Has anyone tried requesting a penalty abatement for first-time late filing? I heard the IRS has a First Time Penalty Abatement policy where they'll waive penalties for people with clean previous filing history.

I'm going through something similar with my divorce proceedings - needed my 2021 return for financial disclosure and realized I never actually submitted it either! The stress is real when you need these documents for court. A few things that helped me: First, definitely file 2022 immediately as a separate return. The IRS systems are set up to handle each tax year individually, so there's no option to combine years anyway. For the court documentation, consider asking your attorney if they'll accept a copy of your prepared return along with proof that you've submitted it to the IRS (like a certified mail receipt if you file by paper, or the electronic confirmation if you e-file). Courts understand that IRS processing can take weeks, so they often accept evidence that you've filed rather than waiting for the processed return. Also, once you do file, you can request an Account Transcript from the IRS online at irs.gov which will show your filing status and any penalties/payments. This can serve as official documentation for court purposes while you wait for your actual return to be processed. The penalties will hurt, but getting this resolved quickly is more important than the extra money, especially with court deadlines looming. Good luck!

Has anyone had their FSA administrator reject expenses during an audit because the provider didn't have a tax ID? I'm in a similar situation with a small home daycare and worried my company might make me pay back the FSA money if they audit and find out the provider wasn't properly registered.

I went through almost the exact same situation two years ago with a home daycare that suddenly shut down. What really helped me was keeping a detailed timeline of everything - when I paid, when they closed, when I tried to contact them, etc. One thing I'd add to the great advice already given: check with your state's licensing board for childcare providers. Even if the daycare was operating without proper licensing, they might have records or complaints filed that could help you track down the owner's information. In my case, I found out through the state board that several parents had filed complaints when the daycare closed, and they actually had the owner's SSN on file from a previous licensing attempt. Also, don't stress too much about the FSA side of things. Your FSA administrator approved the reimbursement based on valid receipts for childcare expenses. The fact that the provider may have had licensing issues doesn't retroactively make your childcare expenses ineligible. You legitimately paid for childcare so you could work - that's what matters for FSA purposes. Just make sure to document everything thoroughly and you should be fine on both the FSA and tax filing fronts!