Has anyone dealt with getting a severance paid out over multiple payments instead of one lump sum? My company is offering me either option, and I'm wondering if taking it over 3 months would result in less tax withholding upfront compared to a lump sum.

I went through something very similar when I got laid off six months ago. The 58% withholding rate you're seeing is unfortunately pretty normal for severance payments, especially if your company is being conservative with their calculations. Here's what likely happened: Your company treated the $8,500 severance as if you were going to receive that amount every pay period for the entire year. So if you normally get paid bi-weekly, they calculated withholding as if you'd be making $221,000 annually ($8,500 x 26 pay periods). That would put you in a much higher tax bracket, hence the aggressive withholding. The silver lining is that when you file your 2025 tax return, your actual tax will be based on your total income for the year - which will likely be much lower since you're now unemployed. You should get a substantial refund of that overwithholding. I'd recommend requesting a detailed breakdown of all the withholdings from HR so you can see exactly where every dollar went. Sometimes there are errors or unnecessary deductions that you can get corrected. Also consider talking to a tax professional about estimated quarterly payments for the rest of 2025 to avoid more overwithholding when you find your next job.

Has anyone dealt with this situation using TaxSlayer? I'm having the exact same Roth IRA withdrawal issue but I can't find where to enter my contribution information to offset the 1099-R. The software keeps treating my entire withdrawal as taxable.

I went through this exact situation last year and it's definitely stressful! The good news is that you're absolutely right - Roth IRA withdrawals of contributions should be tax-free. The key issue is that your tax software doesn't automatically know how much of your withdrawal was contributions versus earnings. Here's what worked for me: First, make sure you have Form 8606 Part III completed correctly. You'll need to track down your total Roth contributions from all years - this becomes your "basis." Since you contributed $15,000 total and withdrew $13,200, your entire withdrawal should be considered a return of contributions and therefore not taxable. In FreeTaxHelper, look for a section on "Retirement Account Distributions" or specifically "Form 8606." You might need to manually override what the software is calculating based on just the 1099-R. Don't panic about that $3,800 tax bill - once you properly account for your contribution basis, it should drop significantly or disappear entirely. Keep good records of all your contributions going forward, as you'll need this information for any future withdrawals. The 5498 forms are indeed just informational, but they're invaluable for tracking your basis over time.

Just to add another perspective - I've been running a mobile coffee cart for 3 years and learned this lesson the hard way. We were doing exactly what your owner is doing (using one "safe" higher rate) until we got audited last year. The auditor explained that by consistently overcharging in certain jurisdictions, we were creating a liability because we were collecting more tax than we were remitting to those specific locations. The solution that worked for us was switching to a POS system with automatic location-based tax rates, but we also had to go back and correct our previous filings. It was a pain, but much better than facing penalties. I'd strongly recommend having a conversation with your owner about getting compliant sooner rather than later - mobile food businesses are actually more likely to be audited because we operate across multiple jurisdictions. Also, don't forget about the permit side of things. Most cities require food trucks to have local permits even for one-day events, and those permits often come with specific tax reporting requirements.

This is such a timely discussion! I'm actually dealing with a similar situation with our mobile BBQ business. We operate in 4 different counties and I've been manually tracking which tax rate to use for each location, but it's been a nightmare to manage during busy festival seasons. One thing I learned from our accountant is that you should also keep detailed records of not just WHERE you made each sale, but WHEN. Some jurisdictions have different tax rates that change throughout the year (like temporary local taxes for infrastructure projects), so even the same location might have different rates depending on the date. Also, for anyone considering the GPS-based POS solutions mentioned above - make sure your system can handle situations where you're right on a city boundary. We had issues where our GPS would ping-pong between two tax rates when parked near city limits, which created some confusing receipts for customers until we figured out how to set a manual override. @Sophie Footman - I'd definitely encourage you to push back more firmly with the owner about getting compliant. The "better safe than sorry" approach of using a higher rate everywhere might seem safer, but as others have mentioned, it can actually create more problems in the long run than just doing it correctly from the start.

As someone who's been through the dual status nightmare myself, I'd strongly recommend getting your situation properly analyzed before picking any software. I made the mistake of jumping straight into TurboTax thinking it would handle everything, only to discover halfway through that it was missing critical forms for my foreign pension. What really helped me was understanding exactly which forms I needed BEFORE choosing software. For dual status with foreign assets, you're likely looking at Form 1040NR and 1040 (depending on your situation), Form 8938 for foreign assets, and possibly Form 3520 if you have foreign trusts or received large foreign gifts. The key is making sure whatever software you choose explicitly supports ALL the forms you need - not just "foreign income" in general. I ended up having to restart my entire return when I realized my chosen software couldn't handle one crucial form. FreeTaxUSA has been solid for me the past two years, but definitely verify it covers your specific situation before committing. Also remember that FBAR filing is completely separate from your tax return - you'll need to file that directly with FinCEN regardless of which tax software you use.

I'm dealing with a similar situation and found this thread super helpful! One thing I wanted to add - if you're still unsure about which forms you need, the IRS has a pretty decent interactive tool called the "Interactive Tax Assistant" on their website that can help you figure out your filing requirements based on your specific situation. For dual status returns, I've been using FreeTaxUSA for two years now and it's been solid. The key thing is that you'll need to prepare what's called a "dual-status statement" that gets attached to your return - basically a breakdown of which income belongs to which part of the year. FreeTaxUSA's help section has step-by-step instructions for this. One money-saving tip: if you're comfortable doing some of the legwork yourself, you can often use the free version for most of the return and only upgrade to premium if you absolutely need specific forms. I ended up paying just $15 last year because I only needed the state filing upgrade. Also seconding what others said about FBAR - that's filed completely separately through BSA E-Filing on the FinCEN website. It's actually pretty straightforward once you know where to go!

I'm dealing with the exact same frustrating situation - filed my FICA refund request in March 2025 and I'm now at 23 weeks with absolutely no communication from the IRS. Like you, I was counting on this money for some important expenses and the uncertainty is really stressful. Reading through all these responses has been incredibly helpful though. I had no idea that FICA refunds go through a completely different processing system than regular tax refunds, which explains why the normal tracking tools don't work. The 12-week timeline they publish is clearly just wishful thinking at this point. I'm definitely going to try calling that direct number (800-829-1040) early in the morning like others suggested, and ask specifically to be transferred to "Accounts Management" based on Dylan's advice. I'm also going to look into the Taxpayer Advocate Service since I'm well past their delay threshold. One thing I'm curious about - has anyone had success with contacting their Congressional representative's office? I've heard they sometimes have special channels to inquire about delayed government processes, though I'm not sure if that applies to tax matters. Thanks Mae for starting this thread, and thanks to everyone who shared their experiences and solutions. It's frustrating that we need to jump through all these hoops, but at least now I have a game plan instead of just sitting here wondering what's happening with my application.

I'm so sorry to hear about your extended wait, Mae. 20 weeks is definitely beyond the normal timeframe, and your frustration is completely understandable. After reading through all these helpful responses, I wanted to share my own experience - I waited 26 weeks for my FICA refund last year and it was absolutely maddening. What finally worked for me was a combination approach: First, I called the IRS at 800-829-1040 right when they opened (7 AM) on a Tuesday morning and specifically asked to be transferred to "Accounts Management" - this is the specialized unit that handles FICA refunds. The regular customer service reps often don't have access to the right systems. Second, I also contacted the Taxpayer Advocate Service since I was well past the 12 weeks + 30 days threshold that qualifies as an "unreasonable delay." They assigned a case worker who was able to track down exactly where my application was stuck. It turned out my refund was sitting in what they called the "correspondence review" queue because the IRS had questions about one of my supporting documents, but they never sent me a letter requesting clarification. Once the advocate's office flagged this, they expedited the review and I had my refund within 3 weeks. I'd definitely recommend trying both approaches - the direct call to get immediate information about your case status, and the Taxpayer Advocate for longer-term resolution if needed. Don't give up - these refunds do eventually come through, the system is just frustratingly slow and poorly designed for tracking. Keep all your documentation handy when you call, including your certified mail receipt if you have one. Good luck!