This is such a common problem! The key issue is that the withholding tables assume you're the only earner in your household when you select "Married." When both spouses work and earn similar amounts, you end up in higher tax brackets than the withholding calculations expect. Here's what you need to do immediately: 1. **Update both W-4 forms** - The new 2020+ W-4 is completely different from the old allowances system. You both need to fill out fresh forms. 2. **Check the "Two Jobs" box** - In Step 2 of the new W-4, there's a checkbox for couples where both spouses work. This automatically adjusts your withholding upward. 3. **Only ONE spouse claims the kids** - Don't both claim your 3 children. The higher earner should claim them in Step 3, the other spouse leaves it blank. 4. **Consider extra withholding** - You can specify an additional dollar amount to be withheld each paycheck in Step 4(c). Based on owing $2,800, you might want each of you to have an extra $50-75 withheld per paycheck. The IRS also has a withholding calculator on their website that can help you figure out the exact amounts. Don't let this drag on another year - update those W-4s now and you should see the difference in your next paychecks!

This is exactly what happened to us! We were in the same boat - both claiming 0 on our old W-4s and still owing every year. The problem is that "married" withholding assumes only one spouse works, so when you both have jobs with similar incomes, you end up in higher tax brackets than expected. Here's what finally fixed it for us: We both filled out brand new W-4 forms and checked the "Two Jobs" box in Step 2. That single checkbox made a huge difference! We also made sure only one of us claimed our kids (I claimed all three since my salary is slightly higher), and the other spouse left Step 3 blank. Since you owed $2,800 this year, you might also want to add some extra withholding in Step 4(c) just to be safe. We added $40 per paycheck each after our first year with the new forms, and now we get a small refund instead of owing. Don't wait - update those W-4s right away! Your HR departments should have the current forms, and you'll see the increased withholding in your next paychecks.

Has anyone used TurboTax to handle this scenario? I'm in a similar situation and wondering if their software can properly calculate the AMT implications or if I need to find a specialized tax preparer.

I went through almost the exact same situation with my startup options in 2021. One thing that really helped me was keeping detailed records of all the valuation documents from the exercise date - the 409A valuation report, exercise confirmation, and any board resolutions that established the fair market value. When I eventually sold some shares at a loss two years later, having those original valuation documents made it much easier for my tax preparer to properly calculate both my regular tax basis and AMT basis. The IRS may want to see proof of how that $130 per share value was determined, especially since it ended up being significantly higher than the IPO price. Also, don't forget that if you paid AMT in 2022 because of the exercise, you'll likely have AMT credits that can be carried forward indefinitely. These credits can offset regular tax in future years when your regular tax exceeds your AMT. It's one small silver lining in an otherwise frustrating situation.

Look, I thought the same thing until I wasted an entire day trying to get through to the IRS. The free options are great if you have unlimited time to figure things out yourself. But when you need answers now because bills are due, spending a few bucks to save hours of frustration is totally worth it. These tools aren't claiming to speed up your refund - they just help you understand what's actually happening instead of staring at a progress bar that hasn't moved in weeks.

I'm in the exact same boat - filed February 8th, NetSpend account, WMR showing approved since March 1st but still nothing deposited. Called NetSpend twice and they confirmed no rejected deposits on their end. The uncertainty is killing me because I have rent due next Friday. Based on what everyone's saying about the additional verification for prepaid cards, it sounds like this is just how the system works unfortunately. At least knowing it's not just me makes me feel a bit better. Going to try calling the IRS tomorrow to see if they can give me any timeline, even though I'm dreading that hold time!

This is such a helpful thread! I'm just getting started with my first rental property and had no idea about the de minimis safe harbor election that several people mentioned. Can someone explain how you actually make this election? Is it something you do annually on your tax return, or do you need to file a separate form? Also, I'm curious about the practical side of record-keeping. For those of you who group items together (like "Living Room Decor Package"), do you still keep individual receipts for everything, or is it okay to just have one receipt that shows the total? I'm trying to figure out the best way to organize everything from the start so I don't have a mess come tax time. One more question - if I buy decor items from multiple stores on the same shopping trip, should I group them by store or by room/function? Just want to make sure I'm setting up a system that will make sense later!

This is such a timely question! I just went through this exact process setting up our first short-term rental last month. After reading through all the great advice here, I wanted to add one practical tip that really helped me. I created a simple spreadsheet with columns for: Item Description, Purchase Date, Cost, Store/Vendor, Room/Area, and Tax Treatment (Depreciate vs Expense). This has made it so much easier to track everything and will make tax prep much smoother. One thing I learned the hard way - if you're buying a lot of items at once (like I did during my initial setup), try to keep purchases under the de minimis threshold when possible. Instead of buying a $300 lamp and $200 in throw pillows on one receipt, I split them into separate transactions. This way I could expense the pillows immediately and depreciate just the lamp. Also, don't forget that if you're actively managing your short-term rental (cleaning, guest communication, marketing, etc.), you may qualify for the material participation test which can give you some nice tax advantages over traditional long-term rentals. Definitely worth discussing with a CPA when you find one!

Has anyone used the free IRS Taxpayer Advocate Service for help with this? I'm trying to figure out the S corp election forms too but can't afford to pay for help.

Just want to echo what others have said about Form 2553 being sufficient for single-member LLCs electing S corp status. I went through this process in 2023 and filed only Form 2553 - no issues with the IRS at all. One tip I'd add is to make sure you have your EIN ready when filling out Form 2553, and double-check that all your business information matches exactly what's on file with the IRS. Also, consider sending it certified mail or filing electronically if possible to have proof of timely filing. The March 15th deadline is firm, so don't wait until the last minute. If you miss it, you'll have to wait until the following tax year unless you qualify for late election relief (which requires jumping through additional hoops). Good luck with your election!