I went through this exact same situation a couple years ago when I started taking personal finance seriously! That initial shock of seeing your refund drop is really jarring, but you're absolutely making the right financial moves. One thing that helped me was thinking about it differently - that $520 difference in your refund represents roughly $2,364 in interest income you earned (assuming you're in the 22% bracket). So even after taxes, you still came out ahead by about $1,844 compared to keeping that money in a regular checking account earning nothing! For next year, I'd recommend starting with the IRS Tax Withholding Estimator in January to get a baseline, then checking it again around June when you have a clearer picture of your actual interest earnings. Interest rates can change throughout the year, so your projections might need adjusting. Also consider that if your savings continue to grow (which sounds like the plan!), your interest income will keep increasing, so you'll want to revisit your withholding annually. The key is just staying on top of it rather than letting it surprise you again. You've got this!

This is exactly what happened to me when I first opened my HYSA! The key thing to remember is that you're still way ahead financially - that $520 reduction in your refund likely represents around $2,300+ in interest income you earned (depending on your tax bracket), so you netted roughly $1,800 more than if you'd kept it in a regular savings account. For withholding adjustments, I'd recommend using the IRS Tax Withholding Estimator tool mid-year once you have a better sense of your actual interest earnings. HYSA rates can fluctuate, so your January estimate might be off by year-end. A simple approach: take your current quarterly interest earnings, multiply by 4 to get an annual estimate, then multiply that by your marginal tax rate (probably 22% based on your situation) to see how much extra tax you'll owe. Divide that by your number of paychecks per year and add that amount to line 4(c) on your W-4. Don't let this discourage you from the HYSA - it's still the smart move! You're just learning how to manage the tax side of building wealth, which is a good problem to have.

Another thing to consider - the timing of when you sell might matter for tax purposes. If you've held the Bitcoin for over a year, you'll qualify for long-term capital gains rates, which are typically lower than short-term rates. For 2025, long-term capital gains are taxed at 0%, 15%, or 20% depending on your income bracket, while short-term gains are taxed as ordinary income (potentially much higher). So if some of your brother's Bitcoin investments were made less than a year ago, it might be worth waiting until they cross that one-year threshold before selling.

I'm dealing with a similar situation with my sister's crypto investments, and from what I've learned, you're actually in a pretty good position with that documentation you mentioned having since 2019. One thing that hasn't been mentioned yet - make sure you're calculating the cost basis correctly for each of your brother's purchases. Since he's been making weekly $65 investments, you'll need to track the purchase price of Bitcoin at each transaction date to determine his individual cost basis for each "lot" of Bitcoin purchased. This becomes important because when he sells, you'll need to determine which specific Bitcoin purchases are being sold (FIFO, LIFO, or specific identification method) to calculate the actual capital gains or losses accurately. Also, since you mentioned you're not currently working, be aware that even though the Bitcoin sale will appear on your tax return, the actual tax liability should really be your brother's responsibility. You might want to have a clear agreement with him about covering not just the taxes owed, but also any additional tax preparation costs since this complicates your return significantly. The joint vs. separate filing question is tricky, but as others mentioned, joint filing is almost always more beneficial. The key is making sure your brother understands he needs to reimburse you for the full tax impact on your household.

I'm going through almost the exact same thing right now! Filed my Form 5329 about 7 weeks ago for a missed RMD (also due to advisor issues - mine moved firms and the transition got messy). Got that same frustratingly vague acknowledgment letter that tells you absolutely nothing useful. Reading through all these responses is actually making me feel much better about the situation. It sounds like this is just how the IRS operates with Form 5329 submissions - they send the generic "we got it" letter first, then take their sweet time processing everything before sending any kind of final resolution. The timeline everyone's mentioning (8-12 weeks) seems pretty consistent across different people's experiences. I'm trying to be patient but it's hard when you're wondering if you're going to get hit with additional penalties or complications. At least I know I'm not the only one dealing with this kind of confusing communication from the IRS!

I've been following this thread closely because I'm dealing with a very similar situation - missed RMD due to a communication breakdown with my financial institution, filed Form 5329 with penalty payment about 5 weeks ago, and got that same maddeningly vague acknowledgment letter. What I'm finding really valuable here is seeing the consistent timeline everyone is reporting (8-12 weeks) and hearing that paying the penalty upfront along with an explanation letter generally leads to successful resolution. It's also reassuring to know that these generic acknowledgment letters are completely normal and don't indicate any problems with your submission. One thing I wanted to add for anyone else reading this - I learned that it's worth keeping detailed records of everything during this process. I'm maintaining a simple log with dates of when I submitted the form, when I received the acknowledgment letter, when my check was cashed, etc. If I do need to call the IRS later or if any issues arise, having all those details readily available will make the conversation much more productive. Thanks to everyone who shared their experiences here - it's really helping reduce the anxiety of waiting for the IRS to finish processing everything!

I went through this exact same frustration last year with a $3,200 Form 941X refund. Unfortunately, as others have mentioned, there's no direct deposit option for these - it's paper checks only, which is ridiculous in 2025! What I learned from calling the IRS multiple times (before I knew about services like Claimyr) is that 941X refunds go through a completely different processing system than individual tax refunds. The employment tax division handles these manually, and their systems aren't connected to the electronic refund infrastructure. One tip that might help with cash flow while you wait - if you have other quarterly tax payments coming up, you can potentially apply future 941X refunds as credits toward those payments instead of requesting a refund check. You'd need to contact the IRS to set this up, but it can help with the timing if you have upcoming tax liabilities. Just make sure your accounting team is aware of any credits you arrange so they don't double-pay. The whole process is outdated but unfortunately we're stuck with it for now. I'd budget for at least 8-12 weeks realistically, despite what the official timelines say.

I feel your pain on the direct deposit issue! We went through the same thing with our 941X refund last year - ended up waiting 13 weeks for a $5,100 check while our cash flow suffered. One thing I wish I had known earlier is that you can actually request expedited processing if your business is experiencing financial hardship. You have to call the Practitioner Priority Service line (if you have a POA with your tax pro) or the regular business line and explain your situation. They don't advertise this option, but I've heard of cases where they've moved 941X refunds through faster when there's genuine hardship involved. Also, double-check that you didn't accidentally check any boxes on the 941X that might slow down processing. We made the mistake of checking the "amended return may affect prior or subsequent periods" box when it wasn't necessary, which apparently triggers additional manual review. The whole system definitely needs to be modernized - it's frustrating that we can file and pay taxes electronically but still have to wait for paper checks like it's 1985!

Nobody's mentioned the education exclusion for savings bonds! If you use the I-Bond proceeds for qualified education expenses, you might be able to exclude the interest from your income completely. It's subject to income limits, but worth looking into if you or a dependent has education expenses.

This is such a common source of confusion! I went through the exact same thing last year when I had to cash in some I-Bonds early for an emergency expense. The key difference that helped me understand it is this: with CDs, you actually earn ALL the interest throughout the term, but then the bank takes some back as a penalty. That's why it shows up as income and then gets deducted. With I-Bonds, the Treasury literally just stops paying you interest for those last 3 months - you never "earn" it in the first place. Think of it like this: if you work 10 hours but your boss docks 2 hours pay as a penalty, you can deduct that penalty. But if you only work 8 hours to begin with, there's nothing to deduct. That's essentially what's happening with I-Bonds vs CDs. One thing to double-check though - make sure you're reporting the I-Bond interest correctly. If you didn't get a 1099-INT from Treasury (they only send them if you redeem $600+ in a year), you'll need to calculate the interest yourself using the redemption value minus what you originally paid.