7 One thing nobody's mentioned yet - remember you can choose SPECIFIC LOTS when selling RSUs. You don't have to sell entire batches. Many brokers default to FIFO (first in, first out) but you can typically select exactly which shares to sell. This lets you fine-tune your tax strategy even further.

5 Just adding another consideration - if you've got other income/loss events this year, that might influence your decision. I ended up selling some underwater RSUs (at a loss) to offset gains from other investments. Tax-loss harvesting can be a powerful strategy!

Has anyone addressed the Roth IRA overcontribution issue? I had a similar problem last year when a bonus unexpectedly pushed me over the income limit after I'd already contributed. The cleanest solution is a "recharacterization" to a Traditional IRA. Call your IRA provider and tell them you need to recharacterize your Roth contribution to a Traditional IRA due to income limits. They'll handle the paperwork and move the money (including any earnings/losses). Do this before your filing deadline (including extensions). Since your income is above the deduction limits for Traditional IRAs, you'll have a non-deductible contribution, which means you need to file Form 8606 with your tax return to track the basis. This gets a bit complicated if you already have Traditional IRA money, due to the "pro-rata rule." Alternatively, you could withdraw the excess contribution plus earnings before your filing deadline. You'll pay income tax on the earnings portion only (plus a 10% early withdrawal penalty on the earnings if you're under 59½), but no 6% excess contribution penalty.

This is a really frustrating situation, and you're absolutely right to be stressed about it. The retroactive nature of this change is particularly unfair since you made a major financial commitment based on their previous policy. A few additional thoughts beyond what others have shared: 1. Document everything from when you enrolled - any emails, benefit summaries, or enrollment materials that indicated the tax treatment. If you have anything in writing suggesting the reimbursements would be non-taxable, that strengthens your position significantly. 2. Consider consulting with a tax attorney who specializes in employment benefits. The retroactive application of a policy change that affects substantial financial commitments could potentially violate reasonable reliance principles, especially if you can show you wouldn't have enrolled knowing the true tax consequences. 3. For immediate relief, you might want to adjust your W-4 withholdings now to account for the additional tax burden over the remaining years of your program. This will help avoid a massive tax bill at filing time. 4. Some companies have hardship provisions in their benefits policies. Given that this change creates unexpected financial hardship, it might be worth asking HR if there are any exceptions or payment plan options for the additional taxes. The Roth IRA issue is definitely fixable through recharacterization as others mentioned, but make sure to act before your filing deadline. This whole situation is a good reminder of how important it is to get benefit details in writing, even when policies seem well-established.

mine are teenagers with part time jobs so we had to report it... such a pain lol

I went through this exact situation last year! The key thing to remember is that Social Security survivor benefits for children are generally not taxable UNLESS your child has other significant income. You'll get a SSA-1099 form showing the total benefits received. As long as your child doesn't have other income sources (like significant investment income or wages), you typically won't need to report it. The threshold is pretty high - around $25,000 total income including half the SS benefits. Keep all your paperwork though, just in case you need it later. Hope this helps ease some stress during an already difficult time! 💙

My sister-in-law works at the IRS and said they NEVER just freeze accounts out of nowhere for simply filing late. They have to send multiple notices including a final certified letter with 30 days to respond before taking any action like that. The whole process takes at least 6+ months minimum, often years. The only time they move faster is if they suspect actual tax fraud or if someone is actively hiding assets, which doesn't sound like your situation at all. Just file ASAP, pay what you can, and respond to any notices you get.

I totally understand your panic - I was in almost the exact same situation two years ago. Missed the deadline by about 6 weeks and was convinced the IRS was going to empty my account overnight. Here's what actually happened: I filed late (with penalties), set up a payment plan for what I owed, and never heard from them again except for the monthly payment confirmations. No scary letters, no account freezing, nothing dramatic at all. The key things that helped me: 1) Filed as soon as I realized my mistake, 2) Paid what I could upfront (even though it was only about 30% of what I owed), and 3) set up an automatic payment plan for the rest. The IRS website makes it pretty easy to do the payment plan online. Your $5,300 estimate sounds very manageable for a payment plan. Even if you could only pay $200/month, that would show good faith and keep you in compliance. The relief you'll feel once you just file and get it sorted is incredible.

My tax guy told me there's a way to partially benefit from both if you have 2+ kids and don't max out the FSA. For example: - 2 kids with $20k in childcare expenses - Put $3k in FSA (not the full $5k) - Now you can claim $3k of expenses for the credit ($6k limit - $3k FSA) - Get 20% credit on that $3k = $600 tax credit This way you get both the tax-free FSA benefit AND a partial childcare credit. Might be worth running the numbers to see if this combo approach works better for your specific tax situation.

This is exactly the kind of frustrating tax situation that trips up so many parents! I went through the same confusion last year with my daughter's daycare costs. The key insight everyone's sharing is correct - with one child, the $3,000 expense limit for the childcare tax credit is what kills your ability to use both benefits. Since you're already using $5,000 in FSA funds, you've exceeded that $3,000 limit before you even get to claim the credit. One thing to consider for next year: if your daycare costs are that high anyway, you might want to run the numbers on whether maxing out the FSA at $5,000 gives you more tax savings than trying to optimize between the two benefits. In most cases, the pre-tax savings from the FSA (especially when you factor in avoiding FICA taxes) beat the 20% credit rate. Also worth noting - some employers offer dependent care assistance programs beyond just FSAs that might help with those brutal daycare costs. Mine offers backup care services and discounts at certain daycare centers. Might be worth checking with HR to see what other family benefits are available that you might not be utilizing.