heres something nobody mentioned yet - check if your employer offers any kind of stipend for wfh equipment!! my company gives us $500/year for home office stuff and i didnt even know until i asked HR about buying a second monitor. worth asking about before u spend ur own $$$

I'm in a similar boat as a retail manager and went through this exact dilemma last year. Unfortunately, as others mentioned, the employee business expense deduction is gone for most of us. However, I found a workaround that might help you too! I started doing some freelance bookkeeping on the side (just a few hours on weekends) and now I can deduct a portion of my laptop cost as a business expense on Schedule C. Since you're already helping with your partner's Etsy shop, you might be able to formalize that arrangement and pay yourself for the work you do. Even if it's just $50-100 per month, it creates a legitimate business activity that would allow you to deduct the business-use percentage of the laptop. Just make sure to keep detailed records of your time usage - business vs personal vs regular job. The key is having a genuine profit motive and treating it like a real business. It's not a huge tax break, but every little bit helps when you're spending $800+ on equipment!

One more thing to consider - if you're filing the W7 because you're not eligible for a SSN, make absolutely sure that's correct. I spent months going through the W7 process only to find out later I was actually eligible for a SSN, which would have been much easier to get and use long-term. Worth double-checking with Social Security before going down the ITIN path!

Great advice in this thread! I went through the W7 process two years ago and can confirm that order absolutely matters. Here's what worked for me: 1. W7 form on top (as mentioned) 2. Supporting identity documents attached to the W7 3. Tax return (1040) underneath everything 4. Any schedules or additional forms at the bottom One thing I didn't see mentioned - if you're married filing jointly and both spouses need ITINs, you'll need separate W7 forms for each person, but you can submit them together with one tax return. Just make sure each W7 has its own set of supporting documents. Also, pro tip: write "ITIN APPLICATION" in large letters on the outside of your envelope. It helps ensure your package gets routed to the right department at the IRS processing center. My accountant recommended this and I think it helped my application move through faster. Good luck with your application! The wait is frustrating but once you get your ITIN, future tax filings become much smoother.

Has anyone ever had the IRS challenge their treatment of earnest money in a 1031? I'm in a similar situation but worried about getting flagged for audit if I don't report it as ordinary income.

This is such a complex area and I'm seeing some really helpful insights here! As someone who just went through a similar situation, I wanted to add that documentation is absolutely critical. I kept detailed records of the first buyer's breach of contract, the earnest money forfeiture, and how it related to my overall 1031 exchange timeline. My tax preparer said having clear documentation showing the connection between the earnest money and the eventual successful sale was key to justifying treating it as part of the overall transaction rather than separate ordinary income. One thing I learned is that if there's a significant time gap between losing the first buyer and closing with the second buyer, the IRS might be more likely to view these as separate events. In my case, the gap was only about 6 weeks, which helped support treating it as one continuous transaction process. Also worth noting - if you're doing your own taxes, Form 8824 for the 1031 exchange should include all the transaction details, including any adjustments for earnest money situations like this. Don't forget to adjust your basis calculations accordingly!

This is such valuable information! I'm actually in a similar situation - turning 55 next year and considering early retirement. One thing I want to add based on my research is about the timing of your separation. The key detail many people miss is that you must separate from service during or after the calendar year you turn 55. So if your birthday is in November 2025, you could technically leave in January 2025 and still qualify. But if you leave in December 2024 (before turning 55), you wouldn't qualify even though you're only a few weeks away from 55. Also, regarding your question about documentation from HR - while there's no specific IRS form required, I'd recommend getting a letter confirming your separation date and that it constitutes a complete termination of employment. This can be helpful if the IRS ever questions the distribution on your tax return. One more consideration: if your current employer allows it, you might want to look into whether you can roll any old 401(k)s into your current plan before you leave. This would make more of your retirement savings accessible under the Rule of 55, since it only applies to the plan you're separating from. Good luck with your early retirement planning - sounds like you're well prepared with that savings level!

I'm also planning early retirement at 55 and this thread has been incredibly helpful! One thing I want to emphasize that hasn't been fully covered is the importance of understanding your specific 401k plan's distribution options after separation. I called my benefits department last week and learned that my plan has three different withdrawal options: lump sum, systematic withdrawals (monthly/quarterly/annual), or partial lump sums combined with systematic payments. This flexibility could be crucial for tax planning since you can potentially control which tax years your distributions fall into. Another consideration - if you're married, make sure your spouse understands the Rule of 55 strategy. My financial advisor mentioned that some couples accidentally trigger the "still employed" rule if one spouse continues working for the same company in any capacity (even as a contractor). For those asking about healthcare costs during early retirement - this is huge. I'm budgeting about $1,800/month for a decent ACA plan for my family, which is significantly more than what I pay through my employer now. Make sure to factor this into your $45k annual withdrawal calculation. Has anyone looked into whether state taxes apply differently to Rule of 55 distributions? I'm in a state with no income tax, but I'm wondering if that changes if I move to a different state after retiring.

I'm dealing with a similar situation right now - my employer has had my SSN wrong for about 4 months and I just got one of those IRS compliance letters too. Reading through everyone's experiences here has been incredibly helpful! One thing I wanted to add based on what I've learned from my own research: if you're in a state that has its own income tax, you'll likely need your employer to file corrections with the state tax authority as well, not just the IRS. My employer initially only wanted to fix the federal reporting and didn't realize they needed to correct the state filings too. Also, for anyone else in this situation - I found it really helpful to ask my employer for their EIN (Employer Identification Number) when discussing the corrections. Having that number handy made it easier when I called the IRS to verify that the corrections had actually been processed on their end. The stress is real when you first get that letter, but it sounds like this is definitely fixable if you stay on top of your employer to handle it properly. Thanks to everyone who shared their experiences - it's made this whole process feel much less overwhelming!

I'm going through something very similar right now, and this thread has been incredibly reassuring! My employer transposed digits in my SSN about 3 months ago, and I just caught it when reviewing my latest pay stub. One thing I wanted to add that I learned from calling the IRS directly - they actually have a specific department that handles employer reporting discrepancies like this. When you call the main IRS number, if you tell them you received a compliance letter about incorrect withholding due to an employer SSN error, they can transfer you to the right team who deals with these cases daily. The agent I spoke with explained that this happens more often than you'd think, especially with new hires when information gets entered manually. She also mentioned that as long as the employer files the corrections promptly (within 30-60 days), there usually aren't any long-term issues for the employee. What really helped me was asking my employer for a written timeline of when they would submit each correction (941X for quarterly corrections, W-2c for annual corrections). Having specific dates made it easier to follow up and ensure nothing fell through the cracks. For anyone else dealing with this - don't let the employer treat it as "just a paperwork issue." The IRS compliance letter means they're actively monitoring the situation, so prompt action really is important. But it's definitely fixable with the right steps!