My accountant told me that with the per diem LTC policies, you should look at IRS Form 8853 instructions first. There's also a calculation worksheet in there that helps figure out the taxable amount. Don't forget that the per diem limit is adjusted each year for inflation! The 2023 limit was $370, 2024 is $390, and 2025 will be different again. Make sure you're using the correct year's limit when you do your math.

This is such a helpful thread! I'm dealing with a similar situation for my dad's LTC benefits and had no idea about all the additional qualified expenses that could be included. One thing I wanted to add - make sure you also check if your mom had any premium payments for the long-term care insurance policy itself during the year. Depending on her age, a portion of those premiums might be deductible as medical expenses, which could further reduce the taxable portion of the benefits. Also, if she received care from family members who aren't licensed care providers, those payments generally don't count as qualified LTC expenses, so don't include informal care payments in your calculations. The Form 8853 instructions are definitely your best friend here - they walk through the calculation step by step. Good luck with getting this sorted out!

I've been following this discussion closely and want to share some additional insights from my experience with a similar multiple W-2 situation. While everyone is absolutely correct that you cannot opt out of FICA taxes as a W-2 employee, I discovered one strategy that hasn't been mentioned yet: if your employer offers flexible spending accounts (FSAs) beyond just healthcare, you might be able to increase those contributions to free up cash flow for your 401k. For example, if your company offers a Limited Purpose FSA (for dental/vision expenses) or a Dependent Care FSA (up to $5,000 annually), maxing these out can reduce your taxable income and create more room in your smaller paycheck for 401k contributions. These are often overlooked but can make a meaningful difference when you're trying to squeeze out those final dollars. Also, I want to emphasize something that several people touched on but bears repeating: if you're working with multiple W-2s from the same employer, absolutely verify whether they're using the same EIN. If they are, your employer should be coordinating Social Security withholding across both paychecks. If they're not doing this correctly, you could be significantly overpaying throughout the year rather than getting that relief when you hit the wage base limit. The tracking spreadsheet approach everyone's recommending is spot-on. I'd add that you should also track any bonuses or overtime that might accelerate your timeline for hitting the Social Security wage base - this can really throw off your projections if you're not accounting for it.

This entire thread has been incredibly enlightening! I'm in a very similar situation - same employer, multiple W-2s, trying to maximize my 401k contributions - and I was also initially hoping there might be some way to temporarily reduce FICA withholdings. Clearly that's not possible, but the alternative strategies everyone has shared are actually much more practical. I'm particularly drawn to the combination approach that several people have successfully implemented: moving pre-tax deductions between W-2s, creating a detailed tracking spreadsheet for Social Security wage base timing, and strategically adjusting contribution percentages throughout the year rather than trying to maintain a constant rate. The insight about FSAs beyond just healthcare is something I completely overlooked - if I can max out a Dependent Care FSA at $5,000 annually, that's over $400 per month in additional pre-tax savings that could free up room for 401k contributions. Combined with moving my health insurance premiums to the higher-income W-2, this might solve my cash flow issue entirely. One thing I'm curious about: for those who successfully implemented the "back-loading" strategy with dramatically higher contributions in the final months, how did you handle the lifestyle adjustment of suddenly having much less take-home pay? Even with the Social Security wage base relief providing extra breathing room, going from 5% to 25% 401k contributions seems like it would require some serious budgeting discipline in those final months. Thanks to everyone for sharing such detailed, real-world experiences. This thread should be required reading for anyone dealing with complex payroll structures!

Has anyone actually gotten FreeTaxUSA to correctly calculate the tax credit for income tax withheld on 1042-S? I tried reporting it as suggested here but my refund calculation seems off.

I went through this exact same situation two years ago! As a tax resident filing jointly, FreeTaxUSA definitely works for 1042-S reporting, but you need to be careful about a few things that haven't been mentioned yet. First, double-check that your 1042-S shows the correct tax treaty benefits applied (if any). Sometimes universities mess this up even for tax residents. If you see treaty benefits applied when you shouldn't have them as a resident, you'll need to contact your university's payroll office to get a corrected 1042-S. Second, when entering the fellowship income as "Other Income" on Schedule 1 Line 8z as Chloe mentioned, make sure to also check if any of it qualifies for the American Opportunity Tax Credit or Lifetime Learning Credit. Fellowship money used for qualified education expenses can sometimes still allow you to claim these credits for other educational expenses you paid out of pocket. Also, since you mentioned HSA contributions - fellowship income actually counts as earned income for HSA contribution purposes, which is great news if you're trying to maximize your HSA contributions for the year. The combination of FreeTaxUSA plus getting official IRS guidance through something like Claimyr (as Sophie mentioned) is honestly your best bet for peace of mind on a complex situation like this.

Great question! I went through this exact situation two years ago when I moved back to Germany but kept my US savings account open. A few additional tips that helped me: 1. Make sure you have Form 1042-S from your bank showing the interest paid - this will help you complete Schedule NEC accurately. 2. Since you're Canadian, definitely claim the treaty benefit on Schedule NEC. The US-Canada treaty typically eliminates tax on bank interest for Canadian residents, so you'll likely owe zero US tax. 3. Keep good records of when you left the US permanently in 2024 - you'll need this date for Schedule OI and it affects your filing requirements. 4. Don't forget that even if you owe no tax due to the treaty, you still need to file the 1040-NR to claim that benefit properly. The process is much simpler than it looks when you only have bank interest. Focus on the personal info, Schedule NEC for the interest income and treaty claim, Schedule OI for the residency info, and you should be good to go!

One thing to be careful about is the timing of when you report the interest income. Since you moved back to Canada in 2024, you'll need to determine if any of the interest was earned while you were still a US resident versus after you became a nonresident. If you were in the US for part of 2024, you might need to file both a resident return (Form 1040) for the period you were in the US and a nonresident return (1040-NR) for the period after you left. This is called a "dual status" year and requires careful attention to the dates. However, if you left early in 2024 and all your bank interest was earned after establishing Canadian residency, then you'd file only the 1040-NR as others have mentioned. The key is documenting exactly when you established Canadian tax residency and ceased being a US tax resident. Also worth noting - even though the Canada-US treaty likely eliminates your US tax liability on the bank interest, you'll still need to report this income on your Canadian tax return since Canada taxes its residents on worldwide income.

H&R block charged me $450 last year for basically typing numbers from my forms into their computer. This year I did it myself with TurboTax and paid $120. Self employed too with some investment stuff. The software asks the same questions the human did tbh.

Wow, $675 is absolutely outrageous for a straightforward self-employment return! I had a similar experience with H&R Block a few years ago - they quoted me $550 for what was essentially just a Schedule C and basic forms. I ended up walking away and never went back. The reality is that most self-employed people with simple situations can easily handle their own taxes with good software. The "complexity" they charge you for is really just filling out Schedule C, which asks pretty straightforward questions about your income and business expenses. Unless you have multiple businesses, complex depreciation schedules, or unusual deductions, you're paying hundreds of dollars for data entry. I've been doing my own self-employment taxes for the past 3 years using various software options and have saved thousands compared to what these chain preparers were charging. The software walks you through everything step-by-step and often catches deductions that the rushed preparers at these big chains miss anyway.