Don't forget to call the IRS after sending important faxes to confirm they received them! I learned this the hard way when I faxed my offer in compromise docs and assumed they got them, only to find out 2 months later they had no record of receiving anything. Now I always follow up with a call about a week after sending anything critical.

Great advice from everyone here! I'd also add that if you're sending time-sensitive documents like amended returns or payment agreements, consider sending them through multiple channels (fax AND certified mail) for extra security. I've had situations where the IRS received one but not the other, and having both methods gave me backup proof of timely filing. Also, always keep your fax confirmation receipts - I scan mine and save them digitally with my tax files. The IRS can be slow to update their systems, so even if they received your fax, it might not show up in their records for several weeks when you call to check. One more tip: if you're faxing forms that require signatures, make sure your signatures are dark and clear on the scanned document. Light or blurry signatures can cause processing delays.

Don't forget you might have some interest charges even if you pay the correct amount now! Since the original deadline has passed, the IRS will likely charge interest on the $40,500 from the original due date until they receive payment.

Based on everything discussed here, I'd strongly recommend paying the amended amount ($40,500) as soon as possible and including a note with your payment referencing your amended return number. The key is getting that payment in quickly to minimize interest charges. However, given the complexity of capital loss calculations that others have mentioned, I'd also suggest having a tax professional review your amendment before you submit it. With amounts this large, the cost of a professional review is worth avoiding potential errors that could trigger an audit or result in owing even more. If you need to speak with the IRS directly about your specific situation, it sounds like services like Claimyr can actually get you connected to a real agent, which might be worth considering given how difficult it normally is to reach them. Getting confirmation directly from the IRS about how to handle your payment could give you peace of mind.

I'm so sorry for your loss, and what an incredible discovery! Your grandparents clearly loved you and wanted to help with your future - even if the timing got complicated. I've been following this thread closely because I work in financial planning, and I want to emphasize something important: you're NOT in immediate crisis mode here. Many people think the IRS is going to come knocking the day after you turn 30 with a Coverdell, but that's not how it works. The age 30 rule creates a requirement for action, but discovery of a forgotten account doesn't automatically trigger penalties. Everyone's advice about changing the beneficiary to your daughter is absolutely spot-on. This is a clean, legitimate solution that honors your grandparents' original intent of helping with education. Here's what I'd recommend for your next steps: 1. Call the institution tomorrow and ask for their "beneficiary change specialist" - most have dedicated people for exactly this situation 2. Request that complete breakdown of contributions vs. earnings that others mentioned 3. Ask about any fees that have been charged and whether they can be refunded 4. Get everything in writing once the change is processed The beautiful thing is that your 4-year-old daughter will have this money available for K-12 expenses AND college, giving you incredible flexibility. At her age, this $12,500 has the potential to grow significantly by the time she needs it for education. Your grandparents' gift is going to keep giving - just to the next generation they would have loved to meet.

What a wonderful discovery, even if the timing feels stressful! I went through something very similar when I found a forgotten 529 plan at age 28, so I understand that mix of gratitude and panic you're probably feeling. Based on everything I've read here, changing the beneficiary to your daughter seems like the clear winner. Not only does it avoid penalties, but it actually fulfills your grandparents' original intention - helping with education in your family. They would probably love knowing their gift will help their great-granddaughter. One thing I'd add that I haven't seen mentioned: when you call the financial institution, ask if they have any record of attempted communications about the account over the years. Sometimes institutions try to reach account holders at old addresses when they hit milestones like age 30, and if they can show they attempted to notify you but couldn't reach you, it might provide additional documentation that this was truly a "forgotten" account rather than willful neglect. Also, consider this a learning opportunity for your family's financial organization going forward. I've started keeping a simple spreadsheet of all financial accounts with beneficiary information and sharing it with my spouse and trusted family members to prevent this kind of situation in the future. Your daughter is incredibly lucky to have this head start on her education savings, and it sounds like your grandparents were amazing people who truly cared about your family's future. Best of luck getting this resolved!

Another commission earner here! Don't forget that you can also do estimated tax payments directly to the IRS if your withholding is too high on big commission checks. I've found it easier to have less withheld throughout the year and then make quarterly estimated payments based on my actual earnings. Gives me more control over my cash flow.

This is such a common frustration for commission earners! What you experienced is totally normal - the payroll system essentially projects your annual income based on that single large paycheck and withholds at the corresponding tax bracket. So when you made $14,000 in one week, the system calculated as if you'd make $728,000 annually ($14,000 × 52 weeks) and withheld at that higher bracket. The good news is this is just withholding, not your actual tax rate. When you file your return, your tax will be calculated on your actual total annual income. If you're overwithholding (which is likely), you'll get a refund. A few options to consider: You could adjust your W-4 to reduce withholding on regular paychecks, use estimated quarterly payments instead of relying solely on withholding, or work with payroll to see if they can process large commissions separately using the flat supplemental rate (which is currently 22% for most people). Many of the tools and strategies mentioned in the other comments could really help you optimize this!

Great thread everyone! I'm actually experiencing this for the first time this year too and it's fascinating to learn how the system works. One question I have - does this mean that people who earn exactly at the $168,600 threshold pay the same total Social Security taxes as someone earning $300,000? That seems like a pretty significant advantage for higher earners, even with the benefit cap that was mentioned. I'm trying to wrap my head around whether this system is actually progressive or regressive when you look at effective tax rates across different income levels.

This is such an eye-opening discussion! I'm nowhere near hitting the FICA cap myself, but it's fascinating to learn how this system works. One thing that strikes me is how many people seem surprised by this - it makes me wonder if employers should do a better job explaining payroll tax mechanics to their employees, especially those approaching higher income brackets. For those of you who have hit the cap, do you typically adjust your financial planning for the rest of the year knowing you'll have that extra 6.2% in take-home pay? I'm curious if people use this as an opportunity to boost retirement savings, pay down debt faster, or just enjoy the temporary increase in cash flow.