Just to add another perspective - I was in a similar situation last year (US resident who moved abroad and then took a retirement distribution). One thing to be aware of is that you may be subject to additional reporting requirements beyond just the 1040 and figuring out how to report the 1042-S income. If you had financial accounts outside the US that exceeded $10,000 at any point, you might need to file an FBAR (FinCEN Form 114). And depending on your total assets abroad, you might also need Form 8938. These have serious penalties if you miss them.

Slight tangent but worth mentioning - when you file as a dual-status taxpayer, be aware that you generally can't file jointly with a spouse, you're limited on which deductions/credits you can claim, and you have to use the standard deduction (itemizing isn't allowed). Also, foreign tax credits work differently.

Has anyone tried using TurboTax to fix this issue? My employer also included my MBA tuition on my W-2, but I was able to exclude it on my tax return using TurboTax's deduction finder. It asked specific questions about my education and determined I could exclude it as a working condition fringe benefit. I'm just nervous about getting audited.

I went through something very similar as a registered nurse pursuing my BSN while working at a hospital. The IRS distinction between "maintaining/improving current job skills" vs "qualifying for a new profession" can be tricky with nursing education. For your NP program, you'll want to focus on how the advanced coursework enhances your current nursing practice - things like pathophysiology, pharmacology, and assessment skills that make you a better RN even if you don't immediately transition to an NP role. If your hospital has a clinical ladder or specialty certifications that benefit from advanced nursing knowledge, document that connection. The questionnaire you mentioned probably asked whether the degree qualifies you for a "new trade or business." The key is how you frame it - emphasize that it's advanced nursing education that improves your current nursing skills, not preparation for a completely different career. Even if you plan to become an NP later, if the coursework enhances your current RN duties, it can still qualify. Don't give up on getting this corrected. Consider escalating beyond your immediate HR contact or requesting a written explanation of their policy. Sometimes a different HR representative will have better understanding of the tax rules.

I'm dealing with a similar situation at my company right now! My employer has been doing this "we'll pay your taxes as a benefit" thing for the past 6 months, and I've been getting increasingly worried about it. After reading through all these responses, I'm definitely going to bring this up with HR tomorrow. It sounds like even though my boss thinks they're doing something nice for us, they're actually creating potential problems. The point about this being considered additional taxable income is especially concerning - I had no idea about that. Has anyone here had success getting their employer to switch back to normal withholding mid-year? I'm wondering if there are any complications with changing the withholding system partway through the tax year, or if it's pretty straightforward to fix.

I went through something very similar with my previous employer about two years ago. What really helped me was documenting everything - I kept copies of all my pay stubs showing zero state tax withholding and any emails or conversations with my boss about this arrangement. When I finally got it resolved (after talking to the state tax department), I learned that Illinois specifically requires employers to withhold state income tax from employee wages. There's no legal exception for employers to "pay it later as a benefit." Your boss might think they're being helpful, but they're actually putting both of you at risk for penalties. The good news is that this is fixable! I'd recommend approaching your boss with the information others have shared here about Illinois withholding requirements. Most small business owners genuinely don't know the rules and are willing to correct it once they understand the compliance issues. If they push back, having documentation from the state tax authority (like others mentioned getting through Claimyr) can be really persuasive. Don't wait too long to address this though - the longer it goes on, the more complicated your tax situation becomes. You've got this!

Anybody else notice how many ppl got Thursday cycles this year? feels like everyone i know got an 06

Just wanted to chime in as someone who was in your exact situation last week! Had the same 20250602 cycle code and was totally confused. After reading through all these comments, I decided to try taxr.ai that everyone's mentioning and honestly it was a game changer. Not only did it explain what my cycle code meant, but it also caught that I had a small math error that could have delayed my refund. Got my deposit 3 days earlier than their estimated timeline! For $6.99 it definitely beat sitting on hold with the IRS for hours 😅

Has anyone actually considered the "routine maintenance safe harbor" for this instead of de minimis? Under Treas. Reg. 1.263(a)-3(i), if you reasonably expect to perform the maintenance more than once during the class life of the property (which is 27.5 years for residential rental buildings), you might be able to deduct it all immediately. So if you're replacing an HVAC system that's 15 years old, and you can reasonably expect to replace it again within the remaining life of the building, it could qualify as routine maintenance. I've used this approach for several rental property improvements with no issues so far.

I appreciate everyone sharing their experiences with HVAC replacements and tax strategies. Based on what I've seen work in practice, here are a few additional considerations for your $9,800 HVAC situation: The component breakdown approach (air handler $3,400, condenser $3,300, labor $3,100) could work for de minimis safe harbor, but make sure your contractor can legitimately justify those allocations. The IRS looks for reasonable market-based pricing for each component. One thing I haven't seen mentioned is the timing consideration - since you're selling another rental this year with $140K in gains, you might also want to explore whether any of this HVAC cost could qualify for Section 1031 exchange treatment as part of your overall real estate strategy. Also, don't forget about state tax implications. Some states have different de minimis thresholds or don't conform to federal safe harbor elections, so factor that into your decision. Finally, consider getting a second opinion from your tax preparer before filing. Even if you use the AI tools or IRS guidance mentioned in this thread, having a professional review your specific situation could save you headaches later if there are any gray areas.