Just a heads up - make sure you're looking at your actual W-2 to confirm the ESPP discount is really included there. Some companies handle this differently! My company actually doesn't include the ESPP discount in the W-2 for disqualifying dispositions - instead they report it on a separate 3922 form and I have to report it as "Other Income" when I file. Worth double-checking how your specific company handles it so you don't make incorrect adjustments.

This thread has been incredibly helpful! I'm dealing with a similar ESPP situation and was totally confused about the basis adjustments. One thing I'd add for anyone else reading this - if you have multiple ESPP purchases throughout the year at different discount rates, make sure you're tracking the specific discount amount for each lot separately. My company's supplemental statement breaks this down by purchase date, which is crucial since the 15% discount applies to different FMV amounts depending on when you bought. Also, don't forget that if you had any dividend reinvestments on your ESPP shares before selling, those might affect your basis calculation too. I almost missed that detail until I noticed some small amounts on my brokerage statement. Thanks everyone for sharing your experiences - this stuff is way more complex than it should be!

I dealt with a similar medical hardship situation two years ago when my wife needed emergency surgery that insurance partially denied. The $3,400 you're facing should definitely qualify - here's what worked for me: Submit Form 911 immediately along with: 1) The complete medical records showing the MRI was ordered by your doctor, 2) Your insurance EOB (Explanation of Benefits) showing the denial, 3) A detailed financial statement showing your monthly income/expenses. The IRS considers medical expenses a priority hardship, especially when they're unexpected and medically necessary. In my case, they approved hardship status within 18 days and allowed me to defer payment while setting up a manageable installment plan. Pro tip: when you call the Taxpayer Advocate Service, mention it's for "medical hardship" right away - they have a separate queue that moves faster. Don't stress too much about the April 15th deadline - once you file Form 911, they typically put a hold on any collection activities while reviewing your case.

I went through this exact process last year for my father's unexpected dialysis treatment costs. The $3,400 amount definitely qualifies - the IRS doesn't have a minimum threshold, they look at it relative to your ability to pay. Key things that made my case successful: 1) Filed Form 911 within 48 hours of getting the insurance denial, 2) Included a timeline showing the medical emergency nature (sudden onset requiring immediate testing), 3) Got a letter from the treating physician explaining why the contrast MRI was the only diagnostic option available. The TAS assigned my case to a local advocate who actually called me back the same day. They put an immediate hold on any potential penalties while reviewing. My advice: don't just submit the forms online - also call the TAS hotline at 1-877-777-4778 and explain it's an urgent medical hardship with a filing deadline. They expedited my case and I had approval in 12 days. The relief was retroactive to my filing date, so even though April 15th is approaching, you'll be protected once you submit the paperwork. Also, make sure to request Currently Not Collectible status on the form if you truly can't pay - it's different from hardship but often granted together for medical situations.

Don't forget that when you withdraw excess HSA contributions, the earnings portion is taxable as "other income" in the year you make the withdrawal! I learned this the hard way. The excess contribution itself isn't taxed again if you already included it in income (which you would have if it was through your employer's payroll), but the earnings definitely are taxable.

I've been through a very similar situation and want to emphasize something that might save you stress: the IRS is generally reasonable about HSA excess contribution calculations as long as you make a good faith effort and document your methodology. For your specific case with mixed cash/investment balances, I'd recommend the total account approach mentioned by Fatima Al-Suwaidi above. Calculate your HSA's overall rate of return for 2024 (total ending balance minus total beginning balance minus contributions, divided by average balance) and apply that percentage to your excess contribution amount. This method is defensible, straightforward to explain, and accounts for both portions of your account naturally. The key things to remember: 1) Get the excess contribution AND earnings out before your tax deadline (including extensions), 2) Report the earnings as taxable income on your return, 3) Keep documentation of your calculation method. A $5-10 difference in calculation precision isn't going to trigger an audit - they're more concerned with people who don't correct excess contributions at all.

I've been following this thread as someone who's dealt with F-1 visa tax complications before, and wanted to add one important point that hasn't been mentioned yet. Since you completed your 5-year stay back in 2019 but only started working in June 2023, there's a significant gap there. Make sure your employer understands that your FICA exemption ended in 2019, not when you started this current job. Some payroll departments get confused about this timing and think the exemption is tied to when you start working rather than your total time in the US. This could actually work in your favor - it shows you've been subject to FICA taxes for several years now, so there shouldn't be any question about your status. Just make sure they're calculating from your actual start date in June, not trying to go back further. Also, regarding your concern about "doing this incorrectly" - the fact that you're addressing this proactively after being contacted by your employer shows you're handling it exactly right. The IRS appreciates when taxpayers work to correct errors rather than ignore them.

This has been an incredibly helpful thread! As someone who went through a similar FICA withholding issue with my F-1 to H-1B transition, I wanted to add one more resource that might be useful. If you run into any delays or pushback from your employer about issuing the corrected W-2, you can actually contact the IRS directly to report the issue. There's a specific process for when employers fail to provide corrected tax documents in a timely manner. The IRS can sometimes intervene to get the correction expedited. Also, just to reinforce what others have said about penalties - I was really worried about this too when I discovered my employer had been withholding incorrectly for almost a full year. The IRS agent I spoke with made it very clear that as long as you pay what you owe once the error is discovered, there are no penalties for the employee in these employer withholding error situations. One last tip: when you file your amended return, consider sending it via certified mail. Since it's correcting a FICA withholding issue rather than claiming additional refunds, it's not likely to trigger problems, but having proof of delivery gives you peace of mind and documentation for your records. You're handling this exactly the right way by being proactive about it!

I'm confused why people are suggesting such complicated solutions. If your income is below the Roth IRA contribution limits as you mentioned, why not just contribute directly to your Roth IRAs instead of doing backdoor conversions?

Your tax professional seems to be mixing up several different concepts here, which is unfortunately pretty common with backdoor Roth strategies. Let me help clarify what's actually happening: 1. **You don't need to withdraw anything from your Roth IRAs.** The money is already there legally - the issue is just how much tax you owed on the conversions. 2. **The pro-rata rule means you owe taxes on most of your conversions.** With $250k in pre-tax Traditional IRA money and only small non-deductible contributions, roughly 97% of each conversion was taxable income that should have been reported on your tax returns. 3. **Your spouse's situation is completely separate.** If she doesn't have pre-tax Traditional IRA balances, her backdoor Roth conversions work normally with minimal tax impact. 4. **Maxing out 401k/403b has nothing to do with this.** Your tax guy is confusing workplace retirement plan limits with IRA strategies. 5. **Income limits don't prevent backdoor conversions.** They only affect direct Roth contributions. The whole point of backdoor Roth is to get around those limits. For going forward, consider asking your current employer if their 401k accepts reverse rollovers. Moving your Traditional IRA balance back into a workplace plan would eliminate the pro-rata problem for future conversions. You'll also need to make sure Form 8606 was filed correctly for all years to track your non-deductible contributions. Might be worth getting a second opinion from a CPA who specializes in retirement planning - these strategies require specific expertise that not all tax professionals have.