Just wanted to share my experience with this exact same issue! I'm an HR manager at a mid-sized company and we actually discovered we had been making this mistake for about 18 months before our payroll vendor caught it during an audit. What happened was our payroll system had HSA contributions configured as "pre-tax for income tax only" instead of "pre-tax for all taxes including FICA." It's a surprisingly common setup error because the system defaults aren't always correct, and many payroll administrators don't realize there's a distinction. When we discovered the error, we had to issue W-2c forms to about 40 employees and process refunds for the overpaid Medicare taxes. The total overpayment per employee wasn't huge (usually $30-80 depending on their HSA contribution amount), but it was definitely real money that people deserved back. If anyone is dealing with an unresponsive employer on this issue, you might mention that the employer also owes matching Medicare tax refunds to the IRS - so they actually have a financial incentive to fix it properly rather than just ignoring it. That usually gets their attention pretty quickly!

As a former payroll specialist who dealt with these Section 125 configuration issues regularly, I'd recommend being very specific in your initial communication with HR/payroll. Don't just say "my W-2 is wrong" - that could mean anything and often gets put in a pile. Instead, try something like: "My HSA contributions made through payroll deduction under our Section 125 cafeteria plan are incorrectly included in Box 5 (Medicare wages) on my W-2. Per IRS Publication 969 and IRC Section 125, these contributions should be excluded from all FICA taxes including Medicare. This appears to be a payroll system configuration error that may affect other employees as well." The key phrases that usually get immediate attention are "Section 125 cafeteria plan," "IRS Publication 969," and especially "may affect other employees." That last part is crucial because it signals this could be a systemic issue requiring broader correction, which makes it a priority for the payroll department rather than a one-off employee complaint. Also, if you have access to your pay stubs, include one that shows the HSA deduction coded as pre-tax. This gives them concrete documentation to reference when they're troubleshooting their system setup.

I'm dealing with code 474 on my transcript right now too, and reading through everyone's experiences here has been really reassuring. It's frustrating when you're waiting for money you need, especially for medical expenses like you mentioned. From what I've gathered from this thread and my own research, the key things to remember are: • This is specifically for Injured Spouse processing - your refund is being manually reviewed to separate what belongs to each spouse • The timeline is typically 11-14 weeks from filing, though some people have reported shorter or longer waits • The IRS won't provide much communication during this time, which is the most stressful part One thing I'd add that hasn't been mentioned much - if you filed jointly but didn't submit Form 8379 (Injured Spouse Allocation), definitely call the IRS to make sure this code isn't an error. Sometimes returns get flagged incorrectly. Also, since you mentioned medical expenses, you might want to contact the Taxpayer Advocate Service if you're facing financial hardship. They can sometimes help expedite processing in urgent situations, though there's no guarantee. Hang in there - the waiting is brutal but you will get your portion of the refund eventually!

I went through code 474 last year and completely understand your frustration, especially when you're counting on that refund for medical expenses. The waiting period is really tough because there's so little communication from the IRS during the process. Here's what I learned from my experience: • Code 474 means your refund is on hold for Injured Spouse processing - the IRS is manually determining how to split the refund between spouses when there's a debt offset involved • The timeline is typically 11-14 weeks, but I've seen it vary from 8-16 weeks depending on the complexity • Your transcript will update weekly (usually overnight between Sunday-Monday), so checking daily won't show changes • The "Where's My Refund" tool won't be very helpful during this period since your return is in specialized processing A few practical tips: • If you didn't file Form 8379 with your return, call the IRS to verify this isn't an error • Keep records of which income/payments belong to which spouse in case they need documentation • Consider reaching out to the Taxpayer Advocate Service (1-877-777-4778) if your medical expenses create a financial hardship - they may be able to help The lack of updates during this process is maddening, but you will eventually receive your portion of the refund. In my case, it took 13 weeks and I received about 60% of the original refund amount. Hang in there!

Has anyone worked with a qualified personal residence trust (QPRT) instead of a regular irrevocable trust? I'm wondering if the basis rules are different with that structure.

This is such an important consideration that many people overlook when setting up irrevocable trusts! I made this mistake with my father's trust several years ago - we didn't properly structure it as a grantor trust, so when we sold his property after his passing, we ended up with a much higher capital gains tax bill than expected. One thing I'd add to the excellent advice already given: make sure your estate planning attorney specifically includes language in the trust that retains certain powers for your mom (like the power to substitute assets of equal value, or administrative powers) that will ensure grantor trust status under IRC Section 675. These powers don't affect the irrevocable nature for estate planning purposes but are crucial for maintaining the step-up in basis. Also, consider having the trust document reviewed periodically. Tax laws can change, and you want to make sure the trust continues to qualify for the tax treatment you're expecting. The potential tax savings from getting the step-up in basis (in your case, potentially avoiding capital gains on over $245,000 of appreciation) is definitely worth the extra planning effort upfront!

Has anyone used TurboTax for this kind of situation? I'm wondering if the free version would work or if I'd need to pay for the self-employment version to report my side gig income and claim my kids.

Congratulations on your upcoming little one! You absolutely can claim your child as a dependent even without traditional W-2 employment. The key factors are that you'll provide more than half of your child's support and they'll live with you for more than half the year. Since you mentioned cash income from babysitting and jewelry sales, here's what you need to know: that income counts as self-employment income and needs to be reported on Schedule C if it exceeds $400 annually. This is actually GOOD news because once properly reported, it qualifies you for valuable tax credits like the Child Tax Credit (up to $2,000) and potentially the Earned Income Tax Credit, which can be substantial for single parents. My advice: Start keeping detailed records NOW of all your cash earnings - dates, amounts, services provided. Also track business expenses like jewelry-making supplies and transportation to markets, as these can be deducted. Consider opening a separate bank account for your side businesses to make record-keeping easier. Being 2000 miles from the father actually strengthens your case for claiming the child, as you'll clearly be providing the primary support and residence. Just make sure to file properly with your self-employment income - it's not just about being able to claim your child, but maximizing the tax benefits you're entitled to as a working parent.

I'm dealing with the exact same situation and it's incredibly stressful! Filed in early January, got my 60-day letter in February, and now we're well past that deadline with zero updates on my transcript. The worst part is feeling completely in the dark about what's happening. Reading through everyone's experiences here has been both reassuring (I'm not alone) and concerning (this could drag on much longer). I'm particularly interested in the advice about calling early Monday morning and requesting a case trace - that sounds like the most concrete next step. For those who have successfully gotten through to the IRS, did you find that calling on specific days of the week made a difference? I've heard Tuesday through Thursday might be less busy than Mondays, but the 7 AM strategy seems to be the consistent advice regardless of the day. Also, has anyone had success with the "Where's My Refund" tool suddenly updating after weeks of no change, or is calling really the only way to get movement on these delayed returns? I check it obsessively but it's been stuck on "still processing" since February. The financial stress is real - I had planned expenses around receiving this refund by now. Thanks to everyone sharing their experiences and advice. It really helps to know we're not dealing with this alone!

I'm so sorry you're going through this - the combination of medical bills and an indefinitely delayed refund is incredibly stressful. I went through something very similar last year and wanted to share what finally worked for me. After my 60-day period expired with no updates, I called the IRS using the early morning strategy others mentioned (7 AM sharp). The key thing I learned is to specifically ask for a "manual refund trace" rather than just asking about your refund status. This is different from a regular case trace and actually requires them to physically locate your return in their system and provide you with the specific reason for the delay. When I did this, I discovered my return had been flagged because I had moved between tax years and they needed to verify my address change, even though I had filed a change of address form months earlier. The agent was able to clear this immediately once she saw the documentation in their system. The whole process took about 2.5 hours on hold, but once connected, the issue was resolved in 15 minutes and I had my refund deposited within 6 business days. For your medical bills situation, definitely reach out to the billing departments and explain you're waiting on a delayed federal tax refund. Most healthcare providers are familiar with IRS delays this year and many will put your account on hold or set up a payment plan without penalty if you can provide them with documentation of your pending refund (like a copy of your 60-day letter). Don't lose hope - your money is there, it's just stuck in bureaucratic quicksand. The squeaky wheel really does get the grease with the IRS.