One thing to consider with mortgage payoffs before a 1031 exchange that nobody's mentioned yet - if your existing mortgage has a prepayment penalty, that penalty is NOT considered part of your exchange basis. I found this out the hard way and ended up with a $3,800 penalty that I couldn't roll into the 1031. Check your mortgage terms carefully!

This is a really thorough discussion! Just wanted to add one more consideration that might be relevant - the timing of when you actually pay off the mortgage versus when you start the 1031 exchange process. I'm dealing with a similar situation right now and my qualified intermediary advised me to coordinate the mortgage payoff timing carefully with the exchange timeline. If you pay off the mortgage too far in advance of listing the property, it could raise questions about your intent to do a 1031 exchange from the beginning. The IRS likes to see that your 1031 exchange was planned as part of an investment strategy, not something you decided to do after the fact. So while paying off the mortgage before the exchange is totally fine from a tax perspective (as others have confirmed), just make sure you can document that the 1031 was always part of your plan. My QI suggested keeping records showing I was researching replacement properties and consulting with them before paying off the mortgage, just to establish the timeline clearly. Probably overkill, but better safe than sorry with the IRS!

@Nina Fitzgerald I actually went through this exact same situation a few months ago! The phone number everyone's mentioning (1-800-830-5084) is definitely your best bet. I'd recommend calling right when they open at 7 AM - I got through in about 15 minutes that way. One thing I learned: make sure you actually NEED to cancel vs. just reschedule. If you still need identity verification but just can't make that specific time, rescheduling might be easier than starting the whole process over. The agent will ask you why you're canceling, so be ready to explain. Also, don't stress too much about it - the IRS agents are usually pretty understanding about appointment changes. Just have your SSN and the appointment confirmation info ready when you call. You got this! 👍

I've been through this process recently and it's definitely frustrating! The phone route is really your only option since there's no online cancellation system (which is honestly ridiculous in 2024). A few things that helped me: - Call 1-800-830-5084 as others mentioned - Have your appointment confirmation number ready along with your SSN - If you get disconnected or can't get through, don't give up - it took me 3 tries over 2 days - Ask for a cancellation confirmation number or email if possible One important thing to consider: Are you canceling because you no longer need identity verification, or just because of scheduling conflicts? If it's the latter, rescheduling might be easier than starting over if you still need to complete the verification process eventually. The whole system is outdated but the agents are generally helpful once you get through. Hang in there! 💪

When I had a similar W2c issue, TurboTax had a specific section for entering W2c information. Is anyone using a particular tax software that handles this well? My accountant charged me extra last year because of all the corrected forms and I'm trying to DIY this year.

I went through this exact same situation two years ago! The key thing to remember is that the W2c completely replaces the information on your original W2. You should only use the corrected information when filing - so yes, use code W with the $13,340 amount. The reason for the code change makes total sense too. Code D is for your own 401(k) deferrals (money taken out of your paycheck), while code W is for employer HSA contributions (money your company puts into your HSA account). Your payroll department probably miscoded it initially. One thing that helped me was calling my HR department to confirm what actually happened. In my case, they had incorrectly categorized the employer's HSA contribution as a 401(k) deferral on the original W2. The good news is that employer HSA contributions (code W) are generally more favorable tax-wise since they don't count as taxable income at all. Make sure whatever tax software you're using has an option for entering W2c information specifically - don't just manually change the numbers from your original W2 entry.

Has anyone mentioned FATCA requirements yet? If the sister deposits the money in a foreign account that OP has signature authority over, there could be additional reporting requirements beyond just the gift tax forms.

I've been through a similar situation with inherited property in Mexico, and I learned some hard lessons about the importance of proper documentation. One thing that might help your case is getting a formal written statement from your sister-in-law clearly stating that this payment is a voluntary gift with no legal obligation on her part. The IRS looks at the substance of transactions, not just the form. Since you mentioned she "could keep all the money if she wanted," having her document that this is purely voluntary generosity (not payment for services, not fulfillment of any agreement) could strengthen the gift classification. Also, make sure you understand the timing requirements. Form 3520 for foreign gifts needs to be filed by the due date of your tax return (including extensions), and there are significant penalties for late filing even if no tax is owed. The penalty can be 35% of the gift amount, which is brutal. I'd strongly recommend getting professional help from someone who specifically handles US-Philippines tax matters. The intersection of foreign inheritance law, gift tax rules, and international reporting requirements is complex enough that general tax preparers often miss important details.

WARNING: You need to be super careful with your US brokerage accounts! Many US financial institutions will FREEZE or even CLOSE your accounts when they find out you have a foreign address. I moved to Australia and lost access to my Vanguard account until I could provide a US address (ended up using my parents'). Also, don't forget about PFIC rules if you invest in non-US mutual funds or ETFs in New Zealand - the tax treatment is BRUTAL. Stick with US-based investments through your existing accounts if possible.

Great question! I went through something similar when I moved to the UK a few years ago. A couple of additional points that might help: For your 401(k), you'll want to check if your employer's plan allows contributions while you're on international assignment. Some plans restrict this, but since you mentioned they have Auckland offices, they likely have experience with expat employees. Also consider that if you become an NZ tax resident, your 401(k) growth might be taxable in NZ even if it's tax-deferred in the US - definitely something to discuss with a tax advisor familiar with both systems. Regarding your rental property breaking even - don't forget about depreciation! Even if your cash flow is neutral, you can still claim depreciation on the property which often creates a tax loss on paper. This can be valuable for offsetting other income. One more tip: start keeping detailed records of everything NOW. Track your days in each country (for the physical presence test), keep receipts for moving expenses, and document your ties to NZ vs the US. The IRS loves documentation, and good records will save you headaches later. Also consider opening an account with a US bank that's expat-friendly (like Schwab International) before you move. It's much easier to establish these relationships while you still have a US address.