I literally just went through this last week! For Line 4 (tax liability), I just used my 2022 tax return and found the line that said "total tax" (I think it was line 24 on the 1040). For line 5, I added up all the federal taxes from my paystubs for 2023 (look for "Fed Withholding" or similar). Line 6 was just the difference, and for line 7, I paid about half of what I owed just to be safe.

I completely feel your frustration! I was in the exact same boat last year - staring at Form 4868 like it was written in hieroglyphics. Here's what helped me understand it: Think of "tax liability" as your final grade on a test, and "payments" as all the homework points you already earned throughout the year. Line 4 is asking "what do you think your final tax grade will be?" and Line 5 is "how many homework points (tax payments) have you already earned?" Since you don't have your W-2 yet, here's a quick workaround: Look at your last paystub from December 2023. It should show your year-to-date federal tax withholding - that's your Line 5 number. For Line 4, if your income was similar to 2022, you can use last year's "total tax" from your 2022 return as a starting estimate. Don't stress too much about getting it perfect - the IRS knows these are estimates on extension forms. The key is making a reasonable good-faith effort. Once you get all your documents, you'll calculate the exact amounts on your actual tax return. Also, remember that filing an extension gives you until October to file your return, but if you owe money, you still need to pay by the original deadline to avoid interest charges. So it's better to overestimate a bit than underestimate!

Pro tip: sign up for informed delivery with USPS so you know exactly when that check hits your mailbox

Same thing happened to my friend - the IRS will automatically send a paper check to your last known address when the direct deposit gets rejected. Just make sure to keep checking your mail and maybe give it a few extra weeks. Also might want to call your old bank to see if they can tell you exactly when the account closed, that way you know if your refund got processed before or after the closure date.

I'm still traumatized from this happening to me last year! 😭 The worst part was that the IRS website never updated to show the direct deposit failed - it just kept saying "Your refund is being processed" for WEEKS! I literally checked every single morning. Then suddenly a paper check showed up in my mailbox with zero warning. What makes me nervous is that they mail it to whatever address they have on file, which might not be current if you've moved recently. Double-check that your mailing address is updated with USPS at the very least!

I went through this same situation two years ago and it was honestly less stressful than I expected once I understood the process. The IRS will attempt the direct deposit, it'll bounce back from your closed account, and then they automatically mail a paper check to your last known address. The whole process added about 2-3 weeks to my refund timeline. One thing I'd recommend is setting up mail forwarding with USPS if you've moved recently, just to be safe. Also, you can check your account transcript online to see the status codes - when the direct deposit fails, you'll see specific codes that indicate they're issuing a paper check. Don't stress too much about it, this happens more often than you'd think and the IRS has a standard procedure for handling it!

My accountant told me that if you mark the payments as "friends and family" in PayPal/Venmo, they're not supposed to be reported on 1099-Ks in the first place. Has anyone else heard this? Would solve the whole problem.

This thread has been super helpful! I'm in a similar situation but with a twist - my partner and I also occasionally lend each other larger amounts (like $1000+ for emergencies or big purchases that we pay back over a few months). Are these personal loans between cohabitating partners treated the same way as the regular expense splitting? I'm worried the IRS might see a $1500 Venmo transfer and think it's income when it's actually just me paying back money I borrowed for car repairs. Should we be documenting these larger transfers differently, or do the same rules apply as long as we can show it's personal and not business-related?

Just a tip from someone who went through this last year - if you do get your account levied, immediately open an account at a different bank for any new incoming funds/deposits. The levy only applies to the money in the account at the time it's processed and the specific bank that received the levy notice.

Just went through this exact situation two months ago. The timing is unpredictable - my bank received the levy on a Tuesday and froze my account that same day around noon. I only found out when my debit card was declined at lunch. One thing that really helped was calling my bank directly after I got the Final Notice. While they can't tell you exactly when they'll receive the levy, some banks will put a note on your account to call you immediately when it arrives, giving you a few hours to withdraw emergency cash before the freeze takes effect. Also, if you have direct deposit set up, contact your employer ASAP to see if they can issue you a paper check for your next paycheck. Once that account is frozen, any direct deposits will just sit there until the levy is resolved. I learned this the hard way when my paycheck got stuck in the frozen account for three weeks. The 21-day hold period that was mentioned is accurate, but don't count on it - use that time to aggressively pursue a payment plan with the IRS. I was able to get mine released on day 18, but it was touch and go.