Can I just say how messed up it is that we have to do all this math ourselves?? Most other countries just send you a bill or refund automatically. The withholding system is from like the 1940s and we're all just accepting this as normal 😠

The confusion is totally understandable! Think of paycheck withholding like making estimated payments throughout the year based on limited information. Your employer only sees your salary from that one job and uses the withholding tables, but they have no idea about your complete financial picture. Here's what makes it tricky: the withholding system assumes you'll have steady income all year from just that job. But in reality, you might have periods where you earn more or less, you might change jobs mid-year, have freelance income, investment gains/losses, or qualify for deductions and credits your employer couldn't possibly know about. So filing taxes is essentially the "true-up" process where you calculate what you actually owe based on your complete financial situation, then compare it to what was already withheld. If too much was taken out, you get a refund. If not enough, you owe more. The $700 being taken from each of your paychecks is an estimate based on earning $2,800 every two weeks for the full year. But what if you get a bonus, take unpaid time off, or have medical expenses you can deduct? The system can't account for those variables automatically. It's definitely not the most intuitive system, but it's designed to collect taxes throughout the year rather than hitting everyone with one massive bill in April!

I'm so sorry you're dealing with this frustrating situation! One alternative approach that has worked for some of my clients is requesting help through your local Taxpayer Advocate Service. They can sometimes intervene when a return has been stuck beyond normal processing times. You'll need to demonstrate financial hardship to qualify for their assistance - things like pending eviction, utility shutoffs, or medical bills can qualify. I've seen them get movement on cases that were seemingly lost in the system for months! You can find your local office at taxpayeradvocate.irs.gov and request Form 911 for assistance.

I feel your pain - went through almost the exact same timeline earlier this year. Filed in early February, got the dreaded "errors department" notice after 6 weeks, then waited through their initial 10-week estimate only to be told about another 6-week extension. What finally broke things loose for me was getting my account transcripts (you can request them online at irs.gov). The transcript showed specific codes that revealed what was actually holding up my return - turned out to be a simple W-2 verification issue that I could have resolved months earlier if anyone had just told me what they needed. Once I had that information, I was able to call with specific details about my case rather than just asking for a general status update. The whole experience was incredibly frustrating, but having those transcript codes made all the difference in getting actual answers instead of generic responses.

The most annoying thing about this whole situation is that depreciation recapture still applies at 25% even if your actual depreciation deductions didn't save you that much in taxes! Like if you were in the 12% bracket when taking depreciation deductions, you still pay 25% on recapture. So unfair!

This is such a helpful thread! I'm dealing with a similar situation but with one additional complication - I inherited the property from my parents 5 years ago, lived in it for 2 years, then rented it out for the past 3 years. Now I'm considering moving back in. Does the stepped-up basis from inheritance affect how the capital gains exclusion and depreciation recapture calculations work? I assume I still need to recapture the depreciation I claimed during the rental period, but I'm not sure if the inheritance changes the timeline for the "2 out of 5 years" rule or the qualified use percentage. Also, for anyone who's been through this - is it worth getting a professional appraisal when you convert back to primary residence? I'm wondering if having documentation of the property's value at the time of conversion could be helpful for tax purposes later.

I've been following this thread as someone who just started getting annuity payments myself, and there's so much helpful information here! One thing I'd add is to double-check whether your annuity qualifies for any special tax treatment. Some annuities have a portion that's considered "return of principal" (if you made after-tax contributions) which wouldn't be taxable. The pension administrator should be able to tell you what percentage of each payment is taxable vs. non-taxable. This can significantly affect how much you want withheld. Also, if you're over 59½, you don't have to worry about early withdrawal penalties, but if you're younger, make sure you understand if any penalties apply to your specific type of annuity. The 1099-R you receive will have codes that indicate the tax treatment, which is super helpful when filing. For what it's worth, I ended up using a combination of the advice here - filled out the W4P with minimal withholding since I have other income sources with withholding, and I'm planning to reassess after a few months once I see how it all balances out.

I just want to thank everyone who contributed to this thread! As someone who was completely overwhelmed by the W4P form and all the annuity paperwork, reading through all these responses has been incredibly helpful and reassuring. The key takeaways I'm getting are: 1. Yes, I do need to fill out the W4P form even for my small $319/month annuity 2. I'll receive a 1099-R (not a regular 1099) showing the payments and withholding 3. I can always adjust my withholding election later if needed 4. I should coordinate withholding between my annuity and part-time job income 5. I need to check if any portion of my payment might be "return of principal" and non-taxable I'm feeling much more confident about tackling this now. I think I'll start by calling my pension administrator to walk through the W4P form and ask about the tax treatment of my specific annuity, then use a conservative withholding approach initially and adjust as needed. The reminder that this doesn't have to be perfect right away really takes the pressure off! Thanks again to everyone, especially the tax professionals who shared their expertise. This community is such a valuable resource!

Quick question - am I the only one who thinks its weird that the IRS doesn't just automatically do your taxes for you if they already know how much you made? Like they send those letters saying "hey you made this much" so obviously they know! Why do we even have to file???

Hey Ryder! I totally get the panic - I was in a similar situation a few years ago and it felt overwhelming. But honestly, you're taking the right step by addressing this now rather than continuing to put it off. A few things that might help ease your mind: First, if you've been working regular jobs, your employers were likely withholding taxes from your paychecks, which means you probably won't owe as much as you think (and might even be due refunds for some years). Second, the IRS has programs specifically for people in your situation - the First Time Penalty Abatement can waive many late fees if you qualify. For your immediate apartment application problem, you might be able to get wage transcripts from the IRS that show your income history even without filed returns. This could at least help with the rental application while you work on getting caught up. I'd recommend starting by gathering whatever documents you can find (W-2s, 1099s, bank statements) and then deciding whether to tackle this yourself or get help. The peace of mind of having it resolved is honestly worth whatever effort or cost it takes. You've got this!