Just wanted to share another perspective on this - I've been using FreeTaxUSA for years and while the $7.99 Deluxe upgrade for amendments isn't ideal, it's still way cheaper than most alternatives. I compared it to H&R Block online last year and they wanted $50+ for amendment services. One thing I haven't seen mentioned here is that FreeTaxUSA's Deluxe also includes some other useful features like priority customer support and audit assistance, so you're not just paying for the amendment capability alone. If you're someone who files complex returns or might need help during tax season, the upgrade can actually provide good value beyond just the amendment feature. That said, definitely worth trying TaxAct's free option first if your situation is straightforward - just make sure to double-check everything before submitting since free services usually have less hand-holding through the process.

I've been following this thread with interest since I'm in a similar boat! Just wanted to add that I called FreeTaxUSA customer service yesterday to confirm the amendment situation, and they were pretty upfront about it - yes, you absolutely need the Deluxe upgrade for federal amendments, no exceptions for their free tier. However, the rep did mention something useful that I haven't seen discussed here: if you're within 3 business days of filing your original return, they can sometimes help you file a "superseding return" instead of an amendment, which replaces your original return completely and doesn't require the Deluxe upgrade. Obviously this won't help most people since we usually discover mistakes weeks or months later, but might be worth knowing for anyone catching errors quickly. For those considering the TaxAct route mentioned above - definitely worth a shot! I'm planning to explore that option myself before committing to any paid upgrades. The worst that happens is I spend an hour checking it out and then fall back to paying the $7.99 FreeTaxUSA fee if needed.

Another important thing about lottery timing - if you take the annuity option (payments over 30 years), you'll pay taxes on each payment as you receive it. This can sometimes be better than taking the lump sum because: 1) You might stay in lower tax brackets across multiple years 2) You protect yourself from spending it all at once 3) The total payout is actually significantly higher

Great question! I've been wondering about this too. One thing I'd add is that you should definitely consider making quarterly estimated tax payments once you claim, especially for large winnings. The IRS expects payment throughout the year, not just at filing time. If you win big and don't make estimated payments, you could face underpayment penalties even if you pay the full amount when you file your return. The standard withholding might not be enough to cover your actual tax liability, especially if the winnings push you into higher brackets. Also, don't forget about the "kiddie tax" if you're planning to gift any winnings to children - there are special rules that might apply. Definitely worth consulting a tax professional for the big wins!

Has anyone successfully received a refund using Form 843 for a penalty? I submitted mine about 6 weeks ago (with my SSN, not my employer's EIN lol) and haven't heard anything. Is there a way to check the status online or do I have to call?

I went through this exact same confusion last year! You definitely should NOT use your employer's EIN on Form 843 - that field is for YOUR identification number. Since you're filing as an individual, you need to use your Social Security Number (SSN). I made the same mistake initially and had to resubmit the form, which delayed my refund by about 2 months. The IRS sent me a letter asking for clarification, but it would have been much faster to just get it right the first time. For the explanation section, be as detailed as possible. Include specific dates, reference any IRS publications or regulations that support your case, and clearly explain why you believe the fee was charged in error. Attach copies of all supporting documentation - bank statements, correspondence, whatever proves your point. The more evidence you provide upfront, the less likely they'll need to request additional information later. Good luck with your refund request! The process can be slow but if you have a valid case and complete documentation, you should get your money back.

The confusion makes total sense! Here's what's happening: Box 1 ($6,725) shows what your school received for tuition, and Box 5 ($3,748) shows scholarships/grants they processed. The $2,977 difference likely represents other financial aid (like loans) that covered the rest. Even though you paid $0 out of pocket, you still need to report this because the IRS uses it to determine if you qualify for education credits and whether any scholarship money is taxable. The good news is since your scholarships ($3,748) are less than your qualified expenses ($6,725), you probably won't owe taxes on the scholarship money. Just enter the numbers as they appear on your 1098-T and let the tax software do the calculations!

The 1098-T can definitely be confusing! You absolutely need to report it even though you didn't pay out of pocket. The form is required because it shows the IRS your educational expenses and aid received, which affects potential education credits and determines if any scholarship money is taxable income. In your case, since your scholarships ($3,748) are less than your qualified expenses ($6,725), the scholarship portion likely won't be taxable. The difference could be from loans or other non-grant aid. Just enter the numbers exactly as shown on your 1098-T - Box 1: $6,725, Box 5: $3,748 - and let your tax software calculate everything correctly. You might even qualify for education credits!

Emma, I'm really sorry you're going through this - job loss is stressful enough without having to figure out retirement withdrawal complexities on top of everything else. Since you only worked 4 months this year, your situation is actually quite different from someone withdrawing at full annual income. Your total 2023 taxable income will likely be much lower than normal, which could work in your favor for tax planning. Here's what I'd suggest: First, calculate your total expected 2023 income including your partial work salary, any unemployment benefits you're receiving, and the amount you plan to withdraw. This will help you estimate which tax bracket you'll fall into. Given your reduced annual income, you probably don't need the default 20% federal withholding. I'd recommend starting with around 12-15% on your W-4R form. This should cover your federal tax obligations without over-withholding cash you need for immediate expenses. A few important reminders: - The 10% early withdrawal penalty isn't automatically withheld - you'll owe it when filing your 2023 tax return - If you're using any of the withdrawal for health insurance premiums while unemployed (like COBRA), keep detailed records as this portion may qualify for an exception to the penalty - Don't forget to factor in state taxes separately since the W-4R only handles federal withholding You can always submit an updated W-4R later if your situation changes. Take care of yourself during this tough time - you've got this!

Emma, I'm really sorry you're dealing with this situation - losing your job is incredibly stressful, especially when you're forced to tap into retirement savings earlier than planned. Given your unique circumstances of only working 4 months this year, you actually have some advantages for tax planning. Your total 2023 income will be significantly lower than normal, which means you'll likely fall into a lower tax bracket. Here's my recommendation: Calculate your total expected 2023 income by adding your partial work salary, unemployment benefits, and the planned 401k withdrawal amount. Since this total will be much lower than a typical year, you can probably get away with withholding less than the default 20%. I'd suggest starting with 15% federal withholding on your W-4R. This should adequately cover your tax obligations while preserving more cash for your immediate needs. You can always adjust later by submitting a new W-4R if your situation changes. Important things to keep in mind: - The 10% early withdrawal penalty isn't automatically withheld - you'll owe it when filing taxes - If you're using any funds for health insurance premiums while unemployed (like COBRA), keep detailed records as this may qualify for an exception to the 10% penalty - Remember to factor in state taxes separately since the W-4R only covers federal withholding You're being smart by asking these questions upfront. This is a temporary setback - you'll get through this tough time. Best of luck with both your withdrawal planning and job search!