Don't forget to adjust your tax withholding for this year ASAP! Set aside 25-30% of all your contractor income or make quarterly estimated payments. The worst thing you can do is fall further behind while trying to fix past issues.

I'm so sorry you're going through this - the stress and anxiety from tax debt is absolutely crushing, and you're definitely not alone in this situation. As someone who's been there, I want you to know that there IS a way out of this. A few practical steps that helped me: 1. **Get current first** - Like others mentioned, make sure you're not digging the hole deeper. Set up automatic transfers of 30% from every contractor payment into a separate tax account. 2. **Request penalty abatement** - If you had a clean tax history before this mess, ask for First Time Penalty Abatement. This alone could save you thousands. 3. **Consider professional help** - Sometimes the cost of a tax professional who specializes in contractor issues pays for itself through the deductions and strategies they find. 4. **Don't let this define you** - You made an honest mistake that thousands of first-time contractors make. The IRS deals with this situation constantly, and they have programs specifically designed to help people in your position. The most important thing is to take action rather than letting the anxiety paralyze you. Each step forward, no matter how small, reduces that overwhelming feeling. You've got this, and your family's financial future isn't ruined - this is a temporary setback that can absolutely be resolved.

Everyone's talking about refunds, but the real question is: could you have paid less in total taxes? Look into maximizing pre-tax contributions next year. You only put $2500 in your 401k, but the limit is $22,500 for 2023 and $23,000 for 2024. Even increasing to 10% of your salary would make a big difference in your tax bill. Also consider an HSA if you have an eligible health plan - that's another pre-tax contribution that reduces your taxable income. Between those two things, you could potentially reduce your taxable income by $10k+ and save thousands in taxes.

This is a really common misconception! The key thing to understand is that your refund amount doesn't reflect how much you paid in taxes - it only shows how much you overpaid during the year through withholding. Breaking down your situation: out of that ~$20k deducted from your paycheck, about $13,800 went to taxes that aren't refundable (Social Security $4,100 + Medicare $1,000 + actual federal income tax liability of ~$6,550 + state taxes of ~$2,000 + $150 you still owe). The remaining $6,200 was federal withholding that exceeded what you actually owed, hence your $1,150 refund. Your effective tax rate is actually quite reasonable for your income level. The "problem" isn't that you're being overtaxed - it's that your withholding was fairly accurate to your actual tax liability, which is actually a good thing! Getting a huge refund means you gave the government an interest-free loan all year. If you want more money in your pocket, consider increasing your 401k contribution (you're only doing $2,500 of the $23,000 limit) rather than trying to get a bigger refund.

Random question but how much did you all pay for TurboTax self-employed? I'm also a programmer with 1099 income and QBI deduction, but I'm wondering if there are cheaper alternatives that still handle this correctly.

As a fellow freelance programmer, I can confirm that your work absolutely qualifies for the QBI deduction! I've been claiming it for the past few years with similar income levels. For TurboTax, "consulting" is the right category to select. The IRS doesn't have a specific programming classification, so most of us fall under professional services or consulting. What matters is that you're reporting legitimate business income from your programming work. One tip that saved me money: make sure you're tracking every business expense throughout the year. Don't just think about the obvious ones like software and equipment. Consider things like: - Portion of internet and phone bills used for business - Professional development courses or certifications - Business books or subscriptions - Home office expenses if you work from home - Even coffee meetings with clients These expenses reduce your taxable business income before the QBI calculation, so they provide double benefit. I use a simple spreadsheet to track everything monthly - makes tax time much easier! Also, keep good records of your 1099s and any business receipts. The QBI deduction can be substantial (up to 20% of your business income), so it's worth getting it right.

You might want to check your local tax authority's rules about employer requirements. In my city, employers are REQUIRED BY LAW to withhold local taxes if they have a certain number of employees. Print out those regulations and bring them to your HR department. Also, save 2.3% of each paycheck in a separate savings account yourself. I had a similar issue and ended up owing $1,900 at tax time - it was painful to pay all at once.

This is such a common and frustrating issue! I went through something similar with my employer not withholding city taxes correctly. Here's what I learned from my experience: First, definitely keep detailed records of every interaction - dates, names, what was promised, etc. This documentation becomes crucial if you need to escalate. Second, consider sending a formal written request (email works) to both your direct supervisor and HR, clearly stating that your local income tax withholding is incorrect and requesting immediate correction. Sometimes putting it in writing gets more attention than verbal requests. If they continue to drag their feet, you absolutely should make quarterly estimated payments to your local tax authority. It's much better to stay current than deal with penalties and interest later. Most local tax departments have online payment systems that make this pretty straightforward. One thing that worked for me was calculating the exact dollar amount I was losing each pay period and presenting that to HR as a "this is costing me X dollars every two weeks" - sometimes putting a specific dollar figure on it helps them understand the urgency from your perspective. Don't give up! You have every right to have your taxes withheld correctly, and there are definitely ways to get this resolved.

Has anyone dealt with the "unforeseen circumstances" exception to the 2-year rule for partial exclusion of gain? I know OP had a loss not a gain, but I'm in a similar job relocation situation except I might have a small profit and I'm wondering if I can avoid taxes on it.

I'm dealing with a somewhat similar situation and wanted to share what I learned from my tax professional. While you can't deduct the loss on your personal residence, make sure you're calculating your actual loss correctly. Your basis includes not just the purchase price but also: 1. Closing costs when you bought the home 2. Capital improvements (like your $800k renovations) 3. Some selling expenses (realtor commissions, title fees, etc.) So if you bought for $500k, spent $800k on improvements, and had $50k in selling costs, your basis would be $1.35M. If you sold for $1.03M, your actual loss would be much higher than the $320k you mentioned. While this doesn't help with deducting the loss, it's important for accurate record-keeping. Also, keep every receipt and document related to this transaction - the IRS has been known to audit large losses even if they're not deductible, just to verify the numbers are accurate. One more thing - if any part of your home was used for business (home office, etc.), that portion might have different tax treatment, though it gets complicated with mixed-use properties.