That's interesting and might explain what's happening in my case too. Did your former employer provide any documentation explaining this approach? And which method did you end up using - the itemized deduction or claim of right?

They didn't provide specific documentation beyond a brief explanation in the email that accompanied my W-2c. It was frustrating because they basically put the burden on me to figure out the tax implications. I ended up using the claim of right provision (Section 1341) since my repayment was over $3,000. This gave me a better result than the itemized deduction would have because I was in a higher tax bracket when I received the money than when I repaid it. I had to fill out some additional worksheets that weren't part of the standard tax software process, but it was worth it - I got back about $1,200 more than if I had just taken the itemized deduction.

Does the Tax Cut and Jobs Act affect this? I thought miscellaneous itemized deductions were eliminated until 2025?

Would you need to fill out a new W-4 form for this? Or can you just ask payroll to withhold an additional specific amount each paycheck? I've never adjusted my withholding before and don't want to mess anything up.

You would need to submit a new W-4 form to your employer. There's a section on the form (Step 4c) where you can specify an additional amount you want withheld from each paycheck. You don't necessarily need to complete the whole form again. Many employers will let you just indicate the additional amount you want withheld. I'd recommend using the IRS Tax Withholding Estimator on the IRS website to calculate how much extra you should have taken out based on this new income. It's much better to handle this now than to get surprised with a tax bill next April!

No, there's no requirement for employers to gross up the amount. It's completely at their discretion. But it's definitely not a favor if they're just converting the same dollar amount from non-taxable to taxable!

Thanks for clearing that up. I figured that was the case but wanted to check. Guess I'll be having a chat with my manager tomorrow with some calculations in hand!

This is incredibly helpful - I had no idea these options existed. Do these programs stop the levy process right away? And if I apply for an Offer in Compromise, how long does that typically take to process?

Yes, both applying for an Offer in Compromise or being placed in Currently Not Collectible status will stop the levy process immediately. The IRS can't continue collection actions while your offer is being evaluated or while you're in CNC status. The Offer in Compromise process typically takes 6-9 months from submission to decision. During this time, your collection statute (the 10-year period the IRS has to collect) is extended. If your offer is accepted, you'll typically need to pay the settlement amount within 24 months or in some cases as a lump sum within 5 months (which often results in a lower settlement amount).

This is only partly right. The 10-year clock doesn't start until the tax is actually assessed, which requires filing a return or the IRS creating a substitute return for you. For unfiled returns, that clock might not have even started yet!

Is Modelo 210 something I can file online or do I need to physically go to a Spanish tax office? I'm planning to buy but won't be in Spain more than a few weeks each year.

You can definitely file the Modelo 210 online through the Spanish Tax Agency's website. You'll need to get an NIE (Foreigner Identification Number) first, which is required for property purchase anyway. Many non-residents also use a "fiscal representative" in Spain - basically an accountant or lawyer who handles the filing for you. This is often the easiest option if you're only there a few weeks a year. Most of the online filing system is available in English now, which is a big improvement from when I first bought my place five years ago. But the translations can be a bit confusing sometimes, which is why many people just hire a local tax advisor for a few hundred euros per year.

I went through this when my uncle passed and left his Malaga apartment to my cousin. Inheritance tax in Spain varies HUGELY by autonomous region - some regions like Madrid and Andalusia have big exemptions, especially for close family members. But as non-residents, you don't automatically get all the same benefits as residents. The good news is that in 2018, the rules changed to allow non-EU residents to benefit from regional tax rules instead of just the national ones, which are usually less favorable. So definitely check the specific inheritance tax rules for Mallorca (in the Balearic Islands region).

Thank you so much for this info! I had no idea the rules had changed in 2018 - that's a huge relief. I'll definitely look into the specific rules for the Balearic Islands. Did your cousin end up paying a lot in inheritance tax, or were they able to take advantage of the regional exemptions even as a non-resident?

We used [firm name] last year and they found about $180k in credits, but charged us $54k (30%). They handled everything including amending prior year returns. The documentation they prepared was really thorough which helped when we got some questions from the IRS. Expensive but worth it for the peace of mind.

That's helpful to know. The 30% fee sounds high but having thorough documentation that stands up to IRS scrutiny seems worth it. Did they help with both the technical and financial documentation aspects? I'm also wondering about the amending prior years - did that cause any complications or did it go smoothly? We're considering going back to claim 2022 credits we missed.

We've been using QuickBooks with custom accounts set up specifically for R&D. Created separate accounts for domestic R&D (5-year amortization) and foreign (15-year). Then set up amortization schedules in Excel that feed back to our monthly journal entries. Not perfect but it works.

Thanks for the suggestion! That makes sense - creating custom accounts seems like a practical workaround. I'm still hoping software providers will catch up with better built-in solutions for these R&D tracking requirements. Our controller wasn't thrilled about the manual Excel approach but I guess that's what we'll need to do for now. Did you run into any challenges with mid-year R&D expenses and when to start the amortization?