Thanks for the warning! I hadn't even considered that possibility. I'll check with them to confirm they're not planning to send a corrected 1099 for 2024. Would definitely complicate things if they did.

Glad I could help! It's worth a quick email to their accounting department. In my case, they had sent the corrected 1099 without telling me, and it didn't arrive until after I'd already filed. So I had to amend my return, which was a whole ordeal. Better to know their plans upfront.

I did this in TurboTax last year. When you're filling out the Schedule C section, there's a part for "Other Expenses" where you can add a custom category. I labeled mine "Income previously reported on 2023 tax return" and entered the amount. The TurboTax interview doesn't specifically ask about this situation, so you have to know to add it yourself.

Thanks for the clear explanation. My gut was telling me this didn't sound right. I'm definitely going to get a second opinion from a tax professional before filing. Do you think I should tell my immigration lawyer about these concerns or just quietly get tax advice separately?

I would absolutely discuss your concerns with your immigration lawyer, but frame it constructively. Perhaps say something like, "I've been researching the tax implications, and I understand that dependent status vs. marital status on tax returns can be scrutinized during the immigration process. Can we discuss how to properly document our financial relationship without potentially creating inconsistencies?" This approach acknowledges your lawyer's expertise in immigration while opening the door to correcting any tax misunderstandings. Also, it would be very helpful to consult with a tax professional who has experience with immigration cases specifically. They can often provide documentation that satisfies both IRS requirements and supports your immigration case appropriately.

True, and there's also the issue of the stepson's other parent. If the biological parent is claiming the child as a dependent (which they likely have the right to do if providing support), then trying to also claim the child could trigger automatic IRS flags.

I didn't know the IRS could restrict your withholding choices! Has this happened to you or someone you know? How extreme would the withholding need to be for them to do this?

It's never happened to me personally, but I've seen it happen to a colleague. In their case, they were having about 50% of their check withheld when their actual tax liability would have only required about 15-20%. The IRS typically only issues lock-in letters when there's a significant discrepancy. For your situation, wanting a $12k refund on $150k income with 3 kids isn't extreme enough to trigger concern. It would be more problematic if you were trying to have, say, $40k withheld when your likely tax liability is only $15k. They generally don't mind reasonable overwithholding - many people use tax refunds as a savings method.

Do you know which states offer tax benefits for homeschooling? I'm in Illinois and considering homeschooling next year.

Illinois doesn't currently offer specific tax benefits for homeschooling expenses, unfortunately. States that do include Louisiana (deduction up to $5,000), Indiana (deduction up to $1,000 per child), Minnesota (education tax credit), and a few others. Even without state-specific benefits, don't forget about potential federal benefits like the Lifetime Learning Credit depending on how you structure your homeschooling program. Some families also set up small educational businesses alongside their homeschooling which can provide some tax advantages if done properly.

Is there a specific form or worksheet we need to include with our tax return to explain the 402G excess contribution correction? I've entered everything in TurboTax but want to make sure I have proper documentation if I get audited.

There's no additional form you need to file with your return for 402G excess distributions. The 1099-R with code "E" is sufficient documentation. TurboTax should handle the calculations correctly when you identify it as a return of excess contributions. The software will automatically exclude the principal amount from taxation while including the earnings portion as income for the year you received the distribution. If you're concerned about documentation, you could print out the 1099-R and keep it with your tax records, along with any communication from your plan administrator about the excess contribution removal.

I had this exact situation with a $490 excess contribution in 2022, and I received a notice from the IRS about a year later asking for clarification. I sent them a copy of my 1099-R showing code E and a letter explaining the situation, and they accepted it without any issues. I think what happened is their automated system initially flagged it as potentially unreported income.

Do these Tax Topic 151 reviews usually result in reduced refunds? Or is it just a verification process and you still get your full amount if everything checks out?

It really depends on what they find during the review. If all your documentation supports your claims and everything checks out, you'll receive the full refund amount, though obviously delayed. If they determine certain deductions or credits aren't valid, they'll adjust your return and you'll receive a reduced amount. In some cases, if they find significant issues, you could even end up owing more instead of getting a refund. The vast majority of cases are just verification though, and many people do receive their full refund after providing documentation.

I waited almost 60 days last year before I got my letter. Called multiple times and kept getting told "it's in process." When the letter finally came, it was something simple they could have told me over the phone. The IRS is still dealing with backlogs from Covid even now.