Thank you so much for this specific information! I just checked my 1042-S again and it DOES have the "corrected" box checked at the top. I hadn't even noticed that before. So I'm guessing you're right that the timing between their correction and my filing might be the issue. I'll contact the issuer tomorrow and specifically ask about when they submitted the electronic correction to the IRS. That seems like the most likely explanation for why the IRS thinks there's a mismatch when my numbers actually match what's on my form.

Glad I could help! That "corrected" box is definitely your smoking gun. Based on what you've said, I'm almost certain the timing is the issue. When you contact the issuer, ask them to provide you with documentation showing both the original and corrected submission dates. Having this documentation will make resolving the issue with the IRS much easier. You can include it with your response to show exactly what happened and why there appears to be a mismatch in their system.

In my experience, these specific matching issues almost always require a phone call or a written response. The online account tools don't have functionality to resolve document matching problems. Your best option is probably to prepare a written response with copies of your documents and mail it to the address on your notice.

Do you know if the safe harbor is calculated on total tax liability or just income tax? Like does it include the self-employment tax portion too when figuring the 100% or 110% of last year's taxes?

The safe harbor amount is based on your total tax liability, which includes both income tax and self-employment tax. So when people talk about covering 100% (or 110% for higher incomes) of last year's tax, they're referring to the total amount on line 24 of your Form 1040 from last year - that's your total tax, including self-employment taxes. That's why self-employment income can really complicate things, because you're responsible for both the employee and employer portions of Social Security and Medicare taxes, which adds about 15.3% on top of your regular income tax.

That's a great tip! I didn't realize you could adjust Social Security withholding too. Is there a limit to how much you can withhold from Social Security benefits specifically?

Where exactly is this in the 2025 version? I'm looking under Reports but don't see Tax Reports as an option. Is it only available after you complete Schedule D or something?

In the 2025 version they moved it slightly. Look under Reports > My Documents > Generated Reports and then you need to click "Create New Report" and select Capital Gains from the dropdown list. It's definitely not intuitive! The report won't be available until you've entered at least some Schedule D information. Once generated, it creates a nice PDF that you can open in Adobe Reader and copy text from. The data comes out pretty clean and just needs a little formatting in Excel.

That sounds incredibly tedious! How long did it take you to manually enter all 43 trades?

That's a perspective I hadn't considered. Did you use tax software to file for them or do the paper forms? And did they actually participate in the process or did you just do it for them?

I used free tax software for their simple returns. The first couple years I walked them through it with me sitting next to them, explaining each step. By age 16-17, they did it themselves with me just reviewing after. It was definitely worth it. My 19-year-old now understands tax concepts better than most adults I know. She can explain her withholding, knows which deductions she qualifies for, and even helped her roommate file this year. The investment account discussions led to broader financial literacy too - she's already putting money in a Roth IRA from her campus job.

Wait, you lose the child tax credit if you report their investment income on your return? That's a huge deal that I've never heard mentioned before! Is that always the case or only in certain circumstances?

That's a really good point. I didn't even think about the delayed earnings potential. Do you have any rough numbers on what that looked like for you financially? Just trying to do my own math here.

In my case, I was making about $85k during my MBA. The role I moved into after graduating paid $112k. So that's roughly $27k per year in lost salary increase, which means delaying graduation by 18 months cost me about $40k in potential earnings. My total tuition was $36k, and by stretching it I saved paying taxes on about $22k (the amount over the $5250 limit across 3.5 years). At my tax bracket that saved me around $6k in taxes. So I essentially lost $34k ($40k in delayed earnings minus $6k tax savings) by stretching the program. Obviously everyone's numbers will be different, but definitely consider the full financial picture, not just the immediate tax hit.

Some companies definitely do this! Mine doesn't call it a "gross-up" but they essentially pay about 40% extra on the amount over $5250 to offset the taxes. Worth asking about.

I actually did ask about this! My company said they don't offer any tax offset or gross-up for education reimbursement. Their policy is pretty rigid - $5250 tax-free per year, anything above that gets taxed, and that's it. I appreciate the suggestion though. Seems like I need to either stretch the program or just accept the tax hit as the cost of finishing faster.