Everyone is focusing on fixing the problem, but don't forget to actually USE the FSA money before your husband leaves his job! If he quits mid-year, depending on the plan terms, you might lose any unspent FSA funds. I'd recommend scheduling any eligible medical expenses you were planning to have this year ASAP. Dental work, vision exams, prescription refills, etc. That way you at least get the benefit of the tax-free money before it potentially disappears.

This is a really tricky situation, but you're not alone! I went through something similar last year. One thing I'd add to the great advice already given - make sure you keep detailed records of all the dates and amounts involved. The IRS is very specific about month-by-month eligibility for HSAs. When you contact your HSA administrator to remove the excess contributions, ask them to provide written documentation showing the calculation they used and which months they considered you ineligible. This will be crucial for your tax filing. Also, don't forget about state tax implications if you live in a state that taxes HSA contributions differently than federal. Some states don't recognize HSA tax benefits at all, which could affect how you handle the excess contribution removal. The silver lining is that once your husband changes jobs and the FSA issue is resolved, you'll have a much cleaner setup going forward. Just make sure to double-check all your benefits elections during his new employer's enrollment process!

Has anyone here actually maxed out both the employee AND employer portions of their solo 401k? I'm trying to figure out if I can really contribute up to $66,000 for 2025 (I'm under 50) between both parts. My CPA says my employer contribution is limited by my net business profit and I'm trying to calculate exactly how much income I need to earn to max out the entire thing.

Great thread! I want to add one important detail that hasn't been mentioned yet - if you're using payroll software to process your solo 401k employee contributions (which some people do to maintain proper documentation), make sure your payroll is processed and the contribution is actually deducted from your pay by December 31st, not just scheduled. I learned this the hard way last year when I scheduled my December payroll to run on January 2nd thinking it would still count for the prior tax year. The IRS considers the contribution made when it's actually deducted from compensation, not when you schedule it or when the funds hit the 401k account. Also, for anyone using a solo 401k loan feature - loan repayments don't count toward your annual contribution limits, but they do need to be made on schedule to avoid being treated as taxable distributions. The loan repayment schedule isn't affected by the December 31st deadline since it's not a new contribution.

My client sent me this one: "What's the difference between a taxidermist and a tax collector? The taxidermist only takes your skin." I couldn't decide whether to laugh or cry because I was literally working on his 1040 with substantial underpayment penalties at that exact moment...

Here's one that perfectly captures tax season desperation: "Why did the taxpayer bring a ladder to the IRS office? Because they heard the rates were going through the roof!" And this classic: "What's the difference between death and taxes? Death doesn't get worse every time Congress meets." But honestly, after reading through all these comments, I'm starting to think we accountants have developed Stockholm syndrome with our own profession. We're sitting here making jokes about the thing that's slowly destroying our will to live! 😂 Anyone else feel like tax humor is just our collective coping mechanism for choosing a career that peaks in stress from January to April every single year?

Hey, just wanted to add another perspective. We had the same issue in 2022 and ended up owing about $5k in healthcare subsidies. We didn't know about the income threshold either until it was too late. What we did was amend our tax return to include some overlooked deductions (home office for self-employment, some business expenses we initially thought weren't deductible). This brought our MAGI down juuuust enough to qualify for the repayment cap. Ended up paying back only about $2,700 instead of the full amount. Definitely talk to your tax person about any possible deductions you might have missed!

One thing nobody mentioned yet is that the marketplace subsidies are totally separate from the Premium Tax Credit you calculate on your return. If you can show that your income increase was unpredictable (like your bonus or sudden business growth), you might qualify for the IRC Section 6662 "reasonable cause" exception for the underpayment penalty. It won't help with paying back the actual subsidy, but could save you hundreds in penalties. Just make sure to include a detailed letter explaining the circumstances with your return.

Has anyone used TurboTax with this same issue? I'm having the exact same problem but with TurboTax and their customer service was useless. They just said to contact SSA but didn't offer any solution for filing my taxes now.

This is such a frustrating but surprisingly common issue! I work for a tax prep company and we see this all the time during filing season. The birthdate mismatch rejection usually means there's a one-day discrepancy in SSA's records, often due to clerical errors made when the SSN was originally issued. A few things that might help while you're working on getting this fixed: 1. You can still file a paper return by mail to meet the deadline - just print, sign, and send it in. The IRS will manually verify your info against your birth certificate if there are discrepancies. 2. When you go to the SSA office, bring both your original birth certificate AND a certified copy. Sometimes they need to keep documentation on file. 3. Ask the SSA rep to give you a printout or confirmation letter showing the correction was made. This can be helpful if you have issues next year or need to prove the change was processed. The whole process usually takes 2-4 weeks for the SSA and IRS systems to sync up, so you should be good to e-file next year without any problems. Hope this helps!