Thanks for this explanation. So even though I thought I was doing the same thing at both employers by selecting "0" allowances, they could actually be using totally different withholding calculations? Should I just ask for additional withholding on my W-4 to make up the difference?

Yes, that's exactly right. Even though you requested maximum withholding at both places, they could be using different calculation methods, especially if one used the pre-2020 W-4 format and the other used the new one. The best approach is to use the IRS Tax Withholding Estimator on their website, which will give you a personalized recommendation for your W-4. If you want a simpler solution, you can just request additional withholding on Line 4(c) of your W-4. Based on your numbers, adding about $125 per month in additional withholding should get you back to the refund level you were expecting.

Great idea! My company gives us access to an online portal where we can see all our deductions broken down by category. It shows pre-tax vs post-tax and which ones affect each box on the W-2. Made this a lot easier to understand when I had a similar issue.

I'll definitely try that. I just emailed my HR department asking for a breakdown of the deductions that make up the difference between Box 1 and Boxes 3/5. Hopefully they can explain exactly what's happening with these withholding calculations too. Thanks for the suggestion!

I had no idea this existed! Do you know if they can help with penalty abatement requests too or just the filing part? And will they judge me for not filing for three years? I'm already feeling pretty stupid about this whole situation.

We can definitely help with the filing part and can give you information about penalty abatement options. While VITA volunteers can't directly negotiate with the IRS on your behalf, we can help you prepare the necessary forms and documentation to request penalty abatement on your own. And absolutely no judgment - I promise! We see situations like yours all the time. Many students don't realize scholarship funds for room and board are taxable. Education tax rules are complicated and not well explained to students. Our entire purpose is to help people navigate these confusing tax situations without judgment. That's literally why the program exists!

Yes, you absolutely can claim the American Opportunity Tax Credit (AOTC) when filing previous years' returns! The AOTC is worth up to $2,500 per eligible student, and 40% of it is refundable (up to $1,000).

The partnership agreement does have a valuation clause, fortunately. They're using a formula based on the market value of the securities plus any cash minus liabilities. Since it's mostly publicly traded investments, the valuation is pretty straightforward. But good point about the fair market value - I'll mention that they should document how they arrived at the final number.

That's good they have a formula in place - that will save a lot of headaches! Just make sure they document everything thoroughly, especially the valuation calculation. Keeping records of how they determined fair market value will be crucial if they ever get questions about it later. For family transfers, the IRS can sometimes be suspicious that there might be disguised gifts happening. Having clear documentation of an arm's-length transaction at fair market value is your best protection.

Section 754 elections can be really valuable in this situation. When your friend sells his partnership interest, the buyers (family members) can benefit from a Section 754 election if the purchase price is higher than the seller's tax basis inside the partnership. The election allows for an adjustment to the basis of partnership assets for the purchasing partners only. This means if they paid more than the internal basis, they get to increase their basis in the partnership assets, which can provide better depreciation deductions or lower gains when assets are eventually sold. The partnership files the election on its tax return for the year the transfer occurs. It's a one-time election that stays in effect for all future years and transfers, so the partnership should consider the long-term implications.

Thanks for explaining! That makes way more sense than what our accountant told us. So essentially it lets the buyers get tax benefits based on what they actually paid rather than the original basis. I wish we had known this better before - we probably could have saved some money on taxes after the buyout.

Do you know what the minimum monthly payment the IRS will accept is? I probably owe around $5000 across three years and there's no way I can pay that all at once.

The minimum payment depends on how much you owe, but generally the IRS will accept payments that would clear the debt within 72 months (6 years). For $5000, that would be around $70-100 per month depending on interest and penalties. If you can't afford what they initially propose, you can request a lower payment based on your financial situation. They have a form called 433-F that lets you show your income and expenses to justify a lower payment amount. The key is to request the payment plan upfront rather than waiting for them to come after you.

People rarely go to jail just for failing to file, especially if you're voluntarily coming forward to fix the situation. The IRS generally reserves criminal prosecution for cases involving fraud, tax evasion, or deliberate concealment. Coming forward voluntarily to file back taxes is actually viewed favorably by the IRS. They're much more likely to work with you on payment plans and might even be able to reduce some penalties if you show good faith by filing now.

That's good to hear. I've been stressing out about my own situation with missed filings. Gonna try to get caught up too.

Thank you so much for mentioning the QBI deduction - I hadn't heard of that at all! Question: do I need to form an LLC or something to qualify for that 20% deduction? And for conferences, can I deduct the full amount including hotel and meals if the conference is directly related to mobile development?

You don't need an LLC to claim the QBI deduction! As a sole proprietor filing Schedule C, you can still qualify. The deduction gets more complicated if your income exceeds certain thresholds ($182,100 for single filers in 2025), but for most contractors, it's a straightforward 20% deduction on your qualified business income. For conferences related to mobile development, you can absolutely deduct registration fees, travel costs including airfare and hotel, and 50% of meal expenses. Just make sure to keep detailed records showing the business purpose. I recommend taking photos of conference badges, session schedules, and business cards you collect to strengthen your documentation in case of an audit.

How do you determine what percentage of internet to deduct? Is there any official guidance or do you just estimate?