Do you know if there's any regulation about how much extra they can charge for credit? My local station is charging almost a dollar more per gallon for credit vs cash which seems WAY more than the actual processing fee would be.

The regulations vary by state, but generally there's no strict limit on the price difference. However, in most states, they do need to clearly post both prices. Some states like California have regulations requiring that credit card surcharges can't exceed the actual cost to the merchant, but enforcement is spotty. The large difference you're seeing (nearly a dollar) is definitely more than just covering the processing fee. It's likely they're using the cash discount to encourage a payment method that has other benefits for them - faster settlement, no chargebacks, and possibly some unreported cash transactions. It's a way to improve their overall margins in a business with typically very thin profit margins.

Is it true that gas stations make almost no money on the actual gas and make all their profit on the convenience store stuff? I've heard that's why they try so hard to get people inside the store.

Oh that's really good to know! I actually do have an old 401k that I rolled into a Traditional IRA last year. So if I did conversion instead of recharacterization, I'd have to convert some of that old 401k money too and pay taxes on it?

Yes, that's exactly the issue. With the pro-rata rule, you can't cherry-pick which dollars to convert. If you have $9,500 in non-deductible contributions and, say, $40,000 in pre-tax money from your old 401k rollover (all in Traditional IRAs), then any conversion would be proportionally taxable. If you converted $9,500, about 19% would be considered non-taxable (your non-deductible portion) and 81% would be taxable. The IRS looks at all your Traditional IRAs as one big bucket for this calculation. Recharacterization bypasses this completely since it's treated as if you never contributed to the Traditional IRA in the first place.

I did a recharacterization with Fidelity last year. Had to call - couldn't find any way to do it online. The phone rep was actually really helpful and processed it while I was on the call. Had to confirm I understood the tax implications but it was pretty straightforward once I got through to someone.

19 Isn't the processing fee higher than the IRS interest rate though? I thought IRS interest was like 8% annually which would be less than 2% for a couple months of payments?

22 The math really depends on your specific situation. The processing fee is a one-time 2% charge, while IRS interest compounds daily at their current rate. If you can pay off the credit card quickly (especially with a 0% intro APR), the one-time fee might be cheaper than ongoing IRS interest plus the installment plan setup fee. Plus, if you earn rewards on that spending, it can offset some of the processing fee.

15 That's a really good point. I almost got hit with a penalty in California because I assumed the payment date was the same as federal!

Wait the $83,500 limit is per employer?? I thought it was a total annual limit across all accounts? Does that mean if I contribute to a 401k at two different employers in the same year I could potentially contribute up to $167,000 total??

Yes, the $83,500 annual addition limit (for 2024) is technically per-employer. So if you work for two completely unrelated employers who each have their own 401(k) plan, you could potentially contribute up to the limit in each plan. However, your personal elective deferral limit ($23,000 for 2024, or $30,500 if you're over 50) is a combined limit across all employer plans. So while you can't defer more than $23,000 total between both employers' plans, you could still potentially reach the annual addition limit at each employer through employer contributions and after-tax contributions.

This is super helpful. What about if some of my money went to ESPP (employee stock purchase plan)? Does that count toward the $83.5k limit? And also do you know if we can just leave excess contributions in there and pay the penalty? Is it just 6% per year or are there other issues?

Did you have to file any special forms when you got them to stop requiring repayment? I'm worried if I just stop paying the $500 installments it'll trigger some kind of automatic collection process. Did they give you any pushback or was it fairly straightforward once you showed them the correct closing date?

I had to file a Form 843 (Claim for Refund and Request for Abatement) along with a detailed letter explaining the situation. I attached copies of my closing documents clearly showing the 2009 date, plus copies of my original tax returns where I made the mistake. The IRS did initially send some automated notices when I stopped making the payments. That's why it's important to be proactive rather than just stopping. They eventually processed my claim and sent a letter confirming I was no longer responsible for the remaining payments. It took about 5 months total from submission to resolution.

That's why I always tell people to triple-check dates on major tax credits! The government loves to create these weird cutoff periods that can cost you thousands. I had a client who missed the solar tax credit by ONE DAY because of installation timing. Brutal.