Is this actually true? That would be a huge help for me. I just realized I'm under-withheld for 2023 and was thinking about submitting a new W-4 to increase withholding for the last two months.

Yes, absolutely true! It's one of the less known advantages for W2 employees. The IRS regulations consider withholding to have been paid proportionally throughout the year regardless of when it was actually withheld. So you can absolutely submit a new W-4 now to increase your withholding for the remaining months of 2023, and the IRS will treat it as if you had been paying at that higher rate all year long. This can help you avoid underpayment penalties even if you were under-withheld for most of the year.

Form 1040-ES is for making estimated tax payments, not just for self-employed people. You need it if you expect to owe $1,000 or more when you file your tax return AND your withholding/credits won't cover at least 90% of current year tax (or 100%/110% of prior year). Most W2 employees don't need it because their employer withholds enough from their paychecks. But if you have significant income not subject to withholding (investments, rental income, side gigs), you might need to make estimated payments using 1040-ES.

I didn't think about retirement contributions! You might be onto something. I did have to reduce my 401k percentage for a few months last year to cover some unexpected expenses. That probably pushed more of my income into taxable territory. Would that really make that big of a difference though?

It absolutely can make that big of a difference! If you reduced your contributions even temporarily, that's additional taxable income. For example, if you normally contribute 10% to your 401k but reduced it to 5% for even a few months on a $50,000 salary, that's potentially an extra $2,000+ of taxable income on top of your raise. That additional taxable income can definitely bump up your blended rate, especially if it pushes more of your money into a higher bracket. Check your W-2 box 1 from both years - the difference might be larger than just your $3,500 raise if your retirement contributions changed.

This is a good point. I had the child tax credit in 2023 but my kid turned 17 so we didn't get it for 2024. Our income only went up about $2000 but our tax bill went up nearly $2500 because of losing that credit. The tax software just showed our "rate" was higher without explaining why.

Is it the same for Social Security tax? I notice that's taken out too. And what about if you're self-employed? Do you still pay Medicare tax?

Yes, Social Security works similarly - it's a mandatory tax that funds retirement benefits you'll receive later in life. Both are part of what's called FICA (Federal Insurance Contributions Act). For self-employed individuals, you actually pay both the employee and employer portions of Medicare and Social Security taxes, which is called Self-Employment Tax. That's why self-employed people pay 2.9% for Medicare (instead of 1.45%) and 12.4% for Social Security (instead of 6.2%). It's one of the downsides of self-employment, but there are other tax advantages that can help offset this.

There is an Additional Medicare Tax of 0.9% that kicks in when your income exceeds $200,000 ($250,000 for married filing jointly). So for most people it's just the flat 1.45%, but higher earners pay 2.35% on the portion of income above those thresholds.

That's super helpful, thanks! I filed my original return about 3 weeks ago. Do you know roughly how long I should wait before filing the amendment? And do you think I should use a tax professional for the amendment or can I do it myself with tax software?

The IRS typically processes electronically filed returns within 21 days, so you're probably right at that threshold. I'd suggest checking your refund status on the "Where's My Refund" tool on IRS.gov. Once it shows your return has been processed, you're good to file the amendment. For amounts this small with just two additional 1099 forms, tax software should be perfectly adequate for the amendment. Most major tax software programs have an amendment feature. Just enter the additional information from your Robinhood 1099-B and Cash App 1099, and the software will generate the 1040-X form for you. The whole process should take less than 30 minutes.

Robinhood does report cost basis to the IRS for most securities purchased after 2011. You can verify this on your 1099-B - if Box 1e (Cost or other basis) is filled in, then yes, the IRS is receiving that information. They know exactly what your gain/loss should be.

2 Does requesting those transcripts trigger any kind of audit or review? My cousin says anytime you contact the IRS directly you're putting yourself on their radar for an audit. Is that true?

17 Requesting your wage and income transcripts absolutely does not trigger an audit or special review. That's a common misconception. These transcripts are your right as a taxpayer and millions of people request them every year for perfectly routine reasons. The IRS selects returns for audit based on specific statistical formulas looking for outliers and unusual patterns, not because someone requested their own information. In fact, being proactive about your tax situation by requesting transcripts and filing accurately is more likely to help you stay off the audit radar.

1 Not sure what software he used, but that's a good point about the W-2 possibly being wrong. How would he even go about proving that though? 7-Eleven probably isn't going to just admit they made a mistake, especially 2 years later.