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One important thing to watch for with multiple W2s - Social Security tax. Each employer withholds 6.2% of your wages for Social Security up to the annual wage limit ($147,000 for 2022). If your combined income from both jobs exceeded that limit, you may have overpaid Social Security tax that you can get back when filing.
Is this something tax software automatically catches? I made about $160k combined between my two jobs last year but I'm not sure if I got this credit.
Most major tax software (TurboTax, H&R Block, etc.) should catch this automatically when you enter multiple W2s. The software will calculate if you exceeded the Social Security wage base and add the excess as a credit on your return. If you're doing your taxes by hand, you'll need to calculate this yourself on your Form 1040. This is definitely one of those situations where software is worth it, since it's an easy thing to miss if you're doing it manually.
Just wantd to mention, when I had 2 w2s I just added the box 1 income from both, added the fed witholding together, and the state witholding together. Enter those on your 1040 and ur good to go! No need to complicate it imo.
This is incorrect advice! You cannot just add the totals from Box 1 and enter as a single amount. You need to enter each W2 separately in your tax return. There are multiple boxes on the W2 beyond just income and withholding that need to be reported individually.
This thread has been incredibly helpful! I work for a state agency and have been wrestling with this same question about my pension contributions. After reading through everyone's experiences, I think I need to take a closer look at my W-2 to see how my contributions are being handled. One thing I'm curious about - for those of you who discovered your pension contributions were pre-tax, did you notice any difference in how state taxes were handled versus federal taxes? I'm in a state with income tax, and I'm wondering if the treatment might be different at the state level. Also, has anyone dealt with situations where you move between states during your career? I'm wondering how that might affect the tax treatment of accumulated pension benefits. Thanks to everyone who shared their experiences with the various tools and services - it's clear there are good resources out there when you need help navigating these complex tax situations!
Great questions about state tax differences! I've actually dealt with both of these situations. For state taxes, it really depends on your specific state. Some states follow federal treatment and exclude pension contributions from state taxable income, while others don't. In my state, pension contributions were pre-tax for federal purposes but still subject to state income tax, which is why my state taxable wages on my W-2 were higher than my federal taxable wages. As for moving between states during your career - this can get complicated! I transferred from one state agency to another when I moved, and the pension systems had different rules. Some states have reciprocal agreements that allow you to transfer credits, while others don't. The tax treatment of your eventual pension payments will generally depend on where you're living when you retire, not where you earned the pension. I'd recommend checking with both your current state's pension system and any previous state systems you've contributed to, as the rules can vary significantly. The Claimyr service that others mentioned could actually be helpful for getting through to multiple state agencies if you need to research this!
This is exactly the kind of confusion I had when I first started working for my state agency! After going through this myself, I can confirm what others have said - those mandatory pension contributions are almost certainly already being handled as pre-tax deductions. The easiest way to verify this is to look at your final paystub for the year and add up all your gross pay, then compare that to Box 1 on your W-2. If Box 1 is lower by roughly the amount of your annual pension contributions (plus health insurance and other pre-tax deductions), then you're already getting the tax benefit automatically. I made the mistake early on of thinking I needed to track these contributions for tax purposes, but it turns out the payroll system handles it all behind the scenes. You're essentially getting the same tax treatment as someone maxing out a traditional IRA or 401(k), just through a different mechanism. The key difference is that with voluntary retirement contributions, you see them as deductions on your tax return, but with mandatory pension contributions, the tax benefit happens before your W-2 is even generated. One tip: keep your year-end paystub that shows your total pension contributions for the year. While you won't deduct it, it's good to have for your records and helps you understand how much you're actually saving for retirement through the pension system.
This is really helpful, Caesar! I just checked my December paystub against my W-2 and you're absolutely right - there's about a $3,300 difference between my gross pay total and Box 1, which matches almost exactly what I contributed to the pension fund this year ($275 x 12 months). I also had some health insurance premiums deducted pre-tax, so that accounts for the small difference. It's such a relief to understand this now! I was worried I was missing out on potential tax savings, but it sounds like I'm already getting the benefit automatically. I really appreciate everyone in this thread sharing their experiences - it's made something that seemed complicated much clearer. I'll definitely keep that year-end paystub for my records like you suggested.
Just wanted to add one important point that might help with your manual calculations - don't forget about the Additional Medicare Tax if you earn over certain thresholds! If you're single and earn over $200,000 (or married filing jointly over $250,000), there's an additional 0.9% Medicare tax on the excess amount. This won't show up in your regular FICA withholdings and might require estimated tax payments or additional withholding to avoid underpayment penalties. Also, when doing manual calculations, make sure you're using the correct year's tax brackets and standard deduction amounts - they change annually with inflation adjustments. The IRS publishes these tables on their website, and using the wrong year's numbers can throw off your entire calculation. Good luck with your manual tax prep! It's actually a great way to really understand how the tax system works, even if it takes more time than using software.
This is really helpful! I had no idea about the Additional Medicare Tax threshold. As someone just starting to understand tax calculations, I'm curious - when you mention estimated tax payments for the additional Medicare tax, does that mean employers don't automatically withhold enough for high earners? And do you know if there are any other "surprise" taxes like this that don't get withheld properly from regular paychecks?
Great question! Yes, employers often don't withhold enough for the Additional Medicare Tax because they only start withholding the extra 0.9% once your year-to-date wages with *that specific employer* exceed the threshold. If you have multiple jobs or your spouse also works, you might hit the threshold earlier than your employer realizes. There are definitely other "surprise" taxes that don't get properly withheld. Investment income (dividends, capital gains) usually has no withholding unless you specifically request it. Self-employment income requires quarterly estimated payments. Even some retirement account distributions might not have enough withheld if you don't elect additional withholding. The key is understanding that payroll withholding is just an estimate based on your job with that employer - it doesn't know about your complete tax picture. That's why some people end up owing money at tax time even when they thought they were having "enough" withheld!
This is exactly the kind of confusion I had when I first started doing my own taxes! The key thing to remember is that these are three completely separate tax systems running in parallel: 1. **Federal Income Tax**: The progressive brackets (10%, 12%, 22%, etc.) that everyone talks about 2. **Social Security Tax**: Flat 6.2% on wages up to $168,600 (2024 limit) 3. **Medicare Tax**: Flat 1.45% on all wages, plus that extra 0.9% on high earners When you see your paycheck, all three are being calculated and withheld separately. Your W-2 will show the withholdings for each in different boxes, as others have mentioned. For your refund calculation, you're mainly focused on comparing your federal income tax withholding (Box 2) against what you actually owe based on your taxable income and filing status. The FICA taxes (Social Security and Medicare) are usually spot-on since they're straightforward percentage calculations. One tip for manual calculation: Start with your gross income, subtract your standard deduction and any pre-tax contributions to get your taxable income, then apply the tax brackets step-by-step. Don't forget that the brackets are marginal - you don't pay your highest bracket rate on all your income!
This breakdown is super helpful for someone like me who's new to understanding taxes! I appreciate how you've organized it into the three separate systems. One quick follow-up question - when you mention "pre-tax contributions" like 401k reducing taxable income, does that mean if I contribute $5,000 to my traditional 401k, my taxable income goes down by exactly $5,000? And does this affect all three tax systems the same way, or just the federal income tax calculation?
This is a really comprehensive discussion that covers most of the key issues for your situation! Just wanted to add one practical tip that helped me when I was in a similar position. Since you mentioned you're stressed about getting this right, consider using IRS Publication 519 ("U.S. Tax Guide for Aliens") as your primary reference. It has specific examples and flowcharts for determining resident status that are much clearer than the general IRS website content. Also, keep detailed records of your entry/exit dates from the US - not just for this year's filing, but for future years too. The Substantial Presence Test is a rolling 3-year calculation, so having accurate travel records will save you headaches down the road. One last thing - if you do end up filing as a resident alien for 2024 (which seems likely based on your 320 days in the US), make sure you understand the implications for estimated tax payments in 2025. As a resident, you may need to make quarterly estimated payments if you have significant income that doesn't have taxes withheld. The good news is that once you work through this first year, subsequent years become much more straightforward if your residency status remains consistent!
This is such excellent advice, especially about Publication 519! I wish I had known about that resource when I first started dealing with US taxes. The flowcharts really do make the residency determination much clearer than trying to parse through the general IRS guidelines. Your point about keeping detailed travel records is spot on. I learned this lesson when I had to reconstruct my travel history for the previous three years - it was a nightmare trying to piece together exact dates from old boarding passes and passport stamps. Now I keep a simple spreadsheet with entry/exit dates that I update whenever I travel. The estimated tax payment reminder is really important too. Many people don't realize that becoming a tax resident means you're subject to the same pay-as-you-go requirements as US citizens. I got hit with underpayment penalties my first year because I didn't understand this requirement. One small addition - if you're using Publication 519, also check out the IRS Interactive Tax Assistant tool online. It has a specific section for determining alien tax status that can walk you through the Substantial Presence Test step by step. It's like having the publication in interactive form!
This thread has been incredibly helpful! I'm dealing with a similar situation but with a twist - I moved to the US in August 2024 from Canada and I'm trying to figure out if the US-Canada tax treaty affects my Substantial Presence Test calculation. I was physically present in the US for about 145 days in 2024, so I definitely don't meet the SPT for 2024. But I'm concerned about 2025 - if I stay the full year, I'll easily pass the test and become a resident alien for tax purposes. What I'm confused about is the timing. If I become a resident alien partway through 2025 based on the SPT, do I file as a dual-status alien for 2025? And does the US-Canada tax treaty have any provisions that might affect this determination? Also, since Canada and the US both tax worldwide income, I'm worried about getting hit with double taxation once I become a US tax resident. I know there's the Foreign Tax Credit, but I'm not sure how it works when you're transitioning between tax systems mid-year. Has anyone dealt with US-Canada tax issues specifically? The treaty seems really complex and I'm not sure if I need professional help or if there are good resources to figure this out myself.
Madison King
Don't forget about state tax returns! Depending on your state, you may need to file a state tax return for the trust as well. Some states have different filing thresholds than the federal $600 income requirement. Also, if the property has appreciated significantly since your mother purchased it, the stepped-up basis provision is HUGELY beneficial. The basis becomes the fair market value at date of death, which could save tens of thousands in capital gains taxes.
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Julian Paolo
ā¢Excellent point about state returns. I learned this the hard way when I got a penalty notice from our state tax authority. They had a $400 income threshold for trust filings while the federal was $600.
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Ayla Kumar
I'm so sorry for your loss, Lucy. Being an executor for the first time is overwhelming, especially when dealing with trust taxation. A few additional points that might help you: 1. **Get organized early** - Start gathering all necessary documents now: the trust document, your mother's death certificate, property appraisals, and any financial statements. You'll need these for multiple filings. 2. **Consider quarterly estimated taxes** - If the house sale generates significant capital gains and you're distributing the proceeds to yourself, you might need to make estimated tax payments to avoid underpayment penalties. 3. **Document everything** - Keep detailed records of all expenses related to maintaining and selling the property. Many of these costs can be deducted against the gain, including realtor commissions, staging costs, repairs, and legal fees. 4. **Timeline planning** - Since you're selling in 2023, you have until April 15, 2024 to file the trust's Form 1041. However, if you expect a large tax liability, consider making quarterly payments throughout 2023. The stepped-up basis is indeed a huge advantage here - your $30,000 potential gain is much better than what it could have been if calculated from your mother's original purchase price. Make sure to get a formal appraisal dated as close to her date of death as possible to support that basis.
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Ethan Wilson
ā¢This is incredibly helpful advice, Ayla. I'm just starting to understand how complex this all is. One question about the quarterly estimated taxes - how do I even estimate what I might owe? The house sale could happen anywhere from next month to six months from now depending on the market, and I have no idea what the final sale price will be. Also, when you mention "expenses related to maintaining and selling the property" - does that include things like property taxes and insurance I've been paying since my mom died? Or utilities while the house is being shown? I want to make sure I'm tracking everything that could help reduce the tax burden.
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