Thanks for the suggestion. It wasn't identity theft - my dad knowingly let my sister use the card to help her out, so we can't go that route. He's on SSDI, not SSI, so that's somewhat reassuring. I'm still concerned about how this might impact his tax situation though, especially since he's normally not required to file due to low income. Does the 1099-C automatically mean he must file now, even with SSDI being his only income source?

If your dad is only receiving SSDI and is single, he generally wouldn't need to file a tax return unless his total income exceeds the standard deduction (which is $14,600 for 2024 if he's over 65). The 1099-C amount would count toward that threshold. So if his SSDI benefits plus the $8,200 canceled debt amount is less than the standard deduction, he still wouldn't be required to file. However, if it puts him over that threshold, then yes, he would need to file - but should definitely look into the insolvency exception in that case.

Form 8275 seems risky to me. I've heard it's like waving a red flag at the IRS saying "look at me!" Wouldn't it be better to just file Form 982 and only provide additional explanation if they actually question it?

Good point! I just checked and you're right - my state withholding also changed on my part-time job. I'm in Illinois, and it looks like they increased the state withholding percentage at the same time as the federal. Any specific suggestions for handling state withholding with multiple jobs? Is it similar to federal or do they have different rules?

State withholding generally follows similar principles to federal, but each state has its own specific forms and calculation methods. For Illinois, they use your federal allowances as a starting point for state withholding calculations. I'd recommend checking the Illinois Department of Revenue website for their withholding calculator or Form IL-W-4. Since both jobs are now withholding correctly, you might just need to make sure your additional withholding amount on your full-time job's W-4 is adjusted downward to account for the new withholding happening at your part-time job. The goal is to get your total withholding across both jobs to match your expected tax liability.

That's actually by design! The 2020 W-4 redesign and IRS withholding tables are set up so that if you check the multiple jobs box, your second/lower paying job often has a higher withholding percentage. This is because the system assumes your first job already uses up your standard deduction and lower tax brackets, so additional income is taxed at higher marginal rates.

I don't think I received any special credits last year - I don't have kids and didn't qualify for most of those pandemic-related things. My income did go up slightly (about $1,500 more than last year), but I didn't think that would make such a big difference. One thing I'm wondering about - I did start contributing to my company's 401k this past September. Would that affect my refund in any way? I'm putting in about 4% of my paycheck.

Your 401k contributions actually should have helped your tax situation, not hurt it. Those contributions reduce your taxable income, which typically means less tax overall. Since you started in September, you might not see the full annual benefit, but it definitely wouldn't cause your refund to decrease. Given all the information you've shared, it really does sound like the withholding change is the primary factor. The good news is that you didn't actually lose money - you just received it gradually throughout the year instead of in one lump sum. For next year, definitely submit a new W-4 requesting additional withholding if you prefer the larger refund approach to saving.

This is exactly right. A tax refund is just the government giving back money they took too much of during the year. Ideally, your refund should be close to zero - that means you paid exactly what you owed, no more no less.

This is exactly the kind of practical advice I needed! I've been overthinking the whole process. So if I understand correctly, I should focus on the actual sensitive data they handle rather than trying to address every possible scenario in those massive templates? Should I also describe their current password policies for their systems?

Yes, that's exactly right! Focus on the actual data they handle, not theoretical scenarios that don't apply to them. A practical WISP is much more useful than a comprehensive one that includes irrelevant sections. Definitely include current password policies for all systems that store sensitive information. Document how often passwords must be changed, minimum requirements (length, special characters, etc.), and who has access to what systems. Also include any multi-factor authentication if they use it, procedures for removing access when employees leave, and any training provided about data security. These practical elements show they're actually implementing security measures, not just documenting theoretical policies.

WISP stands for Written Information Security Program. It's basically a document that outlines how a business protects sensitive information like customer data, employee records, and financial information.

thanks! so its about data protection? is this something all small businesses need now or just certain types?

This is super important! I messed this up my first year and both me and my parents got letters from the IRS because we had conflicting filings. Such a headache to fix.

I hadn't even thought about state taxes! I'm in Texas - do you know if they have state income tax here?

You're actually in luck! Texas is one of the few states with no state income tax, so you don't need to worry about filing a state return. Just the federal one. That makes things much simpler for you! If you ever move to another state though, definitely check their specific requirements. States like California, New York, and many others have their own income taxes with different thresholds and rules.