TurboTax does show the status of your federal refund in your account dashboard. For state refunds, it depends on which state you're in. Some states are integrated in the TurboTax tracking system, but for others, you'll still need to go to your state's tax department website to check. I'm in Texas so no state income tax to worry about, but when I lived in Illinois I had to check separately.

Thanks for the info! I'm in Michigan so I'll probably need to check separately. Was hoping they'd improved the tracking system since last year. I'll still use TurboTax since I'm familiar with it, but wish they'd make this part easier.

In my experience, TurboTax "Free Edition" usually tries to upsell you if you have anything beyond the most basic return. If you have any deductions, credits, self-employment income, etc., they'll tell you that you need to upgrade to Deluxe or higher. I switched to FreeTaxUSA a couple years ago and haven't looked back - much more straightforward pricing.

Thanks, that's interesting! Do the same general tax advantages apply? Like with the SEP, would I still see a similar reduction in my current tax burden if I contributed the same amount to a Solo 401k?

Yes, you'd get the same tax deduction for equivalent contributions. The tax treatment is identical - both reduce your current tax burden and grow tax-deferred until withdrawal. The main advantage of Solo 401k is that you can potentially contribute more in total. For example, in 2023 you could contribute up to $22,500 as an "employee" contribution plus the same employer contribution you'd make with a SEP (up to 25% of compensation with a combined limit of $66,000). If you're over 50, you also get an additional $7,500 catch-up contribution option with the Solo 401k. Many people don't realize that a Solo 401k can be fairly simple to set up with major brokerages like Fidelity, Vanguard, or Charles Schwab.

This is so true. I maxed out my SEP last year and felt great about the tax savings, then my biggest client terminated their contract unexpectedly. I would have been in serious trouble if I hadn't kept a decent emergency fund. How much did you end up paying in penalties when you had to take that early distribution?

As a US citizen working for a foreign mission, your situation is actually a bit different. You DO owe both income tax and self-employment tax since US citizens are taxed on worldwide income. You wouldn't use Schedule C because you're an employee, not a business owner. Instead, you'd report your income on Line 1 of Form 1040 as wages, then complete Schedule SE to calculate your self-employment tax obligation. Make sure you're getting credit for those quarterly payments by reporting them on your return. And keep good records of everything because this situation often triggers questions from the IRS simply because it's less common.

Thanks for clearing that up! So basically treat it like regular wage income on the 1040, but also file Schedule SE for the self-employment portion? And I assume my quarterly payments go on the 1040-ES line? Do I need any special statement or form since my employer gave me their country's version of income documentation rather than a W-2?

Do you mind sharing which publications they recommended? I'm in a similar situation but working for an international organization rather than a foreign mission, and I'm trying to understand if the rules are the same.

They pointed me to Publication 519 (U.S. Tax Guide for Aliens) which has a section on employees of foreign governments and international organizations. Also Publication 54 (Tax Guide for U.S. Citizens and Resident Aliens Abroad) had some relevant information. For international organizations, the rules are very similar but depend on whether your organization has specific tax privileges under International Organizations Immunities Act. The key thing is that while you might be exempt from income tax, you typically still owe self-employment tax unless covered by a totalization agreement with your home country.

That's an interesting idea. I never thought about filing separately. We've always filed jointly since we got married. Would that really make a difference with the retirement withdrawal?

For most married couples, filing jointly results in lower taxes, but there are exceptions especially with unusual situations like yours. With such a large disparity in incomes and a significant retirement withdrawal, it's worth calculating both ways. The potential benefit comes from keeping your 403b withdrawal in a lower tax bracket by not combining it with your wife's higher income. However, you'll lose some tax credits and deductions when filing separately. It's really just a math exercise - calculate your taxes both ways and see which results in a lower total tax. Just be aware that if you file separately, both spouses must either itemize deductions or take the standard deduction - you can't mix approaches.

This is good advice but won't help with the 10% penalty on the early withdrawal. Still worth doing though to reduce the overall tax hit. Also, with their income level, they might be limited in how much they can deduct for traditional IRA contributions.

This is great advice, but I think you mean Form 4506-T for the transcript request, not 8962 (which is for Premium Tax Credits). The Taxpayer Advocate suggestion is gold though - they really can help with these situations!

You're absolutely right, thank you for catching that! It is Form 4506-T for requesting transcripts, not 8962. I mixed up my form numbers. The Taxpayer Advocate Service was definitely the key to resolving my case. They have more direct access to various departments and can often get answers when regular channels fail. They're especially helpful in cases like this where you have evidence the IRS actually received payment but is still sending non-filing notices.

It's a CP59 notice, and it directs us to IRS.gov and the main IRS phone number, so unfortunately I think it's legitimate. We also verified by calling the IRS directly (not using any number from the letter). I wish it was a scam - would be easier to deal with!

Yep, CP59 is definitely a legitimate IRS notice for unfiled tax returns. Good job verifying independently by calling the main IRS number. Since we're dealing with a 2020 return (filed in 2021), you should know the IRS is still working through a massive backlog from the pandemic years. Paper returns especially got backed up severely. I've seen cases where returns were sitting in trailers in IRS parking lots for months before processing. Even with the payment being processed, the physical return could have been separated or lost. Follow the advice others have given about sending a clearly marked copy with a detailed cover letter. Persistence is key with these situations!