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Have you checked if you qualify for first-time penalty abatement? If you haven't had tax issues in the past three years, you might be able to get the penalties removed (though you'd still owe the actual tax). Call the IRS and specifically ask about "first-time penalty abatement" - saved me about $80 when I was in a similar situation.
I had no idea this was even a thing! Do you know if there's a specific form I need to fill out to request this? And does it matter if I've already set up a payment plan?
You don't need a specific form - you can request it by phone when you call the IRS. Just specifically ask for "first-time penalty abatement" and explain that you've had a good compliance history. They'll check if you qualify right on the call. It doesn't matter if you've already set up a payment plan - you can still request the abatement. The payment plan is for the total amount, but if they approve your abatement request, they'll reduce the total and adjust your payments accordingly. Be aware this only removes penalties, not interest or the actual tax owed, but it can still save you a decent amount.
For next year, make sure you do a "paycheck checkup" mid-year! I put a reminder in my calendar for June to review my withholding. I grab a recent paystub, use the IRS withholding calculator, and adjust if needed. Helped me avoid surprises for the past few years.
Just make sure you received the 1099-R forms from your previous plan administrators. Each 401k and 403b provider will issue one showing the full amount that was distributed. Box 7 should have a code that indicates it was a direct rollover (usually code G). You'll need to report these on your tax return, but they won't add to your taxable income as long as you rolled them properly to a traditional IRA. If your tax preparer isn't familiar with rollovers, you might want to find someone with more experience in retirement account transfers.
Thanks for the info. I just checked my online accounts and I do see the 1099-Rs have been issued. They both show Code G in Box 7! That's a relief. Do I still need to file Form 8606 for these rollovers? My tax preparer mentioned that form but seemed unsure if it applied in my situation.
Form 8606 is generally not required for direct rollovers between pre-tax retirement accounts like 401k/403b to a Traditional IRA. This form is primarily used to report nondeductible contributions to IRAs and distributions from Roth IRAs or conversions. Since your 1099-Rs show Code G, you'll simply report them on your tax return (usually on lines 4a and 4b of Form 1040), showing the full amount on line 4a but zero on line 4b (taxable amount). This indicates you've reported the distribution but it's not taxable. Your tax software or preparer should handle this correctly when you input the 1099-R information.
I'm in the process of doing a similar rollover - did you have to pay any fees to transfer everything? My 401k provider wants to charge me $95 for the rollover and I'm wondering if that's normal or if I should look for another option.
I rolled over two 401ks last year and one charged $75 while the other was free. From what I've heard, fees between $50-100 are pretty common. You might want to check if your new IRA provider offers any reimbursement for transfer fees - some do if you're bringing in a large enough balance.
11 Hey, international student advisor here! This happens nearly every tax season with our students. While your return will still be processed as others have mentioned, there's one more thing to consider: timing. Returns sent to the correct processing center are typically processed faster. For future reference, nonresident aliens should send their Form 1040-NR to: Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 But don't worry about this year's return - just note it for next time. The IRS deals with millions of pieces of misdirected mail every year.
7 Is there any negative consequence beyond just delay? Like, would this be considered a filing error that could cause problems for visa renewal or anything? I'm on F1 too and realized I might have made the same mistake.
11 There are no negative consequences for your visa status. This is strictly a processing issue, not a compliance issue. The IRS doesn't report this type of administrative error to USCIS - they simply forward the return to the correct department. Filing your taxes (even if sent to the wrong address) shows you're attempting to comply with U.S. tax laws, which is what matters for immigration purposes. Just make sure you've filed Form 8843 along with your 1040-NR, as that's required for all F1 students regardless of whether you had income or not.
3 Pro tip for future filings: Use USPS Certified Mail with Return Receipt when sending anything important to the IRS. Costs under $10 and gives you proof of delivery. Saved me so much anxiety when I was on F1!
This might sound obvious but did you go through ALL of TaxAct's screens? I had almost the exact same issue (said I owed $400 when I should've gotten $600 back). When I looked closer, I noticed there was a "Personal Info" section I thought I completed, but I missed a question about whether I could be claimed as a dependent. The software defaulted to "Yes" which dramatically reduced my standard deduction. Once I fixed that single checkbox, everything calculated correctly. I've used TaxAct for 6 years and this is the first time I've had this problem. Their interface changed this year and it's really easy to miss important questions.
You're a genius! I just went back and found I had the exact same issue. There was a checkbox in the Personal Info section about being claimed as a dependent that somehow got set to "Yes" even though I definitely can't be claimed by anyone. As soon as I fixed that one setting, my refund jumped from owing $372 to getting back $570, exactly what my calculations showed. It's crazy how one checkbox could completely throw off the standard deduction calculation. Has TaxAct always been this finicky? I've used them for years but never ran into this problem before.
TaxAct definitely changed their interface this year, and I think they're having some issues with it. In previous years, that dependent question was much more prominently displayed and clearly explained. This year it's buried in a series of personal information screens that are easy to click through without carefully reading. I've heard similar stories from several people using TaxAct this year. The good news is once you find and fix that setting, the calculations should be completely accurate. Always a good idea to double-check your final 1040 form before filing to make sure the standard deduction amount ($13,850 for single filers in 2024) appears correctly on the form.
Just a tip - most tax software lets you view your actual Form 1040 before filing. If you look at line 12 on your 1040, it should show your standard deduction amount. If that line shows $0 or some reduced amount instead of $13,850 (assuming you're filing single), that confirms the standard deduction isn't being applied correctly. I always check my actual tax forms in the preview/print section before submitting anything. It's saved me from tons of errors over the years!
Thanks for this! I just checked my Form 1040 preview and line 12 was showing only $500 instead of $13,850. After fixing the dependent checkbox issue others mentioned, it now shows the full $13,850. Checking the actual tax forms is definitely going to be my new practice before submitting anything. Would've caught this issue immediately if I'd done that first!
Kayla Jacobson
Just want to clarify something that nobody has mentioned yet - if your single member LLC elected to be taxed as an S-Corp instead of a disregarded entity, the NOL process is different. In that case, the loss is reported on Form 1120-S, but doesn't directly create an NOL. Instead, it reduces your stock basis, which affects how much you can take out of the business tax-free in the future. S-Corp losses don't generate NOLs that carry forward to your personal return the way Schedule C losses do. Make sure you know how your LLC is classified for tax purposes!
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William Rivera
β’That's a really important distinction. How can you tell if your LLC is being taxed as an S-Corp vs a disregarded entity? I filed paperwork when I started my business but honestly don't remember what I selected.
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Kayla Jacobson
β’You can tell by looking at what tax forms you've filed in the past. If you've been filing Schedule C with your personal tax return, then your LLC is being treated as a disregarded entity. If you've been filing Form 1120-S and receiving a K-1 from your business, then you elected S-Corp treatment. If you're still unsure, you should be able to check with the IRS. You would have filed Form 2553 to elect S-Corp status. If you never filed that form, then you're most likely a disregarded entity by default. This distinction is crucial for understanding how losses flow through to your personal taxes.
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Grace Lee
Has anyone actually carried forward a NOL recently? I had a $7,300 loss in my consulting business last year and tried to use it this year, but TurboTax kept giving me errors about "TCJA limitations" or something. Apparently the rules changed with the Tax Cuts and Jobs Act?
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Mia Roberts
β’Yes, the rules definitely changed. Starting with tax years after 2020, NOLs can only be carried forward (not back, except for some farming losses). Also, you can only use the NOL to offset up to 80% of your taxable income in any future year. So if you made $10,000 this year, you could only use $8,000 of your NOL, and would have to carry the rest to future years.
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Grace Lee
β’Thanks for explaining that! That makes sense why TurboTax was limiting how much I could claim. So I'll have to carry forward part of my loss to next year too. Wish they'd make these tax rules simpler to understand.
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