That's a great idea! She does have access to an employee portal. I'll have her log in tonight and see if there's any detailed breakdown available. Does a retro adjustment like this affect how we should file our taxes this year? Or is it all handled through the normal withholding?

The good news is that for tax filing purposes, you don't need to do anything special. The retro payment will be included in her W-2 for this calendar year, and the taxes already withheld will be credited to your tax account just like regular withholding. It might slightly change your tax situation if it pushes your combined income into a higher bracket, but that only applies to the income within that bracket. Most payroll systems actually overwithhold on retro payments to prevent any surprises, which is why the tax amount might seem high compared to her regular checks.

Actually, I had the opposite happen last year. My company did a retro calculation and determined they had been OVERPAYING me by using the wrong pay grade for 6 months. They took back almost $2800 spread over 4 paychecks. I was furious but HR said it was legally allowed since it was a legitimate error. Check your state laws on payroll recovery if this ever happens to you!

2 Do you know if I can deduct the initial cost of my certification course and background check? I spent almost $500 getting certified and wasn't sure if that counts since it was before I actually started working as a signing agent.

9 Yes, you can absolutely deduct the initial certification costs and background check fees! Those are considered start-up costs for your business, and the IRS allows you to either deduct them in the first year (up to $5,000) or amortize larger start-up costs over 15 years. Even though you paid for them before earning your first dollar as a notary, they're directly related to your business and completely deductible. Just make sure you keep the receipts and documentation showing these were required steps to become a signing agent.

5 Can you explain more about this S-Corp thing? I've heard people mention it but don't really understand why it would save on taxes or when it makes sense.

I hadn't considered that my ex's family might have filed our taxes incorrectly in previous years. That's a really good point and makes a lot of sense with the Form 8862 requirement. I'm going to request my transcripts right away to check for any patterns. I'm also wondering if I should reach out to my ex about this since these were joint returns and any liability might affect both of us? Or is it better to just handle this on my own since we're no longer together?

If you filed joint returns with your ex-spouse during your marriage, you're both potentially liable for any issues on those returns. This concept is called "joint and several liability." However, there are provisions like Innocent Spouse Relief that might help if you can demonstrate you had no knowledge of errors your spouse or their family made. Regarding communication with your ex, it's generally a good idea to keep them informed since this could potentially impact them too. However, I'd suggest consulting with a tax professional before making any decisions about how to approach the IRS about joint returns. There are strategic considerations that might affect both of you, and you want to make sure you're protecting yourself first while being fair.

This is so true! The IRS made a mistake on my return saying I didn't report income but it was clearly on Schedule C instead of where they were looking for it. They tried to hit me with an extra $7k in taxes! Always check their work carefully.

I hadn't heard of this program. Would this still apply even though he passed away? And how did you handle estimating income when there were no clear records?

Yes, it still applies for deceased taxpayers when the estate representative initiates the disclosure. The program essentially acknowledges that you're coming forward voluntarily before any IRS enforcement action. For estimating income, we used industry standard profit margins for his type of business, looked at his living expenses and assets acquired during those years, and made reasonable estimates. We documented our methodology carefully and explained the cash-only nature of his business. The IRS was actually surprisingly reasonable once they understood we were making a good faith effort. For some years, we used Form 8275 (Disclosure Statement) to explain our estimation methods. The key was being transparent about how we arrived at the figures rather than just putting random numbers.

He did own his house - bought it in the late 90s and paid it off around 2003 according to what he told me. But I can't find any mortgage paperwork. That's a good idea about property records though, I should check with the county assessor's office to see what they have. That might at least give me some baseline for what he was earning back when he qualified for the mortgage.

No way! I paper filed in February and I'm STILL waiting for my refund. The IRS is a disaster right now. E-file if you possibly can.

Do you know roughly what CPAs are charging for a return with Form 8915-e? I'm trying to decide if it's worth it vs waiting for my regular software to update.