That's an interesting point - I'll have to double check the paperwork. The financing company definitely framed it as a way to exercise without selling any shares (that was their main selling point), but now I'm wondering if there were any partial sales happening behind the scenes to cover taxes.

Definitely check the paperwork carefully. Some financing companies structure the transaction as a loan against the shares rather than a true cashless exercise, which preserves the tax treatment of a regular exercise-and-hold strategy. The key documents to look for would be any statements showing exactly how many shares you received versus how many you purchased, and confirmation of exactly what taxes were paid at the time. If they paid estimated taxes rather than withholding, that might explain part of the confusion too.

83(b) elections are for restricted stock, not ISOs. They don't apply in this situation at all. ISOs are governed by different tax rules.

Thank you for pointing that out! I should have mentioned - he's definitely not a dependent on anyone else's return. He's 38 and has been living on savings during 2020. I was helping him with paperwork stuff and realized he never got his stimulus payments. I appreciate the advice from everyone!

Glad to hear that! It's just something that trips up a lot of people. Also, make sure your friend keeps a copy of the return and proof of mailing (like a certified mail receipt). The IRS has been really backed up with paper returns, especially for past tax years, so it might take several months for them to process it.

Some tax software does let you file prior year returns, but most only allow electronic filing for the current tax year and maybe the year before. For 2020 returns filed in 2025, you'll probably have to mail it in. I used FreeTaxUSA to prepare a prior year return but had to print and mail it.

I tried to access my transcripts online but got locked out after failing the identity verification. I think this might be related to the name change issue mentioned above. Is there another way to get these transcripts?

You can request transcripts by mail using Form 4506-T if the online system isn't working for you. It takes about 10 business days to arrive, but it's better than nothing. Another option is to visit a local Taxpayer Assistance Center in person - just make sure to schedule an appointment first by calling their appointment line. Bring multiple forms of ID including your Social Security card and they can often help sort out identity verification issues on the spot and get you copies of your transcripts.

Definitely agree. I worked for the IRS for 7 years and the biggest problems were always from people who ignored the initial notices. The good news is they're usually pretty reasonable about removing penalties if you can show you're actively trying to resolve the issues.

Thanks for confirming that. I wish I'd known sooner! I eventually had to hire a tax professional which cost me $450 to straighten everything out, plus I paid about $300 in penalties that probably could have been avoided.

I never thought about the Social Security angle! Do they provide the same level of detail as the IRS transcripts would? I don't have my final pay stubs unfortunately - learned my lesson about keeping those records now.

The SSA records won't have the same level of detail as IRS transcripts. They typically just show your earnings that were reported for Social Security purposes, but not tax withholding amounts. IRS wage and income transcripts are definitely more comprehensive for tax filing purposes. If you've already accessed your IRS transcripts, those are your best resource. The Social Security option is more of a backup if you couldn't get the IRS information for some reason.

I used FreeTaxUSA for 2020 and 2021 returns that I filed late. It was actually really good for prior years - each year costs around $15 for federal (state is extra). The interface for entering W-2 info from transcripts was straightforward, and they have decent support if you get stuck.

Thanks for sharing your experience! That's actually much cheaper than what I was seeing with TurboTax for prior years. I'll give FreeTaxUSA a try with my transcript information.

Thanks for the advice on tracking expenses. I've actually been keeping all my gas receipts and noting my mileage in my phone. It was about 480 miles total over the two weeks just for work-related driving. I also had to buy some office supplies they claimed would be provided but weren't. Do you know if I can still claim these deductions if I file the misclassification complaint? I'm worried about doing something wrong on my taxes while this is all getting sorted out.

You can still document all these expenses while your misclassification complaint is pending. The best approach is to keep everything organized as if you will need to file Schedule C (self-employment), but hold off on actually filing until you get a determination on your status. If the IRS rules that you were misclassified as a contractor and should have been an employee, the company will be responsible for their portion of FICA taxes (the employer half of Social Security and Medicare taxes). In that case, you'd file as an employee with a W-2 that the company would be required to provide, and many of those business expenses wouldn't be deductible anymore under current tax law for W-2 employees.

Even with arbitration clauses, labor board complaints are still valid in most states! Companies can't contract around labor laws. Had this exact situation and still won my case through the state despite the arbitration clause.

You're absolutely right! I should have been clearer about that. Labor board complaints and tax filings with the IRS are still options regardless of arbitration clauses, as these are government agencies enforcing laws rather than private litigation. What I meant was that if the OP is considering a private lawsuit for things beyond just wage claims (like potential fraud or other civil claims), that's where arbitration clauses can create hurdles. But you're 100% correct that for the core issues of misclassification and wage theft, the state labor board is still a valid path forward regardless of what the contract says.