Thanks for mentioning this! Does the deduction for half the SE tax reduce the amount of SE tax I pay, or just my income tax? And do I need a separate form for that or is it part of the regular 1040?

The deduction for half of your SE tax doesn't reduce the SE tax itself, but it does reduce your income tax. It's considered an "adjustment to income" (sometimes called an "above-the-line deduction"), which means you get this benefit even if you take the standard deduction rather than itemizing. You don't need a separate form for this deduction. When you complete Schedule SE to calculate your self-employment tax, the form will automatically calculate the deduction amount. This amount then transfers to Schedule 1 of your Form 1040 as an adjustment to income. Tax software handles this transfer automatically, making it pretty seamless.

If your W-2 wages already hit the Social Security limit ($168,600 for 2024), you'd only pay the Medicare portion (2.9%) on your self-employment income. If your W-2 is below the limit, you pay the full SE tax on your net self-employment income, but only up to the point where your combined income hits that limit. Either way, you still calculate it on Schedule SE.

7 That's a really good point. I did move about 8 months ago but stayed with the same employer. How would I go about checking if they have me in the right district?

5 You should be able to check your pay stub to see which school district they have you listed under. Look for an abbreviation or code that indicates your tax district. Then compare that with the school district that's trying to collect from you. If they don't match, that's your problem right there. You can also ask your HR or payroll department directly what school district they have on file for you. If there's a mismatch, you might have grounds to dispute the collection fees since the error wasn't your fault.

7 Well that explains why nobody told me about this when I started my job! So for future reference, how do I figure out what my school tax obligations are so this doesn't happen again? I definitely don't want another surprise bill.

Thanks for this advice - I hadn't even thought about checking my credit reports. Is there anything else I should do besides responding to the IRS letter and checking my credit? Should I put a freeze on my credit or file a police report?

Responding to the IRS letter should be your first priority to get your refund moving. After checking your credit reports, consider placing a fraud alert with the credit bureaus if you see anything suspicious. A credit freeze is a good precaution if you find evidence of actual identity theft on your reports. A police report generally isn't necessary unless you find concrete evidence of identity theft beyond just the IRS letter. Many of these flags are preventative measures by the IRS, not confirmation that theft has occurred. If your credit reports are clean, you likely just got caught in the IRS screening system, which has been extra sensitive lately.

Yes! This is actually a big red flag - it means someone definitely tried to file a fraudulent return using your information. You need to call the IRS identity theft hotline immediately at 800-908-4490. And file your legitimate return by paper as soon as possible with Form 14039 (Identity Theft Affidavit) attached.

But wait - I thought Roth contributions were tax deductible? Are you saying they're not?

You're confusing Roth contributions with traditional retirement contributions. Roth contributions (which is what code AA represents) are made with after-tax money, meaning you pay tax on that income now. The benefit is that when you withdraw the money in retirement, including all the growth, it comes out tax-free. Traditional 401(k) contributions (which would be code D in Box 12) are tax-deductible now, but you pay taxes when you withdraw the money in retirement.

For the AA codes (Roth 401k contributions), the amount is already INCLUDED in your Box 1 wages because Roth contributions are made with after-tax dollars. If you had traditional 401k contributions (which would be code D in Box 12), those would already be EXCLUDED from your Box 1 wages because they're pre-tax. You don't need to make any adjustments either way - the Box 1 amount is already correct.

Thank you! That makes sense. So basically the Box 1 amount is what I should be using for my tax return, and all these codes in Box 12 are just additional information that I don't need to do anything with.

I actually do use TurboTax! Didn't know they had this feature - where exactly do I find it? Is it in the regular app or do I need to sign in on desktop?

It's available in both the desktop and online versions of TurboTax. Sign in to your account, go to "Tax Tools" and look for "Tax Documents and Records." From there, you should see an option for requesting transcripts or viewing past returns. The feature might be called something slightly different depending on which version you're using. Remember though, it won't be completely unredacted, but sometimes shows different information than what's masked in the direct IRS portal. Worth trying before making an in-person appointment.

This is the correct answer! I'm a mortgage underwriter and we specifically need to see the Tax Return Transcript because it shows AGI and filing status, plus the Wage & Income to verify all sources of income. The Account transcript isn't what we're looking for in most cases.