Did you keep working there while the SS-8 was being processed? I'm worried about the awkwardness but really can't afford to pay that extra tax. Was the amended return process complicated?

Yes, I continued working there the whole time. It was definitely awkward for a few weeks after they received the IRS letter asking for their side of the story. My supervisor made a few passive-aggressive comments but nothing they could actually fire me for. By the time the determination came through, they'd mostly gotten over it. The amended return wasn't too difficult. I used Form 8919 with code G (I believe) since I had already received a favorable SS-8 determination. Then filed a 1040X showing the difference. It took about 3 months to get my refund after amending. One tip - include a copy of your SS-8 determination letter with your amended return to speed up processing. And remember, the employer will be responsible for paying their portion of the Social Security and Medicare taxes that they should have been paying all along.

I wouldn't recommend TurboTax for this specific situation. I tried using it for my worker misclassification amendment and it didn't handle Form 8919 well at all. I ended up using FreeTaxUSA which was much better for this particular scenario and way cheaper too.

This is so helpful! Did your CPA require any specific documentation to prove the "placed in service" date? I have the property management contract, but I'm wondering if I should gather anything else just to be safe.

My CPA wanted several things to document the "placed in service" date: 1. The signed property management agreement (most important) 2. Listing photos and official listing date from the property management company 3. Evidence of any advertising for tenants (online listings, etc.) 4. Email communications showing we were actively trying to find tenants He also suggested I keep all receipts for the flooring work along with photos of the damaged original flooring to justify the "repair" classification for the damaged portion. Having documentation of the water damage was particularly important in our case. Better to gather too much documentation than not enough, especially if you're claiming a loss in a year with no rental income. It raises the audit risk a bit, but if you have good documentation, you should be fine.

I used TurboTax last year for this exact situation. Their rental property section actually handles it pretty well. When you add the property, there's a field for "date placed in service" - put your December 2022 date there. Then it will let you enter all expenses even if you show $0 for income. For the flooring, TurboTax will ask if each expense is a repair or improvement. If you classify as repair, you deduct it all immediately. If improvement, it adds it to the depreciation schedule. The key is being consistent with how you classify things. One tip: make sure you answer "Yes" to actively participating in the rental when it asks. This is important for being able to deduct losses against other income (up to $25,000 depending on your overall income level).

This is really helpful, thanks! Both my jobs are pretty high-paying, so I definitely exceeded the SS limit. One question though - if the IRS fixed the calculation for me, do I need to do anything else, or just accept their correction?

No action is needed on your part. The IRS has already made the correction and adjusted your refund accordingly. When you receive their notice (typically a CP12 notice), it will explain the exact change they made. Keep this notice for your records, but otherwise, you don't need to respond unless you disagree with their calculation. If their adjustment results in a smaller refund than you expected, that's because they determined you claimed too much excess Social Security tax originally.

I switched to TaxSlayer last year and it actually calculated mine correctly. The key is that it specifically asks if any of your employers already refunded excess Social Security taxes to you, which the others don't always do. Might be worth trying next year if this is a recurring issue for you.

Is there any advantage to filing the Form 4852 instead of just using the late W2? Like would it help document that the employer was late?

There's no real advantage to using Form 4852 when you already have your actual W2. Form 4852 is specifically for situations where you need to file but haven't received your W2 at all. It's basically a substitute document that allows you to file without waiting indefinitely. Using your actual W2, even if it arrived late, will ensure your tax information exactly matches what the employer reported to the IRS, which reduces the chance of discrepancies that might trigger questions later. The IRS already has the information from your employer, so using the actual W2 is always preferable when available. As for documenting that the employer was late, keeping the postmarked envelope is your best evidence of that, regardless of which form you file with.

Did you ever have any issues with that employer after reporting them? I'm worried about potential blowback if I report my former workplace.

Can your parents just give you the difference in what they would've saved? Like if they get an extra $2000 by not claiming you, but you lose $1200 in credits, could they just give you the $1200 so everyone wins?

Yes, that's actually exactly what my parents did! They calculated that they would save about $800 by claiming me, but I would lose $1200 in credits. So they decided not to claim me and instead gave me $900 as a gift. That way our family as a whole came out ahead, and I still got more than if they had claimed me. The key is that regardless of their decision or any money they give you, you still need to answer the tax form questions honestly. The question isn't asking about what someone else decided to do on their return - it's asking whether you meet the criteria to be claimed as a dependent.

Yikes that's scary! Did you have to pay any penalties too? I wonder how the IRS even figured out that your parents could have claimed you?