


Ask the community...
One thing I haven't seen mentioned - make sure you understand the difference between your RSUs vesting and any selling that might have happened automatically. Many companies have a "sell-to-cover" arrangement where they automatically sell a portion of your vested shares to cover tax withholding. Look at your brokerage statements from when the RSUs vested. It might show that, say, 35% of the shares were sold immediately for tax withholding. If that's the case, your employer should have already withheld taxes on the full $300k value, but you'd only have the remaining 65% of shares in your account.
Not sure if this helps but you can actually see if your employer withheld taxes properly by looking at Box 2 of your W2 (Federal income tax withheld). If they included the $300k RSUs in Box 1 (Wages) but didn't withhold enough taxes on them, that's why you're seeing a large tax bill now. Unfortunately, you can't override the W2 income amount in TurboTax because that's what's reported to the IRS. The W2 is correct in including the RSUs as income. Your only options are: 1. Pay the tax you owe on that income now 2. Set up an IRS payment plan if you can't pay it all at once 3. If you believe the W2 is actually incorrect (not just inconvenient), contact your employer for a corrected W2
Always request a transcript of your account directly from the IRS before assuming payments have been "lost." You can get this online by setting up an account at irs.gov or by filing Form 4506-T. This will show all payments received and credited to your account. In your case, both payments should show up on the transcript. The IRS will eventually figure out the overpayment and either refund it or apply it to next year, but you can expedite this by filing Form 843 (Claim for Refund) along with proof of both payments. Include copies of both canceled checks or bank statements showing the withdrawals.
Does this work for state tax overpayments too? I overpaid New York state by about $3k and wondering if there's an equivalent process.
For New York State overpayments, the process is different. You'll need to contact the NYS Department of Taxation and Finance directly. They don't have a direct equivalent to the IRS transcript system, but you can request an account statement by calling 518-457-5181. For a $3k overpayment to NYS, you should file Form DTF-973 "Request for Refund of Overpayment or Credit Balance." Include all documentation showing both payments (bank statements, canceled checks, confirmation numbers). New York is generally faster than the IRS in processing these requests - typically 4-6 weeks rather than 8-12 weeks.
Isn't there a way to prevent this from happening in the first place? My CPA always sends me a detailed "action required" email before submitting any payments. I have to explicitly approve any payments through a secure portal. I thought this was standard practice?
That's how my accountant works too. We get a secure message that says "APPROVAL REQUIRED" in the subject line with a breakdown of what's owed and a checkbox to authorize payment. Nothing happens automatically.
Thanks for confirming! I'm going to stick with my current accountant then, as that process seems much safer. I think the takeaway here is that we should all clearly establish payment procedures with our tax preparers at the beginning of the engagement, and get it in writing. As tax preparation becomes more digital, these authorization processes need to be more explicit, especially when we're talking about potentially large sums of money being transferred. I'd recommend everyone have a specific conversation about payment authorizations with their accountant before tax season next year.
Make sure to send your response via certified mail or some international equivalent that gives you tracking and delivery confirmation! I had a similar situation and the IRS later claimed they never received my response. Without proof of delivery, I had to go through the whole process again.
That's a great tip! Do you know which international shipping methods the IRS accepts as proof of delivery? I'm in Germany so I assume Deutsche Post has some options, but not sure which ones the IRS recognizes.
Any service that provides tracking and delivery confirmation should work. DHL, FedEx, and UPS are all recognized by the IRS. Deutsche Post's registered mail service (Einschreiben) should also work fine. The key is getting a tracking number and delivery confirmation you can save. The IRS doesn't specify which carriers they prefer - they just need verifiable proof you sent it by a certain date and that they received it.
Just want to point out - since you already PAID your taxes, this is mostly a paperwork issue and not something to panic about. The IRS cares most about getting their money, which they already have. I had a similar situation (though domestic) and just sent in the signed form with a brief explanation. Never heard anything else about it. They just needed to check the box that they had my signature.
Just to add a bit more info - I'm a software developer and created my own script to handle my crypto taxes last year. The key thing to know is that Form 8949 has a summary section at the top, but you MUST include all transactions in the detailed section. What I did was print the summary page and then attach a spreadsheet with all individual transactions labeled "See attached statement for details" which satisfies the reporting requirements. Most tax software will generate this format automatically.
That's a really helpful suggestion! Did the IRS accept your return with the spreadsheet attachment without any issues? And did you organize the spreadsheet in exactly the same format as Form 8949 or did you use a different layout?
Yes, the IRS accepted it without any issues. I organized the spreadsheet to match Form 8949's column structure exactly - description of property, date acquired, date sold, proceeds, cost basis, gain/loss, etc. I made sure to include all the same information that would be on the official form. I also included subtotals at the bottom of each page and made sure those matched what I reported on the summary section of the official 8949. The key is making sure your attachment contains all the required information in a clear, organized format that an auditor could easily follow if needed.
Has anyone used CoinTracker or Koinly for this? I've heard mixed things but wondering if they're worth trying.
Layla Sanders
One important thing to remember is the reporting thresholds for 1099-K forms have changed for the 2025 tax filing season. PayPal now has to issue these for cumulative transactions over $600 instead of the much higher threshold from previous years. That's why so many more regular people are suddenly getting these forms for normal activity like refunds. The IRS is aware of the confusion this is causing. As others have mentioned, you need to report it, but offset it so you're not paying taxes on money that was just returned to you. Make sure to keep all your documentation showing this was a refund and not actual income.
0 coins
Morgan Washington
β’Do you know if the same $600 threshold applies for multiple small refunds? Like if I had 5 different returns/refunds through PayPal that total over $600 but none individually over that amount?
0 coins
Layla Sanders
β’Yes, the $600 threshold applies to the cumulative total of all transactions processed through the payment platform during the tax year, not individual transactions. So if you had multiple smaller refunds that added up to more than $600 total, PayPal would still issue a 1099-K. This is exactly why so many regular consumers are suddenly getting these forms when they weren't in previous years. The threshold used to be much higher ($20,000 AND 200 transactions), but now it's just the $600 total regardless of how many transactions it took to reach that amount.
0 coins
Kaylee Cook
I messed up on this exact situation last year! I got a 1099-K from PayPal for a refunded purchase and I just ignored it because I knew it wasn't income. Ended up getting a letter from the IRS about underreported income and had to file an amended return. π« Don't make my mistake - definitely report it and offset it like the others are saying. The IRS computers just see the form and expect to find that amount somewhere on your return.
0 coins
Oliver Alexander
β’How long did it take for the IRS to send you that letter? I think I might be in the same boat from last year's taxes...
0 coins