Generally, service income from foreign corporations doesn't automatically trigger Subpart F unless it meets specific criteria (like services performed for a related party or services performed outside the country of incorporation). If your service income doesn't meet the Subpart F criteria, then any retained earnings would potentially be subject to GILTI.

1 Thanks for this additional info! The only gifts I gave were those three payments for my kids' down payments. I'm widowed, so no spouse to worry about for gift splitting. I definitely didn't exceed $17,000 per person - each payment was exactly $15,000 since that was the exclusion limit I remembered from a few years ago (before it increased).

22 You're all set then! The annual exclusion was $15,000 for 2018-2021, then increased to $16,000 for 2022, and $17,000 for 2023. Since your gifts were $15,000 each, you're well under the threshold even for 2022. And being widowed means you don't need to worry about the gift-splitting election. Just keep good records of these gifts for your own files - dates, amounts, and recipients. This can be helpful in case questions ever arise in the future, but you definitely don't need to file Form 709.

19 Gift tax extensions work differently than income tax extensions. Form 8892 extends the deadline to October 15th, but only if you also filed an extension for your income tax return (Form 1040). If you didn't extend your 1040, the 709 extension only goes to April 15th plus 6 months, which would also be October 15th. So either way, October 15th would be your deadline.

Is there a way to report this kind of behavior anonymously? My salon does the same thing and I'm worried about taxes but don't want to lose my job for causing problems.

Yes, you can report tax compliance issues anonymously using IRS Form 3949-A (Information Referral). You can submit this form without providing your personal information, and the IRS is prohibited from disclosing the source of their information during an investigation. That said, if you're the only employee suddenly concerned about tip reporting, it might be obvious who made the report. Some employees choose to first approach the situation by simply saying they need proper tip reporting for mortgage application purposes or similar financial reasons - this sometimes can change the employer's approach without creating conflict.

This is a really good point! When I was reporting tips incorrectly, it messed up my income verification for an apartment rental application. The landlord wanted proof of income and my paystubs showed way less than I actually made. Created a huge headache and almost lost the apartment.

Thanks for this advice. I reached out to our payroll department yesterday and they're "looking into it." Did your company initially deny there was an issue? I'm getting some resistance from our HR coordinator who keeps insisting their reporting was correct.

Yes, at first they denied anything was wrong! It took about two weeks of me and other affected coworkers persistently following up before they finally investigated properly. Their initial response was "our system doesn't make mistakes" but clearly it did. Ask if anyone else in the company received similar notices - that was what finally got them to take it seriously when they realized multiple people were affected. If possible, get a copy of your "Last Pay Statement" for the tax year in question - this should show your year-to-date earnings and withholdings that should match your W-2.

What happens if you miss the 30 day deadline? My notice arrived when I was traveling for work and I just opened it yesterday. The response due date is in 5 days!

This is super helpful! Would it make a difference if some of the additional amount in Code W might be employer contributions to the HSA? My employer doesn't contribute to mine, but I'm wondering if that could explain why some companies might have a higher number there.

Yes, that's a good question! If your employer makes contributions to your HSA, those amounts ARE included in Box 12 Code W along with your own contributions. So the total in Code W would be the combination of your contributions plus your employer's contributions. But in your case, since you said your employer doesn't contribute to your HSA, that's not the explanation. This is definitely an error where they're incorrectly including cafeteria plan premiums in Code W.

Don't worry, it's not a dumb question at all. If you've already filed, you should still try to get a corrected W2 from your employer. Once you receive it, you'd need to file an amended return (Form 1040-X). If the incorrect W2 makes it look like you over-contributed to your HSA, the IRS might send you a notice. In that case, you'd need to respond with an explanation and documentation showing your actual HSA contributions. It's better to be proactive, but you won't get in serious trouble - worst case would be having to pay a 6% excise tax on any "excess contributions" until the issue is resolved.