IRS
CommunityGovernment Services
Can't reach IRS? Claimyr calls for you, so you don't have to wait on hold.
Claimyr is a pay-as-you-go service. We do not charge a recurring subscription.
Live agent or your money backRefund policy
Using Claimyr will:
- Connect you to a human agent at the IRS
- Skip the long phone menu
- Call the correct department
- Redial until on hold
- Forward a call to your phone with reduced hold time
- Give you free callbacks if the IRS drops your call
Ask the community...
- DO post questions about your issues.
- DO answer questions and support each other.
- DO post tips & tricks to help folks.
- DO NOT post call problems here - there is a support tab at the top for that :)
What does Code 12W on Paycom W2 mean when it includes pretaxed cafeteria plan premiums?
So I've been going through my W2 from Paycom for this year's tax filing and noticed something weird with the Code 12W box. I maxed out my HSA contributions for 2024 (actually used 2023's limit by accident since I forgot to update it). According to my final pay stub, I contributed $4,150 to my HSA. Here's where I'm confused - when I got my W2, I expected box 12-W to show exactly $4,150, but instead it's showing over $6,500! When I called HR about this discrepancy, they told me "your health insurance premiums are part of a cafeteria plan and are pretaxed, so those got included in Code W along with your HSA contributions." This doesn't sound right to me at all. From everything I've researched online, Code W on a W2 should ONLY show HSA contributions, not cafeteria plan premiums. My company doesn't contribute anything to my HSA - it's all my money. Is Paycom handling this correctly, or is something wrong with my W2? I just checked my W2 from last year and noticed they did the same thing, but the total amount was still under the maximum HSA contribution limit so I didn't notice it was wrong.
Join the conversation
How do I separate business and personal finances that are completely entangled for my art business?
I've been creating art for about 5 years now, and for the past year I've been trying to actually sell it as a legitimate business while keeping my day job. I'm completely overwhelmed with the financial side of things and worried I'm getting in way over my head. I initially set up a separate business checking account last year to try to keep things organized, but since I was investing more than I was earning, I ended up just transferring personal money into it constantly, and now everything is a complete mess. The separation basically disappeared. So far this year, I've made around $4,200 in gross sales from art markets and online, but I have zero idea how much of that is actual profit since I've been terrible at tracking my expenses. I've spent so much on supplies, booth fees, framing materials, and equipment that I honestly couldn't tell you if I'm making or losing money overall. I think I'm finally reaching a point where I might actually generate income that doesn't immediately get reinvested, but now I don't know how to properly "pay myself" or separate these finances. Should I be taking a regular draw? How do I untangle what's business and what's personal at this point? Also, does any of this affect how I handle taxes for my regular full-time job income? I'm completely lost on this whole situation and don't want to mess up come tax season.
Join the conversation
Something nobody mentioned yet - you should really look into getting a proper business license and registering your art business with your state/city! I learned this the hard way. I ran my design business for 2 years just treating it as extra income before finding out I needed a business license in my city. Got hit with back fees and a small penalty. Each place has different requirements, but usually there's a simple business registration you need to file. Also, once you're official, you can get a resale certificate which lets you buy supplies without paying sales tax (since your customers pay the tax when they buy from you). Saved me thousands on materials alone.
I hadn't even thought about business licenses! Is that something I need even if I'm just doing occasional art markets and some online sales? How do I find out what my local requirements are?
Even for occasional sales, most places require some form of business registration. It varies widely by location though. Start by checking your city's website for "business license" or "business registration" - most have simple online forms. Your county may also have requirements, especially if you're in an unincorporated area. The good thing is that for small creative businesses, the fees are usually pretty reasonable - mine was only $85 per year. The sales tax exemption on supplies makes it worth it alone. Also check if your state requires a general business registration or DBA ("doing business as") filing if you're operating under a business name rather than your personal name.
Just wanted to share what worked for me as a glass artist: I use the "profit first" system where I have multiple business accounts that I transfer specific percentages into: - One account for taxes (25-30% of income) - One for business expenses (30-35%) - One for business profit (5-10%) - One for owner compensation (rest) Every time money comes in, I immediately split it into those accounts. This way I'm always setting aside tax money and know exactly how much I can spend on supplies vs take as personal income.
This is a really smart approach! How did you decide on those specific percentages though? Are those standard or did you customize based on your business?
What would be the best tax system for simplifying complex taxation and addressing income inequality?
I've been thinking a lot about how much better society would function if we simplified our complex tax systems down to primarily income-based taxation. My country's current system (like many others) seems needlessly complicated and often unfair. What advantages might we see with a simplified income-only tax system? First, it would be much easier for legislators to regulate. Politicians could focus on adjusting a single tax rate rather than juggling dozens of different taxes, making it harder to inadvertently damage the economy or government revenue. Second, it would create more equality. One common complaint is how wealthy individuals can navigate complex tax systems to minimize their burden. A single, straightforward income tax would be harder to avoid unless you abandoned the country entirely. Third, it would be more fair across income levels. Currently, consumption taxes on necessities like food affect everyone equally regardless of income. Since income tax is percentage-based, those earning less would pay less, creating true progressivity. Fourth, it might reduce illegal market activity. Without heavy product taxes, legal businesses could potentially compete with criminal enterprises on price. Fifth, transparency would improve dramatically. Most citizens have no idea what percentage of their money goes to taxes overall. A single tax would make this immediately clear and easier to compare internationally. Sixth, it could reduce business bankruptcies. Companies that aren't profitable wouldn't pay taxes, allowing more businesses to survive economic downturns. However, there would definitely be challenges: - Enforcement would be difficult for non-traditional workers - Verifying true income for entrepreneurs and business owners - Wealthy people might relocate to lower-tax countries - "Digital nomads" could potentially avoid taxes altogether How might we address these issues? - Redirect tax enforcement resources from other taxes to focus on income verification - Require tax withholding on all official contracts - Implement stronger penalties for illegal tax avoidance What are your thoughts on simplifying to an income-only tax system? What problems do you see, or how could this idea be improved?
Join the conversation
Adding to the discussion on income-only taxation - one major issue not considered is wealth inequality. Income tax only targets active earnings, but much of the wealth held by the ultra-rich isn't in regular income but in appreciating assets like stocks, real estate, etc. This is why many economists argue for some form of wealth taxation alongside income taxes. If we eliminated property taxes, capital gains taxes, etc., we'd basically be giving a permanent tax holiday to those who live primarily off assets rather than wages. Also, consumption taxes can actually be beneficial for economic stability because they provide a more consistent revenue stream during recessions when incomes might fall dramatically. No perfect system exists, but a balanced approach with simplified versions of different tax types probably makes more sense than going all-in on just income taxation.
Great point about wealth vs income! I never thought about how rich people often have low "income" on paper while their net worth grows by millions. How would you design a wealth tax that's actually effective without hurting regular people who might have a valuable house but not much cash?
Designing an effective wealth tax requires careful thresholds to target only significant wealth. For example, setting the threshold at $10 million in net assets would exempt most homeowners completely. You can also create progressive rates that increase with wealth levels and offer deferred payment options for asset-rich but cash-poor situations. The key is exempting primary residences up to a reasonable value, retirement accounts up to certain limits, and small business assets under a threshold. This protects regular people while still addressing the enormous untaxed wealth accumulation at the very top. Annual reporting requirements and strong valuation methods would be essential to prevent avoidance strategies.
Having lived in 6 different countries, I've experienced many tax systems firsthand. The simplest wasn't necessarily the best. In Singapore, they have very straightforward taxes, but it created other societal issues. In the Nordic countries, taxes are high but extremely transparent in how they're calculated and spent. The problem with income-only taxation is it misses huge parts of economic activity. For example, tourism: visitors consume resources but would pay zero under income-only systems. One approach I liked was in New Zealand, where they have a fairly simple GST (goods and services tax) applied broadly with very few exemptions, combined with a progressive income tax. The simplicity wasn't from having just one tax, but from having few exemptions and very clear rules.
That's really interesting! Can you explain more about how New Zealand's system works? I'm really curious about what makes it clearer than other systems. Also, what did you see in Singapore that created societal issues?
I'm confused about Tax math. How to maximize 529 plan income tax credit?
Hey fellow tax-strugglers. I feel like I'm hitting a wall trying to wrap my head around how to maximize my state's 529 education savings plan tax credit. I've been putting some money aside for my nephew's future college expenses, but honestly the tax benefit calculations are making my head spin. I contribute about $4,000 annually to the 529 account. My state offers a tax credit (not deduction) for contributions, but there are percentage limits, income phaseouts, and maximum credit amounts that I just can't seem to figure out. The state website explains it but might as well be written in another language to me. I'm in the $72,000 income bracket if that matters. Should I be contributing more? Less? How do I know if I'm getting the maximum possible tax credit? Is there a sweet spot I should be aiming for? Any help translating this tax credit math into plain English would be seriously appreciated. I want to help my nephew AND get the maximum tax benefit possible!
Join the conversation
Another option - check if your 529 plan's website has a tax credit calculator tool! My state's 529 plan (Virginia) has a simple calculator where you put in your income and contribution amount, and it tells you exactly what your state tax credit will be. Makes it super easy to play around with different contribution amounts to find the sweet spot. Most of the major state plans have these now. Much easier than trying to decode the tax instructions yourself.
Do these calculators take into account things like income phase-outs and other limitations? Sometimes I worry those online tools are oversimplified and miss the details.
Most of the good ones do factor in phase-outs and limitations! The Virginia one specifically asks for your income and filing status, then applies any phase-outs automatically. I've found them to be pretty accurate. The one limitation I've noticed is that some calculators don't handle multiple beneficiaries well. So if you're contributing to 529 plans for multiple people and your state allows credits for each, you might need to do some additional calculations yourself.
One thing that tripped me up with my 529 credit - make sure you're not confusing deductions vs. credits! Some states offer DEDUCTIONS for 529 contributions (which reduce your taxable income) while others offer CREDITS (which directly reduce your tax bill dollar-for-dollar). Credits are way more valuable! A $1,000 tax credit saves you exactly $1,000. A $1,000 tax deduction might only save you $40-$70 depending on your tax bracket.
Great point! I misunderstood this for years and was excited about my state's "$5,000 529 benefit" until I realized it was a deduction, not a credit. At my tax rate that's only saving me about $250, not $5,000!
Exactly! The terminology makes a huge difference. I've found that states with deductions often allow much higher amounts ($10,000+ in some cases) while states with credits usually have lower limits but they're worth more dollar-for-dollar. It's also worth checking if your state allows carryforward of excess contributions. Some states let you carry forward contributions beyond the annual limit to get the deduction/credit in future years.
Is there really a significant tax benefit to keeping my mortgage?
I'm debating whether to completely pay off my mortgage or keep it going just for potential tax benefits. I already understand that mortgage interest is deductible, so no need to explain that basic concept. Here's what's confusing me - throughout the years I've had my mortgage, it seems to have ZERO impact on my taxes. When I use TurboTax, whether I include $0 or $15K in mortgage interest, it doesn't change my refund or amount owed at all. Not one penny difference! This makes me wonder if there's actually any tax benefit whatsoever to having a mortgage in my situation. I've also heard rumors that having a mortgage can help with deductions if you own rental properties. But based on my experience above, I'm skeptical. Are there ACTUALLY legitimate tax benefits to keeping a mortgage? Like, real benefits that will actually show up in my tax return? Or is this just one of those financial myths everyone repeats?
Join the conversation
Something nobody's mentioned yet - if you're in a high property tax state like NJ, NY or CA, the $10k SALT cap (State And Local Tax deduction limit) really affects whether mortgage interest helps you. My property taxes alone are $14k, but I can only deduct $10k of that. So even with $12k in mortgage interest, my itemized deductions barely exceed the standard deduction for married filing jointly. Before the 2017 tax law changes, having a mortgage was a no-brainer tax benefit for most homeowners. Now it really depends on your specific situation.
That's a really good point I hadn't considered! My property taxes are around $8k, and with state income tax on top of that, I'm definitely hitting that $10k SALT cap. Maybe that's partly why my mortgage interest doesn't seem to be helping at all with my taxes. Would you say it made sense for you to keep your mortgage or are you considering paying it off too?
I'm in a similar position to you - considering whether to keep or pay off my mortgage. For me, the math works out that I'm getting very minimal tax benefit from the mortgage interest. I'm getting maybe a $1,000 extra deduction from itemizing versus taking the standard deduction. At a 24% tax bracket, that's saving me about $240 in taxes while I'm paying far more in interest. I'm actually planning to pay off a significant chunk of my mortgage this year. Not the whole thing, but enough to reduce my interest to the point where I'll just take the standard deduction going forward. The psychological benefit of having a much smaller mortgage outweighs the tiny tax advantage for me.
Remember that even if mortgage interest isn't giving you a tax benefit now, if interest rates rise and your income increases, that could change in the future. I've seen ppl pay off mortgages then regret it when their tax situation changed a few years later and they could have benefited from the deduction. Also don't forget about inflation! $300k debt today will feel like much less in 15-20 years with normal inflation.
That's actually a really good point about inflation. I never thought about it that way. $300k today will be worth a lot less in purchasing power 20 years from now, but you're still paying it back with those cheaper future dollars.
Aria Washington
Just an FYI for anyone dealing with this - I'm a payroll specialist (not for Paycom) and this is unfortunately a common mistake. The confusion usually happens because both HSA contributions AND cafeteria plan premiums are pre-tax, but they're handled differently on the W2. For clarification: - Box 12 Code W: Only HSA contributions - Cafeteria plan premiums: No specific box, they simply reduce wages in Box 1 - FSA contributions: Box 14 (optional) or just reduce Box 1 - 401k contributions: Box 12 Code D If your payroll person insists they're right, ask them to check IRS Publication 969 and the W2 instructions specifically for Box 12 Code W.
0 coins
Lucas Kowalski
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.
0 coins
Aria Washington
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.
0 coins
Liam O'Reilly
Sorry if this is a dumb question but how urgently does this need to be fixed? I just checked my W2 and I think they made the same mistake. I've already filed my taxes though... am I going to get in trouble with the IRS?
0 coins
Olivia Martinez
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.
0 coins