Thanks for the clear explanation! This makes a lot more sense than what the volunteers told me. Do you know if filing the 2018 return now will hurt my OIC chances for 2017? Like, will adding more debt make them less likely to approve it?

Filing your 2018 return now won't hurt your OIC chances - in fact, it's absolutely required. When you submit an OIC, the IRS will check that you're in compliance with all filing requirements before they even consider your offer. As for the additional debt potentially affecting your offer amount, it could be factored into your "reasonable collection potential" calculation. However, this is much better than having your OIC rejected outright due to non-compliance. The IRS looks at your overall ability to pay, so while the total debt matters, your financial situation is the primary factor in determining an acceptable offer amount.

Yes, there's a 3-year deadline for claiming refunds. So for 2018 taxes, you would have needed to file by May 17, 2022 (the deadline was extended that year due to COVID) to claim any refund owed to you. After that, any refund you were entitled to is forfeited to the Treasury.

How does this work exactly? My husband has a side business (LLC) but it's just him, no employees. Would this still be an option for us? Our nanny costs are killing us tax-wise.

This gets a bit complicated, but here's how it works: If your husband's business is just him with no employees, it's trickier but still potentially viable. The key requirement is that if you offer this benefit, it needs to be available to all employees on a non-discriminatory basis. In a single-member LLC situation, you'd need to ensure the plan documents are properly drafted to show it would be available to future employees if they were hired. Some tax professionals are more comfortable with this approach than others. The benefit allows you to deduct a portion of qualifying dependent care expenses as a business expense rather than a personal deduction, which can be more valuable.

For the CDCTC, you generally report the wages you pay directly to the nanny, not including the employer taxes. The qualifying expenses are reported on Form 2441. You'll need your nanny's SSN or tax ID number, and you'll list the care provider's information (your nanny's name, address, and tax ID) in Part I of the form. Make sure you're also filing Schedule H with your tax return to report household employment taxes, and don't forget about state-level requirements like filing DE 3BHW in California. The nanny needs to receive a W-2 by January 31 showing their wages.

Thanks for explaining that! So I only include what I directly paid her, not the employer taxes. That makes sense. I've got her SSN and have been keeping good records of payments. I'm feeling a little better about figuring out this Form 2441 now.

Wait, I thought partnerships themselves don't pay tax? Don't the partners just report their share on their personal returns? Why would a partnership make estimated payments?

You're generally correct that partnerships themselves don't pay federal income tax as they're pass-through entities. However, partnerships can still be subject to making tax payments in certain situations. Some partnerships may need to make estimated payments for things like withholding for foreign partners, or for potential audit adjustments under the centralized partnership audit regime. Also, many partnerships have to pay state taxes or fees depending on their location, and those might require estimated payments.

I've filed 7004s electronically for partnerships without issues. What software are you using? Some tax programs handle the extension forms better than others. I've had good luck with ProSeries and Lacerte for partnership extensions.

That's a good point about documentation. I got my MN driver's license in June and changed my voter registration right after moving. I was working fully remote during this time, but for the same PA-based company. Does that change the situation at all with how I should allocate income?

Working remotely actually simplifies your situation somewhat. Since Pennsylvania doesn't have a "convenience of employer" rule, your income is taxed based on where you physically performed the work. So for those 7 months you were working remotely from Minnesota, that income should be allocated to Minnesota regardless of where your employer is based. Your documentation of establishing Minnesota residency in June aligns with your move timeline, which is perfect. Just make sure to keep copies of your driver's license change, voter registration, lease/mortgage documents, and utility bills showing your Minnesota address. These will be your proof if either state ever questions your residency dates.

I used TurboTax last year for a similar situation (moved from Washington to Oregon mid-year). It actually handles it pretty well! There's a section where you enter your residency information for each state, and it creates the proper part-year resident returns. For the W2 allocation, you'll need to do a bit of manual work. TurboTax will initially allocate your W2 income based on what's in the state boxes, but you can override this. There's a worksheet where you can adjust how much income goes to each state. Just make sure to keep good documentation of how you calculated everything.

Oh that's a good point I didn't even consider! I did sign up for health insurance and the 401k match program, but there might be other stuff I didn't catch. I'll definitely check this on my next stub and talk to HR if anything looks fishy. Is there a standard percentage I should expect to see for all deductions combined? It just seems like a huge chunk of my paycheck is disappearing.

There's no standard percentage since it really depends on your specific benefits and choices. Health insurance can be anywhere from $50 to $500+ per paycheck depending on the plan and if you're covering family members. 401k could be 3-15% of your income depending on what you selected. Look at your pay stub line by line - the withholding amounts should be clearly labeled. Pay special attention to anything marked as "optional" or any insurance codes you don't recognize. Sometimes there are benefit programs you can opt out of if you don't need them.

This is exactly what happened to me! First paycheck was super low, but by the third one things normalized. Payroll systems are weird.

This is really helpful to know - I didn't realize the withholding would adjust over time. I'll keep an eye on my next couple of paychecks before panicking more. Thanks for explaining this!