Thanks for this additional info! I definitely will file long before that 3-year deadline hits, but good to know there's an absolute cutoff. Does the same apply for state taxes or does that vary by state?

The 3-year refund claim deadline is for federal taxes. State tax deadlines vary by state - some follow the federal 3-year rule, while others have shorter or occasionally longer timeframes. For example, California and New York generally follow the federal 3-year rule, but some states like Montana only give you 2 years to claim a refund. I'd recommend checking your specific state's tax agency website for their rules since it's not standardized across all states.

True, but with the current disaster at the IRS with processing times, you might not get that refund anytime soon anyway. My brother filed in April and just got his refund last week!

Couldn't you deduct the amount you paid to your friend as a business expense though? Like as a contractor payment or something?

That's what I thought too, but it's not that simple. Unless you have a formal agreement and you're paying them as a contractor with proper documentation (including a W-8BEN form for foreign contractors), those payments aren't automatically deductible. The IRS wanted to see proof that these were legitimate business expenses and not just me moving money around. Without the right paperwork established beforehand, they considered all the income as mine. Plus, there are strict reporting requirements for payments to foreign persons that I wasn't aware of. The whole thing turned into an audit nightmare.

This happened to my brother! His "friend" imported some electronics that turned out to be counterfeit. Customs seized the shipment and my brother got hit with a $15,000 fine since the business was in his name. The "friend" disappeared and my brother was stuck with the bill.

Oh I hadn't thought about being flagged as a first-time filer! That actually makes a lot of sense. 31 days isn't terrible I guess, just longer than that 21 day estimate. What's the best way to adjust withholding? I'd rather have the money throughout the year for sure, but I'm nervous about accidentally owing taxes next year if I mess with my W-4.

The easiest way to adjust your withholding is to fill out a new W-4 form with your employer. The form was redesigned in 2020 to be more straightforward. If you want to be conservative about it, you can start by claiming just a little less withholding and see how it affects your paychecks. The IRS has a Tax Withholding Estimator tool on their website that can help calculate the right amount based on your specific situation. It's better to slightly overwithhold than underwithhold, so you still get a small refund rather than owing money at tax time. Just update your W-4 with your employer's HR department once you figure out the right numbers.

What tax software did you use? I'm wondering if some get processed faster than others.

Is this actually true? That would be a huge help for me. I just realized I'm under-withheld for 2023 and was thinking about submitting a new W-4 to increase withholding for the last two months.

Yes, absolutely true! It's one of the less known advantages for W2 employees. The IRS regulations consider withholding to have been paid proportionally throughout the year regardless of when it was actually withheld. So you can absolutely submit a new W-4 now to increase your withholding for the remaining months of 2023, and the IRS will treat it as if you had been paying at that higher rate all year long. This can help you avoid underpayment penalties even if you were under-withheld for most of the year.

Form 1040-ES is for making estimated tax payments, not just for self-employed people. You need it if you expect to owe $1,000 or more when you file your tax return AND your withholding/credits won't cover at least 90% of current year tax (or 100%/110% of prior year). Most W2 employees don't need it because their employer withholds enough from their paychecks. But if you have significant income not subject to withholding (investments, rental income, side gigs), you might need to make estimated payments using 1040-ES.

How long did the whole process take from filing the SS-8 to getting a determination? I've heard the IRS is super backed up.

It took about 7 months to get the official determination after filing the SS-8. The IRS is definitely backed up with these cases. The good part was that I didn't have to wait for the determination to file my taxes - I filed Form 8919 with my return and explained the situation. I was able to file my taxes as an employee would (paying only my share of Social Security and Medicare taxes) while the determination was pending. When the official ruling came through, it confirmed I'd filed correctly. If you have solid evidence like paystubs showing withholding, you're in a pretty strong position.

Agreed! My cousin got caught in this same situation and the employer was also skimping on workers comp insurance and violating labor laws about breaks and overtime. These things rarely happen in isolation.