Thank you for explaining the tax implications. I hadn't even thought about how this might trigger an IRS review. Do you know if there are any legal options for small businesses to help employees with maternity leave? My employer seems to think unemployment is their only option.

Small businesses actually have several legal options to support employees during maternity leave. They can offer paid time off from their own funds (which is tax-deductible as a business expense), set up short-term disability insurance (which is relatively inexpensive), or establish a temporary flexible/remote work arrangement. Some states also have paid family leave programs that small businesses can participate in, where both employers and employees contribute small amounts throughout the year. And depending on how your employer structures your compensation, you might qualify for state disability benefits in some locations, which is completely separate from unemployment.

Is there any kind of whistleblower protection if someone reports their employer for suggesting this kind of fraud? asking for a friend...

How does the letter need to be formatted? Does it need to be notarized or anything?

The letter doesn't need to be notarized, but it should be on company letterhead if possible and signed by the owner or appropriate manager. Keep the format professional but straightforward - date, proper greeting, clear explanation of the facts, and formal closing with signature. Make sure it includes specific information like the worker's full legal name, approximate dates of employment, total compensation paid, and the reason for requesting the ITIN. I also recommend including the employer's EIN and contact information for verification purposes. While not strictly required, this level of detail helps demonstrate the legitimacy of the request and can smooth the process considerably.

I helped three employees apply for ITINs in January 2024. It took exactly 9 weeks for two of them, and the third one took 11 weeks. So definitely longer than the official estimate. This was with complete applications submitted through an Acceptance Agent.

But that's still wrong - the total isn't 3.8%. The Additional Medicare Tax is 0.9%, which when added to the 2.9% regular Medicare tax equals 3.8%. Is that what you meant?

Yes, that's exactly what I meant. The base Medicare tax is 2.9% on all SE income. Then the Additional Medicare Tax of 0.9% kicks in at those higher income thresholds, bringing the total Medicare portion to 3.8% (2.9% + 0.9%). I should have been clearer in my wording. Thanks for pointing that out. This conversation perfectly illustrates how even small differences in how tax concepts are explained can lead to confusion!

The wage base is tied to the National Average Wage Index so it automatically increases with inflation. It's gone up dramatically in recent years because wages have been rising so quickly. You can always find the current wage base on SSA.gov rather than relying on articles that might be using outdated numbers.

Thanks for explaining that! I didn't realize it was tied to wage inflation. Makes sense why it's been jumping up so much these past few years. I'll bookmark the SSA site for future reference.

Omg I didn't even think of that - my parents have always claimed me as a dependent but I moved out last May and have been supporting myself since then. How do I know if they can still claim me or not for 2024 taxes?

There are specific tests the IRS uses to determine if someone can be claimed as a dependent. The main ones are the support test (did you provide more than half of your own financial support for the year?) and the residency test (did you live with your parents for more than half the year?). Since you moved out in May, you lived with them for less than half of 2024, but the support test is the bigger factor. You need to calculate all your living expenses (rent, food, utilities, medical, education, etc.) for the entire year and determine if you provided more than 50% of that total yourself. If you did, your parents can't claim you. If they provided more than 50% (including while you lived with them), they can still claim you even though you moved out.

This is correct but keep in mind you might still need to file a state return if you earned any money in another state during the year (like if you had a summer job somewhere else). The tax software will ask you questions to determine this.

They don't currently get any stipend or per diem for the travel unfortunately. That's why we're trying to figure out if there's any tax relief available. The union does have some provisions for travel pay, but only for jobs beyond a certain distance (I think it's 75 miles), and most of their assignments fall just under that threshold. Do you know if there's a standard mileage rate they could use instead of tracking actual gas costs?

Yes, using the standard mileage rate is usually much easier than tracking actual gas expenses. For 2024, the standard mileage rate for business travel is 67 cents per mile. This covers gas, wear and tear, depreciation, and insurance. If your partner qualifies to deduct these expenses (based on the temporary work location rules others mentioned), using the standard rate is typically much simpler than keeping all gas receipts. Just make sure they keep a detailed log of dates, locations, business purpose, and miles driven. There are several good mileage tracker apps that can help with this too.

This is the correct answer that everyone else missed. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2% floor from 2018 through 2025. This includes unreimbursed employee business expenses like mileage to job sites. If they're a W-2 employee, these expenses aren't deductible at the federal level right now. Some states still allow these deductions on state returns though, so check your state tax laws!