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Have you double-checked your withholding status? When you had a baby, did you update your W-4 with your employer? A lot of people don't realize that having a child doesn't automatically change your withholding - you need to submit a new W-4 form to your employer. Also, with the bonus repayment situation, there's a specific way this should be handled for tax purposes. If the bonus was paid in the current tax year and repaid in the same year, the W-2 should simply not include that amount. If it was paid in a previous year and repaid this year, there are special rules under Section 1341 of the tax code.
You know what, I didn't update my W-4 after having the baby! I just assumed the child tax credit would be applied when filing, didn't realize I needed to adjust my withholding throughout the year. The bonus was both paid and repaid in the same tax year (2024), so it sounds like it should have been completely excluded from my W-2 rather than shown as a deduction?
Exactly right! The child tax credit is applied when filing, but updating your W-4 would have reduced your withholding throughout the year, giving you more in each paycheck instead of waiting for a refund. Many people prefer this approach rather than giving the government an interest-free loan. For the bonus that was paid and repaid in the same tax year, yes - it should have been completely excluded from your W-2 as if it never happened. It shouldn't appear as income and then be offset by a deduction. This could definitely be causing part of your tax issue. I'd suggest asking your payroll department specifically about this - whether they excluded the bonus amount completely from your taxable wages or if they included it in income and then added a deduction. The former is correct; the latter could be causing your tax problem.
Don't forget to look at state taxes too! I had a similar issue last year where my federal W-2 was correct but my state withholding was way off. It's worth adding up your state withholding from each paystub separately.
Your dad is probably confused about who owes what. With below-market loans, it's the LENDER (your dad) who would potentially have tax implications, not you as the borrower. And as others have mentioned, loans under $10K are generally exempt anyway. What might be happening is your dad reported this loan on his taxes (which he didn't need to do for this amount), and now thinks you need to pay the tax. Or he might be trying to retroactively charge you interest by calling it a "tax." Either way, you should ask him to show you exactly what tax form or notice he's referring to. If he can't produce anything official from the IRS, that's a red flag.
Could it be that the dad is thinking about the gift tax? Like maybe he's thinking that since he didn't charge interest, it counts as a gift and he has to pay gift tax on it?
You're on the right track. In theory, the forgone interest on an interest-free loan can be considered a gift from the lender to the borrower. But there are two important points here: First, the annual gift tax exclusion is $17,000 per person (in 2023), so the imputed interest on a $9,500 loan would be well below that threshold. Second, even if it were above the threshold, it would just require reporting on a gift tax return - actual gift tax typically wouldn't be owed until someone gives away millions over their lifetime. So either way, there shouldn't be any actual tax payment required. The dad might be confused about these concepts or might be trying to retroactively charge interest and calling it a "tax" to make it seem official.
Just to add a different perspective - could this be a misunderstanding about state taxes? Some states have different rules about personal loans. I got hit with a surprise tax in New Jersey when I loaned money to my cousin, even though it was below federal thresholds. Might be worth asking your dad specifically which tax form or rule he's referring to. If he's actually received tax documentation about this, ask to see it.
Pro tip: If you're getting stuck in the TurboTax interface, try switching browsers or using incognito mode. I had this exact same issue where direct deposit and payment plan options weren't showing up. Turns out my browser extensions were interfering with some elements on the page. Switched to Edge (which I never use) and suddenly all payment options appeared!
Really? What browser extensions would cause that? I'm using Chrome with adblock and a few others. Could that be why I'm only seeing credit card options too?
I think it was my ad blocker causing the issue. It was blocking some elements on the TurboTax payment page. I'm not 100% sure which extension was the culprit, but when I tried in Edge with no extensions, everything loaded properly. Another possibility is to try clearing your cache and cookies for the TurboTax site. Sometimes data from previous sessions can cause weird display issues.
Has anyone tried calling TurboTax support directly? I had this problem and called them - turns out there's a glitch in their system that sometimes doesn't display all payment options depending on how you answer previous questions in the tax interview. The rep had me go back and change my answer to the question about "how do you plan to pay your taxes" much earlier in the process, then the direct payment option finally showed up.
Just wanted to share that many H&R Block and some Jackson Hewitt offices are Certifying Acceptance Agents who can handle the ITIN application right there when they prepare your taxes. They verify your original documents on the spot so you don't have to mail anything to the IRS. We did this for my mother-in-law last year and it was SO much less stressful than sending her Philippine passport through the mail. It cost a bit extra but the peace of mind was worth it.
Do they speed up the actual processing time though? Or just help with the document verification part?
They don't speed up the IRS processing time once it's submitted, but they eliminate the extra time your documents would spend in transit to and from the IRS. They also help prevent errors that could cause delays or rejection. In our case, the tax preparer caught that we had the wrong type of visa documentation before submission, which definitely would have caused issues. Overall, our total wait time was about 9 weeks from submission to receiving the ITIN, which seemed faster than friends who mailed everything themselves.
WARNING! Be careful with who prepares your W-7. My cousin used some "tax preparer" from Facebook who charged $200 to handle her husband's ITIN application, and it was rejected TWICE because they filled out Section 6 completely wrong. Wasted 5 months and had to pay penalties for late filing! The IRS is super picky about the W-7 form. Make sure whoever helps you is actually qualified. Ask specifically about their experience with ITINs, not just general tax preparation.
This happened to my neighbor too! They used some random preparer and later found out the person wasn't even a legitimate Certifying Acceptance Agent. So many scammers target immigrants specifically :
Monique Byrd
5 Quick question - I'm in a similar situation but my missing W2 is from 2020, not 2021. Am I completely out of luck for fixing this? I think I read somewhere there's a 3-year limit on amendments?
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Monique Byrd
ā¢8 You're right about the 3-year limit, but you're still within the window for 2020! The deadline for filing amendments to claim a refund is 3 years from the original due date of the return. For 2020 tax returns, the original filing deadline was May 17, 2021 (it was extended that year due to COVID). That means you have until May 17, 2024 to file an amended return and claim any additional refund. So you should act quickly, but you definitely still have time to file that amendment.
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Monique Byrd
ā¢5 Thank you so much for clarifying this! I was worried I'd missed my window completely. I'll get on this amendment right away before the May deadline hits. Really appreciate the help!
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Monique Byrd
23 Does anyone know if the IRS will contact you if they notice a missing W2? I'm asking because I just got a letter saying I underreported income, but I thought I included everything on my 2022 return.
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Monique Byrd
ā¢10 Yes, the IRS definitely will send you a notice if they identify underreported income. They run an automated matching program where they compare the income reported on your tax return against what was reported to them by employers, banks, etc. The letter you received is probably a CP2000 Notice, which is not an audit but a proposed adjustment to your tax return based on this information matching.
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