Thanks for mentioning this! My second job actually just increased my hours, so I'll probably be making about 25% more there than when I first did the W4 calculation. Should I just redo the entire IRS calculator or is there a simple adjustment I can make?

Definitely redo the entire calculator with your updated income projections. There's no simple adjustment because the calculator is considering tax brackets, your whole annual income, and how much has already been withheld year-to-date. With a 25% increase at your second job, that could potentially push some of your income into a higher tax bracket, so you want the calculator to recompute everything. While you're at it, make sure both jobs have the correct W4 settings. For the highest-paying job, use the results from the calculator. For the second job, you might want to check the box in Step 2(c) or use the multiple jobs worksheet to ensure enough is being withheld there too.

This happened to me too! That $701 sounds about right for adjusting withholding after marriage mid-year. Just don't forget to submit a new W4 in January like others said.

Couldn't this be considered some kind of tax avoidance scheme? I thought the IRS had rules against transferring assets just to create tax advantages?

Transfers between spouses are explicitly allowed under IRC Section 1041, which states that "no gain or loss shall be recognized on a transfer of property from an individual to a spouse." This isn't considered tax avoidance but a legitimate planning strategy. The key distinction is that my spouse is genuinely a different taxpayer with a separate SSN. Once the assets are transferred, they legitimately belong to my spouse, who then has the right to select their preferred cost basis method for those newly acquired shares. This differs from trying to change the method on your own shares after you've already made an election.

Those robo-advisors typically use specific identification method from the start, so they avoid the average cost basis problem entirely. But they won't help with existing mutual fund positions that are already using average cost basis. You'd have to sell everything (potentially creating a taxable event) and then move to their platform.

Thanks, that makes sense. I guess there's no easy solution once you're stuck with average cost basis. I'll make sure to use specific identification for any new investments going forward.

I actually am taking some community college classes! Would that qualify me for education credits even though my income is low? Also, what's the income range for that Earned Income Tax Credit thing you mentioned? This makes me think I definitely should file even though the tax place told me not to.

Yes, education expenses could qualify you for the American Opportunity Credit or the Lifetime Learning Credit! The American Opportunity Credit is partially refundable, meaning you could get up to $1,000 back even if you don't owe taxes. You need Form 1098-T from your school which shows your tuition payments. For the Earned Income Tax Credit, a single person with no qualifying children needs to earn less than about $17,640 in 2025, and be at least 25 years old (with some exceptions). Since you're 19, you might not qualify for EITC yet unless you meet one of the exceptions, but the education credits are definitely worth looking into. This is exactly why general advice like "don't bother filing" can sometimes cause people to miss out on money they deserve!

Oh that makes sense why they were confused when I mentioned the I-9! I just knew it was some form with a letter and number lol. Is there a way I can check if my W-4 is filled out correctly before submitting a new one? I don't wanna mess it up again.

Thanks for this tip! So if I understand correctly, I could still potentially avoid the penalty even now? My broker is Vanguard - would I just call them and ask for a "return of excess contribution" specifically for my 2020 contribution? Do you know if there's a time limit for doing this correction?

Yes, you would call Vanguard and specifically request a "return of excess contribution" for tax year 2020. Be very clear about which tax year you're correcting. There is a time limit - ideally you want to do this before the tax filing deadline for that year (including extensions). Since we're well past the 2020 deadline, you'll still owe the 6% penalty for 2020, but removing the excess now stops you from owing the penalty for subsequent years too. The excess contribution continues to be penalized 6% every year until you either remove it or "absorb" it by using up part of a future year's contribution limit.

I second FreeTaxUSA! TurboTax really struggles with Form 5329 and excess contributions. My tax preparer actually recommended I switch to FreeTaxUSA specifically for handling my IRA issues.

Does your employer know you do this? I'm worried mine would think I'm violating some non-compete if I tell them I need extra withholding for my side business.

Your employer doesn't need to know why you're adjusting your withholding. When you fill out a new W-4, you can either claim fewer allowances or simply specify an additional dollar amount to withhold from each paycheck. There's no requirement to explain why you want more taxes withheld. Many people adjust their withholding for various reasons - maybe they have investment income, rental property, or just want a bigger refund. The payroll department processes the change without needing an explanation.

Where do you find the estimator? I've been all over the IRS site and can't find anything helpful.