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I worked in payroll for 10 years and can tell you this sounds like a classic payroll system misconfiguration. For bonuses (supplemental wages), companies should be withholding at either: 1) The optional flat 22% rate, OR 2) Adding the bonus to your regular pay and calculating withholding on the combined amount The fact that NO federal tax is being withheld on your bonuses is 100% wrong. Your employer needs to fix this ASAP. In the meantime, if your bonuses are around $34k annually ($112k - $78k), you should add about $140 extra withholding per paycheck if you're paid twice monthly to make up for this error ($34,000 ร 22% รท 24 pay periods).
Thank you for the specific calculation - that's really helpful! So if I'm understanding correctly, the issue is two-fold: my regular paychecks have too little withheld AND my bonuses should have 22% federal tax taken out but have zero instead? Would requesting the additional withholding on regular paychecks be enough to cover both problems?
Yes, your understanding is correct - you have two separate withholding problems happening simultaneously. Your regular paycheck withholding is likely calculated based only on your base salary, not accounting for the additional income from bonuses. And then your bonuses should have 22% federal withholding but have zero. The additional withholding I calculated would only cover the missing withholding from your bonuses going forward. You'll also need to address the underwithholding on your regular paychecks. I'd recommend talking to your payroll department first to get the bonus withholding fixed, then use the W-4 additional withholding to cover any remaining gap. You may also need to save some money to cover what's already been underwitheld so far this year.
Has anyone considered that this might be intentional? Some companies deliberately underwithhold to make paychecks seem larger. My previous employer did this and half the staff ended up with surprise tax bills. When confronted, HR claimed it was "employee's responsibility to ensure proper withholding" even though they were the ones configuring the payroll system incorrectly. Just something to consider - might be worth checking if coworkers have the same issue.
This happened at my company too! When I brought it up to HR they got super defensive. I ended up comparing paystubs with colleagues and found out they were underwithholding for everyone. The company eventually had to send out an email explaining the "payroll configuration adjustment" but never admitted fault.
I never thought about it being deliberately misconfigured... that's concerning. I'll definitely ask around to see if my coworkers are experiencing the same thing. The company has been growing really fast so it could be an oversight, but either way I need to get it fixed. I appreciate everyone's advice - I'll update after talking to HR!
Has anyone actually tried filing with the Form 4852 substitute W2? I'm worried the IRS will flag it immediately for an audit if the numbers aren't exactly right.
I've used Form 4852 twice when employers either sent incorrect W2s or I couldn't obtain them. Both times went smoothly - the IRS did not audit or question the returns. Just make sure your estimates are reasonable and as close as possible to the actual amounts. Using your final pay stub is the best approach since the YTD figures should be very close to the W2 amounts.
I'll give a totally different suggestion - go ahead and file an ADDITIONAL extension request Form 4868 today even though you already have one. It won't actually give you more time legally, but it creates a paper trail showing you're making good faith efforts. Then file your return with Form 4852 as mentioned above within the next week. The IRS is much more lenient with penalties when they see you're actively trying to comply rather than ignoring deadlines.
One thing nobody mentioned yet - if you filed an appeal at any point, that also extends the 10-year period. I learned this the hard way when I thought my debt from 2011 was about to expire, only to find out my appeal from years ago added another 14 months to the clock. A lesser-known fact: if you lived outside the US for more than 6 continuous months during this period, that also suspends the statute. IRS can't collect if you're not in the country, so they pause the clock.
Does a Currently Not Collectible status affect the 10-year period? I got placed in CNC status for a couple years when I was unemployed, and I'm wondering if that changed my CSED.
Currently Not Collectible (CNC) status does NOT extend the 10-year statute of limitations. This is actually one of the better options if you're trying to reach the end of the collection period, because the IRS stops active collection efforts while the 10-year clock continues to run. The main advantage of CNC is that unlike an installment agreement or Offer in Compromise, requesting CNC status doesn't extend the CSED. Many people don't realize this and end up requesting payment plans that add time to their collection period when CNC might have been a better option.
Form 433F itself doesn't extend the 10-year statute, but what you DO with it might! If you submitted it as part of an installment agreement request, that likely extended your CSED. If you just submitted it because they requested financial information without a formal agreement, it probably didn't extend anything. The absolute best way to know your CSED is to call the IRS Collections department directly at 1-800-829-1040. Ask them specifically: "What is my Collection Statute Expiration Date for tax year 2013?" They have to tell you. Sometimes they'll transfer you to a collections specialist.
Actually, that's not entirely correct. The 10-year period is extended while the IRS is considering your installment agreement request, plus an additional 30 days - not just when you file the form. Also, there are very specific rules about when extensions happen with OICs and appeals. It's more nuanced than just calling and asking.
Quick tip for anyone still looking - Form 3895 in Proseries 2023 can also be accessed through the Smart Worksheet function. Just type "3895" in the Smart Worksheet search bar and it will take you to the right input screen. Saved me a ton of time once I figured this out!
Does this Smart Worksheet trick work for finding other hidden forms too? I'm new to Proseries and still learning all the shortcuts.
Yes! The Smart Worksheet search is actually the fastest way to find any form in Proseries. It works for pretty much everything - just type the form number or even keywords like "depreciation" or "health insurance" and it pulls up relevant forms and input screens. For new Proseries users, I also recommend using the "Recent Forms" dropdown which shows the last 10-15 forms you've accessed. Between these two features, you'll rarely need to dig through the regular menus once you get comfortable with the software.
Is anyone else noticing that even after entering the Form 3895/1095-A information, the Premium Tax Credit calculation seems off? I've entered everything correctly but the numbers don't match what my clients received on their actual forms.
Elliott luviBorBatman
Has anyone used FreeTaxUSA for a situation like this? I'm in a similar boat (moved from Illinois to Tennessee mid-year) and wondering if their software handles part-year state returns well.
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Demi Hall
โขYeah I used FreeTaxUSA last year for a move from Washington to Texas. It worked fine for me but both states don't have income tax so it was pretty simple. I think they do handle part-year state returns but not sure how good they are with the more complicated situations.
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Mateusius Townsend
One thing I learned from my move from Oregon to Washington - keep EVERY document related to your move. I got audited by Oregon 2 years after moving and had to prove I really moved. Save your moving receipts, lease/purchase documents, utility hookups, everything. States like CA and NY are super aggressive about going after people who moved to no-tax states.
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