But doesn't the W2c get reported to the IRS automatically by the employer? Won't their systems flag the mismatch eventually?

Yes, the W2c gets reported by the employer to the IRS, so they will be aware of the discrepancy. Their automated matching system will technically "flag" it, but they have materiality thresholds. For small amounts like $84, they'll typically just adjust your account internally and might send a notice with the small balance due plus minimal interest. It's an automated process that doesn't constitute a full "audit" - just a routine adjustment based on information reporting.

I did the same with a $65 correction and DID get a letter about 8 months later. They adjusted my tax by like $13 and charged $0.82 in interest. Just paid it online and that was that. No big deal.

Did you have to get a specific type of letter from the doctor or just your regular medical records? I'm wondering what documentation I should ask my doctor for.

We got three things from her doctors: 1) Her regular medical records showing the history of treatments for the skin infections, 2) A specific letter from her surgeon stating that the procedure was medically necessary to prevent ongoing infections and improve mobility, and 3) Before and after photos that were taken as part of her medical record (these showed the severe skin folds and how they were affecting her posture). The letter was the most important part. It specifically stated that this was not being done for cosmetic purposes but to address specific medical conditions. Make sure your doctor includes the medical diagnosis codes related to your skin issues and any functional limitations.

I used TurboTax last year to deduct my post-weight loss skin removal surgery. You just enter it as a medical expense with all your other medical costs. The software itself doesn't specifically flag it, but it does remind you that you need documentation for all medical expenses. I kept all my documentation in a separate file just in case of an audit, but TurboTax itself was pretty straightforward about it. Just make sure you're itemizing deductions rather than taking the standard deduction, otherwise your medical expenses won't matter.

That's a really good point I hadn't considered. We're planning to file jointly going forward, but should we also be updating our status with Social Security, health insurance, etc.? Are there any benefits we might lose by being considered married?

Yes, you should absolutely update your status with all agencies. Being inconsistent is a red flag. As for benefits you might lose - some income-based programs phase out at higher income levels for married couples compared to singles, and there can be a "marriage penalty" in certain tax brackets where two high earners pay more jointly than they would separately. Some people find that student loan payments increase when filing jointly if one partner has a much higher income. You might want to run calculations both ways (MFJ vs MFS) to see what works best, though in most cases MFJ provides better tax benefits.

I went through this in 2023. We claimed common law married status in Iowa and got audited. The key was having consistent documentation - joint bank accounts from when we started considering ourselves married, beneficiary designations, insurance policies listing each other as spouses, and affidavits from family and friends confirming they knew us as married.

That's really helpful to know. Did you need to get a lawyer involved during the audit process? And how far back did they want documentation? I'm just trying to understand what we might be getting ourselves into if we make this change.

Thanks for the advice! Do you think there's any benefit to using H&R Block over TurboTax for K-1 handling? Also, roughly how much time does it take you to do all this yourself each year?

I personally find H&R Block's interface for K-1 entries more intuitive than TurboTax, but both will get the job done. H&R Block seems to provide more explanations about where each K-1 item flows on your return, which helped me understand the process better when I was learning. As for time investment, my first year doing K-1s myself took about 6-7 hours of work, including research time and double-checking everything. Now that I'm familiar with the process, it takes me about 3 hours total, spread across a couple of days. I usually do a first pass when I get my W-2s and most documents, then finish up when the K-1s finally arrive.

This is super important advice! My K-1 had passive activity losses and I thought I did everything right in TurboTax... ended up with a $3200 tax bill I wasn't expecting because of how the passive loss limitations work. Definitely the most complicated part of dealing with K-1s in my experience.

Thank you for mentioning this! I'm actually expecting a small refund based on my calculations. So does that mean I won't face any penalties at all for filing late? That would be a huge relief.

That's right! If you're owed a refund, the IRS doesn't charge penalties for filing late. They're only interested in penalties when you owe them money. The only downside to filing late when you're due a refund is that you're essentially giving the government an interest-free loan for longer. And of course, you won't get your refund until you actually file. But there's no financial penalty for lateness when the IRS owes you.

I filed paper in July last year (for 2022 taxes) and it took almost 8 months to process! Definitely e-file if you can. The IRS accepts e-filed returns year-round for past years. The only reason to paper file is if you have some unusual situation that the e-file system rejects.