But wasn't that tax law passed in 2017? Why would people just now be feeling the effects in the 2025 filing season?

Some provisions of the Tax Cuts and Jobs Act were designed to phase in gradually over several years. While the law passed in 2017, certain aspects are only now taking full effect or interacting with other tax changes in ways that are becoming noticeable. Also, during the pandemic years, there were temporary tax relief measures and credits that masked some of these effects. Now that those pandemic-era benefits have expired, people are experiencing the full impact of the 2017 changes without those offsetting benefits.

Same thing happened at my retail job! New payroll system last spring and now most of my coworkers owe money. Our manager told us it was because the new system "more accurately calculates withholding" but nobody explained we needed to adjust our W-4s.

That's really helpful advice - thank you! What kind of documentation would you recommend I keep? Right now I'm just planning to save the wire transfer receipts, but should I be doing something more formal like writing up agreements with my grandfather?

Definitely save all wire transfer receipts, but that's just the beginning. You should create a simple investment agreement document (doesn't need to be fancy) that clearly states your initial investment amount and the terms for repayment. For each payment received, have your grandfather specify in writing (even just an email) what the payment represents - whether it's returning your initial capital, profit distribution, or a personal gift. Keep a running spreadsheet tracking the remaining balance of your initial investment so you can clearly show when you've been fully paid back and subsequent payments are profits.

I have to respectfully disagree with this approach. While filing the FBAR is absolutely necessary if you meet the $10,000 threshold, it only reports the existence of foreign accounts - it doesn't address your tax obligations on the income. The IRS treats different types of foreign income very differently. Investment returns, business profits, and gifts all have distinct reporting requirements and tax treatments. Taking a simplified approach could lead to significant underreporting penalties if audited.

19 This is really good advice! I work in a college financial aid office, and we do sometimes accept last paystubs as temporary documentation especially in cases like this. We'd still need the official documents eventually, but it can buy you some time with deadlines.

11 Thanks for the additional info! I didn't even think about the paystub option. You're right that the year-to-date information would essentially show the same income information that would be on the W-2. I should have also mentioned that the employer is required by law to provide a replacement W-2, so being persistent with them is important. If they refuse, you can actually report them to the IRS using Form 4852 (substitute for W-2), which also puts some pressure on them to comply.

16 Try the IRS Taxpayer Advocate Service instead at 877-777-4778. They specifically help with issues like this, especially when you have a hardship situation like a financial aid deadline. They're usually much easier to reach than the main IRS line.

Did you need to include any special notes or memo with your payment? I've heard conflicting info about whether that's necessary.

I did include a note in the memo field saying "Schedule 3 Line 12e Deferred Payment" just to be extra careful, but my accountant said it wasn't strictly necessary as long as I selected the correct tax year (2020). The most important thing is selecting the right tax year since that's how the IRS computer systems match the payment to your account. The memo is more of a backup in case there's any confusion later and you need to prove your intent.

EFTPS has always been one day delayed for me too. Is there any tax software that lets you pay deferred taxes more easily? Trying to avoid using EFTPS altogether if possible.

Oh man I didn't even think about the Head of Household thing! That might explain the big difference when I ran the numbers last year. So if I understand right, whoever claims our son can probably file as Head of Household, and the other person has to file as Single? Does this mean we should really be looking at our COMBINED tax situation rather than individual returns? Like figuring out which combination of her filing status + my filing status + who claims our son = the best overall result for our household?

Yes, you've got it right! Whoever claims your son would likely qualify for Head of Household (assuming they meet the other requirements like paying for more than half the household expenses), while the other person would file as Single. Absolutely, you should be looking at your combined tax situation. It's not just about who gets the dependent deduction - it's about the whole package: different filing statuses, child tax credit, earned income credit if your incomes qualify, and other credits/deductions that phase out at different income levels. That's why running the numbers both ways like you did last year is the smart approach. The goal is to minimize your household's total tax burden, not just one person's taxes.

This is so true. When my partner and I were in this situation, we discovered a $3700 difference just based on who claimed our twins because of the earned income credit thresholds. It was actually better for the higher earner to claim them in our case, which seemed counterintuitive.