Do you know if this exclusion was automatic or something you had to claim specifically? I'm wondering if I missed out on this when I filed.

At the federal level, if you filed after the exclusion was enacted (March 2021), most tax software automatically applied it. If you filed before that, the IRS was supposed to automatically recalculate and issue refunds to eligible taxpayers. For state taxes, it varied significantly by state. Some states automatically conformed to the federal exclusion, some explicitly didn't follow it, and others required you to file an amended return to claim it. You'd need to check your specific state's department of revenue website to see their policy. If your state did conform and you were eligible but didn't claim it, filing that amended return now could potentially save you a significant amount on this bill.

You can request tax transcripts from both the IRS (for federal) and your state tax department to see your filing and payment history. That would show if you already reported and paid tax on the unemployment income. Some states didn't follow the federal $10,200 exclusion like the previous commenter mentioned, so you might still owe state tax even if you were exempt from federal tax.

Thanks for bringing that up! I hadn't considered FATCA at all. My investments are pretty minimal, but I should definitely check if they exceed the threshold. Do you know if the 40% ownership in my small company would trigger any special filing requirements? It's definitely not a passive investment - we actively run the business together.

Your 40% ownership in an active business where you're actually working probably won't trigger PFIC concerns, but it might require you to file Form 8858 (for foreign disregarded entities) or Form 8865 (for foreign partnerships), depending on how your business is structured in Argentina. These forms basically just disclose your ownership interest to the IRS. Since you're actively involved in the business, you would report your income as self-employment income on Schedule C, and you'd need to pay self-employment tax unless there's a totalization agreement between the US and Argentina. The income itself might be excludable via the Foreign Earned Income Exclusion, but the SE tax often still applies.

This is so true! I moved from UK to Massachusetts and was shocked at how complicated everything is. In the UK, most people don't even file taxes - it's all done automatically through your employer. Here I had to learn about federal, state AND city taxes in some places.

Thank you so much for this info! Do you know if there's any way to get the penalties reduced if it really was due to an employer error with the withholding? My husband asked HR to withhold additional money from each check and they apparently never set it up correctly.

You might be able to request penalty abatement, especially if this is your first time having an issue with taxes. The IRS has what's called "First Time Penalty Abatement" which can waive penalties if you haven't had any significant penalties in the past three tax years and have filed all required returns and paid (or arranged to pay) any tax due. For the employer error specifically, that's unfortunately common and usually doesn't qualify for special treatment on its own since ultimately it's the taxpayer's responsibility to verify proper withholding. However, you could request a letter from HR acknowledging their mistake, which might help support your case for penalty abatement. I'd recommend filing on time, setting up a payment plan, and then separately requesting the penalty abatement afterward.

An extension gives you more time to file your tax return (until October 15th), but it doesn't give you more time to pay what you owe. The payment is still due by the original tax deadline (usually April 15th). If you file an extension but don't pay by the original deadline, you'll still face failure-to-pay penalties and interest on the unpaid amount. However, you'll avoid the much larger failure-to-file penalties, so it's still better than not filing at all.

Oh that makes sense! I thought it gave you extra time for both. Thanks for explaining that - definitely good to know!

Thank you for this advice. I hadn't even thought about Innocent Spouse Relief. Is that difficult to qualify for? I'm really worried about what I might find when I get these transcripts.

Innocent Spouse Relief has specific requirements, but it's definitely worth exploring if you discover any serious issues on joint returns. It's most applicable when one spouse did something wrong (like underreporting income) without the other spouse's knowledge. The key factors are whether you knew about the underreporting and whether it would be unfair to hold you responsible. Documentation is extremely important - keep those texts where he claimed to handle the taxes. The IRS has Form 8857 for requesting this relief, but I'd recommend consulting with a tax professional before filing it, as the process can be complex.

This is really smart advice. Tax liens can absolutely destroy your credit score too. I had a friend who didn't know her husband hadn't filed for 3 years, and the first she heard about it was when she got denied for a mortgage.

That's actually really helpful! Some of my payments go directly to their health insurance and not to my ex. Would that part be deductible? And our decree just says she gets to claim them as dependents since they live with her over 50% of the time.

If you're paying for health insurance directly (not through your employer but actually writing separate checks for their coverage), you might be able to include that amount as a medical expense deduction if you itemize and your total medical expenses exceed 7.5% of your AGI. It's not a direct deduction for child support, but it could help. Regarding your decree saying she claims them - that's pretty standard unfortunately. Your best bet might be to see if she'd be willing to give you Form 8332 for one child in alternating years, which some co-parents do to make things more equitable. Sometimes offering to split any additional refund can help persuade them.

This is actually really smart. I do this too - my state gives a deduction up to $4000 per year for 529 contributions. It's not federal but still saves me about $200 in state taxes while saving for my kid's college.