I went through almost the exact same situation about 8 months ago - suddenly my federal withholding tripled with no changes on my end, and it was absolutely panic-inducing when you're already stretched thin financially! After reading through all the excellent advice in this thread, I want to add one more thing that really helped me: when you talk to HR, ask them to show you the "before and after" of your W-4 settings in their system. Don't just take their word that "nothing changed" - have them pull up your historical withholding configuration from before the increase started. In my case, HR initially insisted everything was correct until I pushed them to actually compare my current settings to what was on file a month earlier. That's when they discovered that a system update had somehow merged an old W-4 form I'd filled out years ago with my current information, creating this bizarre hybrid configuration that massively increased my withholding. The other thing that saved me time was bringing a printed copy of the IRS W-4 form with my correct information already filled out. Once they identified the problem, I could hand them the corrected form immediately rather than waiting for them to mail me paperwork or set up another meeting. It took about 10 days to get fully resolved, but I got all the excess withholding back in my next paycheck plus a small adjustment for the processing delay. The key was being persistent and not accepting vague explanations - your $385 per paycheck impact is way too significant to let slide. Stay strong and keep pushing for answers! This is definitely fixable.

This sudden 2.5-3x increase in federal withholding without any changes on your part is definitely a red flag for a payroll system error! I've seen this happen to several colleagues over the years, and it's almost always fixable once you get the right person to investigate. One additional thing to check that I haven't seen mentioned yet - look at your pay stub to see if there's a separate line item for "Additional Federal Withholding" or "Extra Withholding." Sometimes during system updates or W-4 processing errors, phantom additional withholding amounts get added to your account that you never requested. I've seen cases where someone accidentally gets an extra $200-400 per paycheck in additional withholding on top of their regular federal taxes. Also, when you talk to HR, ask them specifically when your current W-4 was last processed or updated in their system. Even if you didn't submit a new form, sometimes old forms get reprocessed during system maintenance or upgrades, which can create these sudden changes. The stress of losing $385 per paycheck is absolutely real, especially when you're already tight on money. But based on everything you've described, this sounds very much like a system error that should be correctable. Don't let HR brush you off with "the computer calculated it correctly" - push for someone who can actually investigate what changed in your withholding configuration. You've got plenty of great advice in this thread to work with. Stay persistent and document everything!

One thing that's important - if you live in a state that has different Section 179 limits than federal (like we do in Minnesota), make sure you understand how the state will treat the business-to-personal conversion too! When I closed my construction business, the feds didn't require recapture for equipment held long enough, but my state had different rules and I got hit with an unexpected state tax bill. Some states follow federal treatment but others have their own quirky rules.

This is exactly the kind of situation where getting multiple professional opinions is worth it. Your accountant's advice sounds correct for the basic federal tax treatment, but there are several layers to consider that could affect your specific situation. Since you're in a sole proprietorship, you're right that there's no entity transfer - the equipment is already legally yours. The key issues to watch for are: 1) Making sure you've held everything past the Section 179 recapture period (usually 5 years for most equipment), 2) Properly documenting the conversion date for each piece of equipment, and 3) Understanding any state-specific requirements that might differ from federal treatment. I'd strongly recommend creating a detailed spreadsheet showing each piece of equipment, the original Section 179 deduction date, and when the recapture period expires. This will help you plan the timing of your business closure and conversion to personal use. Also consider getting that second CPA opinion you mentioned - especially one who specializes in business transitions. The stakes are high enough with dozens of pieces of equipment that having absolute clarity is worth the extra cost.

FYI - employers must make W2s electronically available by January 31 but have until Feb 28 to MAIL them. Your W2 was probably available on your employer's HR portal way before you got the paper copy. TurboTax partners with ADP, Paycom, etc so they can pull W2s electronically as soon as they're available!

This is totally normal and you're not alone in being confused by this! What's happening is that your employer in Iowa submitted your W-2 electronically to the IRS by January 31st (as required by law), and TurboTax has access to this data through their partnerships with payroll companies and the IRS database. The paper W-2 you're waiting for in the mail is really just for your records - the "official" version that matters for tax purposes is already in the system. That's why TurboTax could pull it automatically. For your multi-state situation (Iowa to California), definitely double-check a few things when your paper W-2 arrives: make sure the state tax withholding amounts look correct for the months you worked in each state, and verify that your employer stopped withholding Iowa state tax after you moved to California in August. Sometimes employers mess this up and keep withholding for the wrong state. You can safely proceed with filing using the imported information, but it's always good practice to verify against the paper copy when it arrives. The electronic version is typically 100% accurate since it comes from the same source the IRS uses.

Just curious - does anyone know what the threshold is for when banks/credit unions have to send a 1099-INT? I have accounts at multiple banks and only got forms from some of them.

Just to add another perspective - if you're worried about making mistakes with tax forms like the 1099-INT, you might want to consider using a tax professional for this year, especially since it's your first time dealing with investment income. Many CPAs offer reasonably priced services for straightforward returns, and they can walk you through what to expect in future years. That said, if you're comfortable with TurboTax, it really does make adding 1099-INT information pretty foolproof. The software will ask you simple questions and guide you through entering the information exactly as it appears on the form. Just make sure you have the form handy when you're doing your taxes so you can enter all the numbers accurately.

I work in payroll and see this mistake ALL the time. The 2020 form change has created so much confusion. Your best bet is to contact whoever is handling the payments (likely HR or the benefits department) and explain that beneficiary payments should go on 1099-MISC Box 3, not 1099-NEC. Most companies actually want to get this right because incorrect filing causes problems for them too!

This is exactly the kind of frustrating situation that highlights how confusing the 2020 form changes have been! As others have mentioned, you're absolutely right to question this - beneficiary payments should NOT be on a 1099-NEC since you didn't perform any services. I'd recommend taking a two-pronged approach: First, contact the company's benefits or payroll department with a clear explanation that these are beneficiary payments from your father's retirement package, not contractor work. Reference IRS guidelines that beneficiary payments should be reported on 1099-MISC Box 3. Second, once you get the corrected forms, definitely file amended returns (Form 1040-X) for the years you incorrectly paid self-employment tax - that money should come back to you. Document everything in writing when you contact the company. Many payroll departments are still figuring out the post-2020 form requirements, so being clear and specific about the nature of the payments will help them get it right going forward.