Just FYI - my wife had to file for disability a few years back. You CANNOT be claimed as a dependent by your spouse, regardless of income. Spouses file either jointly or separately, but never as dependents. The only question is whether to file jointly or separately once you get your back pay. In our case, filing jointly was still better even with the lump sum payment.

Hi Kayla! I went through this exact situation a couple years ago. Like others have said, you definitely can't be claimed as your husband's dependent - that's just not how it works for married couples. What I learned from my experience: file jointly for sure. Even with zero income on your side, the joint filing will give you better tax benefits. The standard deduction alone makes it worth it. One thing to prepare for though - when your disability gets approved (fingers crossed!), those back payments can create a bit of a tax surprise. I got a lump sum that covered 18 months of back pay, and even though it was all legitimate disability income, it still pushed us into a higher bracket that year. My advice is to start setting aside maybe 15-20% of any back payments you might receive for taxes, just to be safe. Better to have extra money than to owe the IRS come tax time! Good luck with your claim - the waiting is the hardest part, but hang in there!

Just remember if you invest that money, any gains are taxable. Learned that one the hard way lol

Sorry for your loss, Sean. Just went through something similar with my dad's estate last year. The tax professional above is spot on - inheritance itself isn't taxable income for you. One thing to keep in mind though is the "stepped-up basis" rule - if you inherited assets like stocks or property, their value gets "stepped up" to fair market value at the time of inheritance, which can save you on capital gains taxes later if you sell. Definitely keep good records of everything!

One thing nobody has mentioned: make absolutely sure your Solo 401k plan DOCUMENT allows for the flexibility you're trying to use. Some plan documents specifically require deferrals to be deposited within a certain timeframe after being withheld. I learned this the hard way last year when I assumed I had until my tax filing deadline, but my specific plan document (from a major provider) required deferrals to be deposited within 30 days of the end of the month in which they were withheld. This was more restrictive than what the IRS/DOL would have allowed! Check your actual plan document before making any assumptions about deadlines.

CPA here specializing in small business retirement plans. This thread has covered most of the key points, but I want to emphasize something critical that could save you headaches down the road. The IRS distinction between "elective deferrals" and "employer contributions" is crucial for S-Corps. Your $22,500 employee deferral must be reflected as reduced wages on your 2024 W-2 (Box 1 should show $81,500 instead of $104,000 if you defer the full amount). This creates the paper trail showing the deferral happened in 2024. However, here's what many miss: if you haven't actually moved the money to your 401k account yet, you need to be very careful about cash flow and business expense timing. The IRS could potentially challenge whether you had "constructive receipt" of that income if the funds sat in your business account for months while you used them for other business expenses. My recommendation: even if your plan document allows flexibility, try to deposit the deferred funds by January 31st at the latest. This shows good faith compliance and avoids any potential constructive receipt issues. The employer profit sharing contribution can definitely wait until your tax filing deadline, but treat the employee deferrals with more urgency. Also double-check that your payroll system is properly coding the deferrals for your W-2 - Box 12 should show the $22,500 with code "D" for elective deferrals.

I've been dealing with transcript codes for years as a tax preparer, and I want to echo what others have said - code 826 is indeed a positive sign! It means the IRS is paying you interest on your delayed refund. However, I'd add one important detail that hasn't been mentioned: the interest calculation starts from either April 15th (the original filing deadline) or the date you filed if you filed after the deadline. So if you filed early in February but are just seeing this code now, you're looking at a decent amount of interest. Also, @Yara, since you mentioned this is your first post-divorce filing, just double-check that you didn't accidentally claim any dependents that your ex-spouse also claimed - that's one of the most common causes for extended processing delays I see with newly divorced clients. The 826 code suggests you're past any major holds though, so that's encouraging!

Hey Yara! I see you're getting some great detailed explanations here, but I wanted to share a quick personal experience that might help ease your mind. I had code 826 appear on my transcript last year during a particularly stressful time (also dealing with major life changes), and I was worried sick about what it meant. Turns out it was actually one of the better codes to see! I received my refund about 8 days after the 826 showed up, and the interest payment was honestly a nice little bonus I wasn't expecting - ended up being about $47 extra on a $2,800 refund. The waiting is definitely the hardest part, especially when you're navigating all this solo for the first time. But from everything I've learned and experienced, once you see 826, you're usually in the home stretch. Keep checking your transcript every few days - you'll likely see an 846 code appear soon, and that's when you know your refund is officially on its way to your account. Hang in there! 💪

I've been following this discussion as someone who went through a similar car allowance transition last year, and I wanted to add a few practical points that might help others navigate this situation. First, regarding the timing of discovering tax implications - I'd strongly recommend asking HR for a sample year-end paystub or W-2 showing exactly how the allowance will be reported. Sometimes seeing the actual numbers makes it clear whether they're treating it as taxable income or not. Second, if your company does confirm the allowance is taxable, consider negotiating for a "gross-up" payment to cover the additional tax burden. Some companies will increase the allowance amount to ensure employees receive the intended net benefit after taxes. It's worth asking, especially if multiple employees are affected. Third, don't forget about state tax implications. While most of the discussion here has focused on federal taxes, state income taxes can add another 3-10% depending on where you live. This can significantly increase the total tax burden on that $7,800 annual allowance. Finally, for those considering whether to stay with their employer over this issue - it's worth calculating the total compensation change including benefits. If your company is saving money by eliminating fleet management costs, vehicle depreciation, and maintenance expenses, there might be room to negotiate a higher base salary to offset the new tax burden and vehicle ownership costs. The key is to approach this analytically rather than emotionally. Get the facts in writing, run the numbers for your specific situation, and make informed decisions based on your total financial picture.

This thread has been incredibly helpful - thank you to everyone who shared their real experiences! As someone who works in payroll administration, I can confirm that car allowances are one of the most commonly misunderstood areas of tax law, both by HR departments and employees. The consensus here is absolutely correct: unless your employer requires detailed expense documentation and returns of unused funds (a true accountable plan), that $650 monthly allowance will almost certainly be taxable income reported in Box 1 of your W-2. A few additional points that might help: 1. Ask HR to show you their payroll system setup for the allowance. If it's coded as "wages" or "supplemental income" rather than "reimbursement," that's definitive proof it will be taxed. 2. The timing of tax withholding doesn't determine taxability. Even if they're not withholding taxes now, you'll still owe them when you file. 3. Consider the FICA impact too - that $7,800 will also be subject to Social Security and Medicare taxes (7.65% total), which adds another $597 annually. 4. Document everything in writing. If HR continues to insist it's not taxable despite not meeting accountable plan requirements, you'll want that documentation if issues arise later. Based on all the experiences shared here, I'd budget for about 30-35% of the allowance to cover all taxes (federal, state, FICA). Better to over-prepare than get hit with a surprise bill next April!