Just wanted to add some clarity on the withholding estimate you got from your bank. The $300-400 they quoted at 24% might actually be correct if they're only withholding on the earnings portion of your withdrawal, not the full $5,000. Banks often use conservative estimates for withholding because they know contributions from Roth accounts come out tax-free. If your $5,000 withdrawal is mostly contributions with only a small portion being earnings, then 24% of just that earnings amount would result in much lower withholding than you'd expect. However, don't forget you'll still owe that 10% early withdrawal penalty on the full amount if you're under 59½, which would be $500 in your case. The bank's withholding estimate typically doesn't include penalties - just income tax withholding. So your total tax burden could be the withholding amount PLUS the $500 penalty, assuming no exceptions apply to your situation. I'd recommend asking your 403(b) administrator for a breakdown of your account balance showing contributions vs. earnings so you can calculate this more precisely.

Great question about the breakdown! Your 403(b) administrator is required to track your contribution basis for tax purposes, but they're not necessarily required to show it clearly on regular statements. You'll definitely want to request this information specifically - call them and ask for a "contribution basis report" or "cost basis breakdown." When you actually take the withdrawal, they'll provide you with a 1099-R form that shows the total distribution and should indicate how much is taxable vs. non-taxable. However, getting this breakdown beforehand helps you plan better. You'll need this information for tax filing purposes if any portion of your withdrawal includes earnings. The 1099-R will report the distribution to the IRS, and you'll use that to complete Form 8606 (if needed) to properly report the tax-free vs. taxable portions on your tax return. Pro tip: Some administrators can provide this over the phone, while others might require a written request. If you're planning the withdrawal soon, I'd start this process now since it can sometimes take a few days to get the detailed breakdown.

One thing nobody's mentioned is how this affects your ability to claim the Child Tax Credit if you have kids. If you use the FEIE, you can't claim the refundable portion of the CTC on the excluded income. So if you have children, you might actually be better off with the FTC in some cases. For example, I live in France with 2 kids and about €70,000 in income, plus some US dividends. When I ran the numbers, the additional Child Tax Credit I could claim using FTC outweighed the tax savings from the partial FEIE strategy. Has anyone else with children done detailed calculations on this? Would be interested to see if this holds true across different income levels and number of dependents.

This is such a valuable discussion! I'm a US citizen living in Australia and have been struggling with this exact decision. Reading through everyone's experiences, I'm realizing I need to factor in more variables than I initially thought. @Emily Nguyen-Smith and @James Johnson - your point about the Child Tax Credit is huge. I have one child and was leaning toward the partial FEIE strategy, but now I'm wondering if I should stick with FTC to preserve my ability to claim the full CTC. One question for the group: has anyone dealt with superannuation (retirement contributions) in Australia and how that interacts with these strategies? My employer contributes about AUD $8,000 annually to my super, and I'm not sure how that affects the foreign earned income calculation for FEIE purposes. Also wondering about the interaction with the Additional Child Tax Credit - if I use partial FEIE and keep some earned income for Roth IRA eligibility, does that preserved earned income count toward the ACTC calculation even though the rest is excluded? This thread has been incredibly helpful - it's clear there's no one-size-fits-all answer and the optimal strategy really depends on your specific situation including state taxes, number of dependents, and foreign tax rates.

Based on everyone's advice here, it sounds like claiming exempt isn't the right move. I'm definitely going to avoid that route since I clearly don't qualify for it. I'm leaning toward either using the IRS withholding calculator that Tami mentioned or trying one of those AI tools like Julia suggested. My situation is pretty straightforward - just regular W-2 income with this one bigger paycheck coming up. Does anyone know roughly how far in advance I need to submit a new W-4 to my payroll department? I want to make sure I get the timing right if I decide to temporarily adjust my withholding for this paycheck and then change it back. Also, just to clarify - when you all mention "part-year withholding method," is that something specific I ask for on the W-4 form, or is that just what it's called when you adjust the withholding amounts temporarily?

Great question! I went through something similar last year with a large commission check. The key thing I learned is that claiming exempt is really meant for people who expect to owe zero taxes for the entire year - not just a way to temporarily reduce withholding. Here's what worked for me: I used the IRS Tax Withholding Estimator (it's free on their website) and input my expected total income for the year including that large paycheck. It then told me exactly how to adjust my W-4 temporarily. I increased my deductions on line 3 for just that pay period, then switched back to normal withholding right after. The timing is crucial though - make sure to submit your W-4 changes well before the payroll cutoff. I almost missed mine and would have been stuck with the regular withholding. Also keep in mind that if this puts you significantly under-withheld for the year, you might need to make an estimated tax payment to avoid penalties. The math worked out where I kept about 15% more of that large paycheck and didn't get hit with any penalties when I filed. Just make sure you're still meeting the safe harbor rules (paying at least 90% of current year tax or 100% of last year's tax liability).

As someone who runs a small consulting business from a home office, I can definitely relate to the power outage frustrations! One thing that might be worth considering alongside your generator purchase is whether you qualify for any business continuity insurance deductions or disaster preparedness credits. I discovered that some business insurance policies offer premium discounts if you have backup power systems in place, since it reduces their risk exposure for business interruption claims. The savings on insurance premiums over time can help offset the generator cost, making it an even smarter investment. Also, since you're in event production, you might want to check if your clients' contracts include any force majeure clauses related to power outages. If having backup power allows you to fulfill contracts that you'd otherwise have to cancel due to "acts of God" like power failures, that could be another strong business justification for the IRS. Some of my clients actually require proof of backup systems now after experiencing their own event disasters. The generator sounds like a solid business investment that should definitely qualify for the full Section 179 deduction. Just make sure to keep detailed logs of every time you use it for business purposes - even test runs count as business use if they're maintaining your ability to serve clients!

This is a great discussion with lots of helpful insights! I wanted to add one more consideration that might be relevant for your event production company - the potential impact on your business credit and lending capacity. When I purchased backup equipment for my small manufacturing business, I discovered that having documented business continuity measures actually improved my business credit profile. Lenders and suppliers view backup power systems as a sign of operational maturity and risk management, which can help when you need equipment financing or working capital lines of credit in the future. Also, since you mentioned this is an $8,500 investment, you might want to consider whether leasing versus purchasing makes more sense for your cash flow situation. With a lease, you can deduct the full lease payments as a business expense, and it might free up capital for other business needs. Some generator companies offer lease-to-own options that give you flexibility while still building toward ownership. One final thought - document everything about your decision-making process, including quotes from multiple vendors, power requirement calculations, and the business impact analysis from your previous outages. This creates a comprehensive file that demonstrates due diligence and business necessity, which strengthens your position whether you take Section 179 or depreciate the asset. The IRS appreciates seeing that business owners made informed, justified decisions rather than impulse purchases.

Has anyone tried the "worthless securities" checkbox in TurboTax or other tax software for really old stocks? I have some dotcom bubble disasters from 2001 that I never claimed!

I went through this exact situation with some worthless biotech stocks from 2012. Unfortunately, you're right that amending returns from over 10 years ago isn't an option anymore - the IRS only allows amendments within 3 years of the original filing date (or 2 years from when you paid the tax, whichever is later). Having your broker remove the shares won't create a current-year tax loss either. The loss needs to be recognized in the year the stock actually became worthless, not when it's removed from your account. However, there might be one legitimate option: if you can document that you never had a reasonable opportunity to discover the stock was worthless during the proper timeframe (maybe the company kept filing reports or your broker continued showing it as active), you could potentially file Form 8082 with a detailed explanation. This is a long shot and would likely trigger IRS scrutiny, but it's within the tax code. Before going that route, I'd suggest consulting with a tax professional who specializes in securities transactions. The potential tax savings need to be weighed against the cost and risk of an IRS inquiry.