Pro tip: scan and save digital copies of ALL your tax docs. Makes it 10000x easier when the IRS comes asking

Same situation here! I've got codes 570 and 971 showing up too. One of my employers apparently never submitted their W2 info to SSA. Been stuck for 3 weeks now waiting for this CP12 letter. Did they give you any timeline on when you might see movement once they get the missing W2 data?

Has anyone calculated whether it's actually better over the long-term to just keep the active funds and pay the annual tax bills? I'm facing a similar choice and when I run the numbers, the tax hit from selling everything seems so large that it might take 8-10 years of ETF tax efficiency to break even. By then who knows what tax laws will be...

You've outlined some solid strategies, and I think your instinct to be methodical about this transition is spot-on. One additional consideration that might help optimize your approach: look at the specific timing of when each fund typically makes its distributions. Most funds announce their estimated distributions in October/November, so you have a window to act before December. But some funds distribute quarterly or have different schedules. If you can identify which of your funds (FMAGX, FDGRX, PRHSX) have the largest upcoming distributions relative to your cost basis, prioritize moving those first. Also consider the "tax budget" approach - calculate exactly how much additional tax liability you can absorb this year without jumping into the next bracket, then use that as your guide for how much to transition now versus spreading across multiple years. Given that you mentioned still having room before hitting the 20% bracket, you might have more flexibility than you think. The charitable giving strategy you mentioned is particularly powerful if you itemize deductions. You can essentially convert what would be capital gains taxes into charitable deductions at your marginal income tax rate, which could be significantly higher than your 15% capital gains rate. One last thought: if any of these funds are in tax-advantaged accounts (401k, IRA), obviously the tax considerations don't apply and you can transition those immediately without consequence.

Did your filing status change at all? I went from getting $1800 back to owing $700 because I accidentally filed as Head of Household instead of Single (my kid lives with my ex most of the time but visits me). The tax software didn't flag it as different from last year because I used a different program.

This exact same thing happened to me last year! I was panicking because I had always gotten refunds and suddenly owed $850. After digging through everything, I found out that my employer's payroll system had automatically updated to new IRS withholding tables in the middle of the year without telling anyone. Even though my W-4 settings stayed exactly the same, less tax was being taken out of each paycheck. The other big factor was losing those pandemic-related credits. I had gotten the Recovery Rebate Credit the year before, which was a huge boost to my refund that obviously wasn't there anymore. What really helped me was going through my paystubs month by month and comparing the federal tax withheld to the previous year. You can see exactly when the withholding amounts changed. Once I understood what happened, I adjusted my W-4 to have an extra $50 per paycheck withheld, and now I'm back to getting small refunds instead of owing. Don't panic - this is actually pretty common when tax laws or withholding tables change. Just make sure to adjust your withholding going forward so it doesn't happen again next year!

Your confusion about the tax calculations is totally understandable - the relationship between 401k contributions and withholding can be really tricky to wrap your head around at first! The key thing to remember is that your payroll system doesn't just multiply your reduced income by your marginal tax rate. Instead, it's trying to estimate what your total annual tax liability will be, then spread that across all your paychecks. So when you contribute $580 to your 401k, the system calculates: 1. Your projected annual salary ($14,500 × 26 pay periods = $377,000) 2. Subtracts your annual 401k contributions ($580 × 26 = $15,080) 3. Applies the standard deduction (~$13,850 for 2023) 4. Runs this through the progressive tax brackets (10%, 12%, 22%, etc.) 5. Divides the result by your pay periods This is why you're seeing $2,225 in federal withholding instead of the $3,062 you calculated. The withholding system accounts for the fact that not all of your income is taxed at 22% - some is taxed at 10%, some at 12%, etc. For your signing bonus situation, definitely set aside about 25-30% for taxes since nothing was withheld. You might also want to make an estimated tax payment to avoid underpayment penalties. The IRS generally expects you to pay taxes throughout the year, not just at filing time. If you bump your 401k to 20%, you'd contribute about $2,900 per paycheck instead of $580. This would save you roughly $510 in federal taxes per paycheck (22% of the additional $2,320), so your take-home would only drop by about $1,810 instead of the full $2,320.

This is such a common confusion for new employees! I went through the exact same thing when I started my career. The withholding system is designed to be "smart" about estimating your annual tax situation, which is why the math doesn't work out to simply multiplying by your marginal rate. A few key points that might help: 1. **Your signing bonus tax situation**: Since no federal taxes were withheld on that $68,500, you'll definitely owe taxes on it. At your income level, most of it will likely be taxed at 22%, so setting aside around $15,000-$17,000 would be prudent. Don't wait until tax season - consider making a quarterly estimated payment. 2. **Why your regular paycheck withholding seems low**: The payroll system is annualizing your income and then accounting for the standard deduction (~$13,850) plus the progressive tax structure. So it's not just taking 22% of your taxable income - it's applying 10% to the first chunk, 12% to the next chunk, and so on. 3. **401k impact**: Every dollar you contribute saves you taxes at your marginal rate. So if you bump to 20% contribution ($2,900 vs $580), you'd save about $510 in federal taxes per paycheck, meaning your take-home only drops by ~$1,810 instead of the full $2,320. The employer match is free money - definitely keep contributing at least enough to get the full match! And consider bumping it higher if you can afford it, especially while you're young and have time for compound growth.

4 Don't forget about state taxes too! Everything people are saying about federal returns is true (yes, file your own return even as a dependent), but depending on your state, you might need to file a state return as well to get back state income taxes that were withheld.

Just to add another perspective - I was in almost the exact same situation last year (college student, claimed as dependent, worked part-time making about $13k). Filing my own return was definitely the right move and I got back most of what was withheld. One tip that really helped me: when you're filling out your tax software, pay close attention to the dependency questions. The wording can be confusing - it'll ask something like "Can someone else claim you as a dependent?" and the answer is YES even though you're filing your own return. This tripped me up initially because I thought it meant I couldn't file. Also, keep all your W-2s and any 1098-T forms from your school organized. Even though your parents might claim education credits, having your 1098-T can help verify information on your return. The whole process ended up being much simpler than I expected once I understood that being a dependent doesn't prevent you from filing and getting your own refund!