Has anyone else noticed how tax identity theft has gotten so much worse in the last couple years? My neighbor had someone file a fake return with her info last year and it took her like 8 months to get her actual refund. The IRS is completely overwhelmed with this stuff.

This is definitely a red flag. I've been preparing taxes for over a decade and there's absolutely no legitimate reason a tax preparer needs physical copies of social security cards. The SSN itself is sufficient for all tax preparation purposes, including e-filing and identity verification with the IRS. The explanation about "security purposes in case someone tries to fraudulently use your SSNs" doesn't make sense either - having copies of your cards wouldn't prevent or help with identity theft, and actually creates MORE risk by having those documents stored in their files. I'd strongly recommend finding a new preparer. A legitimate tax professional should be able to clearly explain why they need any document, and getting defensive when questioned is another warning sign. Trust your instincts on this one.

Great discussion everyone! As someone who just went through a similar situation, I want to emphasize how important it is to keep meticulous records of all your IRA contributions, especially the non-deductible ones. I had a mix of deductible and non-deductible contributions spanning 15 years across three different brokerages. When I finally needed to start taking distributions, I realized I had never filed Form 8606 for about half of my non-deductible contribution years. The paperwork reconstruction was a nightmare! What saved me was creating a simple spreadsheet tracking every contribution by year, amount, and type (deductible vs non-deductible). I also scanned and saved all my 1099-R forms and brokerage statements. This made filing the missing 8606 forms much easier. For anyone in Brianna's situation - start organizing your records now before you need them. Future you will thank you when it's time to take distributions and you're not scrambling to prove which contributions were already taxed!

This is exactly the kind of detailed explanation I was looking for! I've been making both deductible and non-deductible contributions to my tIRA over the years, and like many others here, I had no idea about the pro-rata rule or the Form 8606 requirement. Reading through all these comments has been incredibly enlightening, especially learning that I can't just cherry-pick which contributions to withdraw first. I think I need to do an audit of my own situation - I've probably been missing Form 8606 filings for several years of non-deductible contributions. The suggestion about keeping detailed records in a spreadsheet really resonates with me. I can already tell that trying to reconstruct years of contribution history is going to be challenging, but it sounds like it's absolutely necessary to avoid major tax headaches down the road. Thanks to everyone who shared their experiences and tools - this community has saved me from what could have been a very costly mistake when I eventually start taking distributions!

Great thread everyone! I'm also dealing with this transition from college to first "real job" and the tax stuff is definitely confusing. One thing that helped me understand the new W4 was realizing that the old allowances system was basically just a rough way to estimate your tax situation, while the new form tries to be more precise about your actual circumstances. For what it's worth, I ended up in a similar situation as Samuel - filled out just the basic info initially, then monitored my first few paychecks. Turned out my withholding was pretty much spot on without any additional adjustments needed. The new system really does seem to work better for straightforward situations like ours. Also wanted to mention that if your employer has an HR department, they're usually pretty good at explaining how the new W4 works since they've had to help tons of employees through this same confusion. Mine even had a little cheat sheet that explained the differences between old and new forms, which was super helpful. Worth asking if yours has something similar!

As a tax professional who's helped dozens of clients transition to the new W4, I wanted to add some clarity to this discussion. The confusion about "claiming yourself" is completely understandable because the terminology changed so dramatically. Here's what's really happening: On the old W4, that "1" allowance you claimed for yourself was essentially telling your employer to reduce your tax withholding by a specific amount (roughly $4,300 worth of income in 2019). The new W4 eliminates this allowance system entirely and instead calculates withholding based on actual tax law. For recent graduates in your situation (single, one job, no dependents), the new system will typically withhold at the 12% federal tax bracket after accounting for the standard deduction. This often results in withholding that's very similar to what you would have gotten claiming "2" allowances on the old system. One important note: if you have student loan interest, you might want to complete Step 4(b) to reduce your withholding slightly, since that interest is tax-deductible. Most new graduates overlook this and end up with larger refunds than necessary. The bottom line is that the new system is actually more accurate for most people, even though the transition feels confusing!

This is a really frustrating situation, and you're absolutely right to be stressed about it. The retroactive nature of this change is particularly unfair since you made a major financial commitment based on their previous policy. A few additional thoughts beyond what others have shared: 1. Document everything from when you enrolled - any emails, benefit summaries, or enrollment materials that indicated the tax treatment. If you have anything in writing suggesting the reimbursements would be non-taxable, that strengthens your position significantly. 2. Consider consulting with a tax attorney who specializes in employment benefits. The retroactive application of a policy change that affects substantial financial commitments could potentially violate reasonable reliance principles, especially if you can show you wouldn't have enrolled knowing the true tax consequences. 3. For immediate relief, you might want to adjust your W-4 withholdings now to account for the additional tax burden over the remaining years of your program. This will help avoid a massive tax bill at filing time. 4. Some companies have hardship provisions in their benefits policies. Given that this change creates unexpected financial hardship, it might be worth asking HR if there are any exceptions or payment plan options for the additional taxes. The Roth IRA issue is definitely fixable through recharacterization as others mentioned, but make sure to act before your filing deadline. This whole situation is a good reminder of how important it is to get benefit details in writing, even when policies seem well-established.

I'm really sorry you're dealing with this - the retroactive nature makes it especially unfair since you made a major financial commitment based on their established policy. One angle that hasn't been mentioned yet: check if your company has an employee grievance or appeals process for benefit disputes. Many larger companies have formal procedures for challenging policy changes, especially when they're applied retroactively. Even if they don't reverse the decision, getting your objection on record could be important if this ever escalates. Also, consider the timing of your remaining reimbursement requests. If you have any flexibility in when you submit receipts for future semesters, you might be able to spread the tax impact across multiple years to avoid pushing yourself into higher tax brackets all at once. For the immediate tax planning, definitely look into increasing your 401(k) contributions if you're not already maxed out. The additional deferrals can help offset some of the increased taxable income from the reclassified reimbursements. And definitely don't let this discourage you from finishing the program! An Executive MBA is a valuable investment in your career, even with the unexpected tax burden. The long-term earning potential should more than offset these additional costs, frustrating as they are right now.

I went through almost the exact same situation last year! Accidentally sent my entire tax payment (federal + state) to the IRS instead of splitting it. Here's what worked for me: 1. File Form 843 immediately - don't wait. The sooner you submit it, the sooner they can process your refund. 2. Include a detailed explanation letter with your form explaining exactly what happened, including the date of payment, amount, and payment method (pay1040.com in your case). 3. Keep copies of EVERYTHING - your payment confirmation from pay1040.com, bank statements showing the transaction, etc. 4. You can also try calling the IRS at 1-800-829-1040, but be prepared for long hold times. Sometimes they can process overpayment refunds over the phone if it's straightforward. The good news is that this is actually a pretty common mistake, so the IRS is used to handling these situations. I got my overpayment back in about 6 weeks. And definitely pay your state taxes ASAP even if you have to put it on a credit card temporarily - the interest on a card will be way less than state penalties and interest.

I've been through this exact situation! The most important thing is to act quickly on both fronts - getting your IRS refund AND paying your state taxes to avoid penalties. For the IRS overpayment, Form 843 is definitely the right form (not 8849 as someone mentioned earlier). Make sure to include: - Exact payment date and amount - Clear explanation that you accidentally paid state taxes to the IRS - Payment confirmation from pay1040.com - Your contact information Pro tip: You can actually request expedited processing if you're experiencing financial hardship due to the overpayment. Include a brief hardship letter explaining your situation. While you're waiting for the refund (typically 4-8 weeks), definitely pay your state taxes immediately even if you have to borrow the money temporarily. State penalties and interest rates are usually much higher than what you'd pay on a short-term loan or credit card. You can also try calling the IRS Taxpayer Advocate Service at 1-877-777-4778 if you're experiencing significant financial hardship. They sometimes can expedite overpayment refunds in genuine hardship cases. Good luck - this mistake happens more often than you'd think, so the IRS is used to processing these requests!