Questions about YTD Earnings for 2025 Tax Reporting - College Grant Income Limits

But what if their employer reports those December days on their 2024 W-2? Wouldn't that mess things up? Also, does this apply the same way to all types of income or just regular employment income?

Your employer should only include income on your 2024 W-2 that was actually paid to you in 2024. If you worked in December but weren't paid until January, those wages should appear on your 2025 W-2, not your 2024 W-2. This same principle applies to most types of ordinary income for individuals. The exception would be if you use accrual basis accounting, which most individuals don't. For regular employment income like yours, it's simply when you receive the money that determines which tax year it falls into.

How exactly does taxr.ai work with pay stubs? Does it just tell you the same info that's already on them, or does it actually calculate something useful? I'm curious because I'm also trying to manage my income for financial aid purposes.

Is this just for W-2 income or would it work for independent contractors too? I do both W-2 and 1099 work and am always confused about what counts when.

It does way more than just read what's on your pay stubs. It analyzes all your income documents together - pay stubs, 1099s, whatever you have - and gives you a comprehensive picture of where your income stands for the year. It helped me identify exactly how much more I could earn before hitting my threshold. It definitely works for both W-2 and 1099 income. That's actually one of the things I found most useful since I have some side gig income too. It breaks everything down by income type and tells you exactly what will count for the current tax year versus next year. Super helpful if you're trying to stay under a specific threshold.

How does this actually work? Seems sketchy that a third-party service could somehow get you through the IRS phone system faster than doing it yourself.

Sounds like a scam to me. Nobody can "hack" the IRS phone system. You're probably just paying for something you could do yourself for free if you're patient enough.

It's not sketchy at all - they don't get you through "faster" than everyone else. They use an automated system that waits on hold for you. Instead of you personally waiting on hold for hours, their system does it, and then they call you when an actual agent picks up. It's basically like having someone else wait in line for you. I was skeptical too before I tried it. They don't hack anything - they literally just wait on hold like anyone else would. The difference is you don't have to stay on the phone that whole time. For me, it saved about 2.5 hours of hold time, and I got the exact tax information I needed straight from an IRS representative. Sometimes peace of mind is worth it, especially with tax questions that could affect thousands of dollars.

Thanks for this suggestion! The grant is actually based on MAGI (Modified Adjusted Gross Income) rather than just gross income. I do have some room left in my 401k for the year, so this might be a perfect solution. Do you know if 401k contributions have to clear by December 31st to count for 2024, or can I make them until tax filing time like with IRAs?

401k contributions generally must be made through payroll deductions by December 31st to count for that tax year. Unlike IRAs which allow contributions until the tax filing deadline, 401k contributions are strictly calendar year. If you have a December paycheck coming, you could see if your employer will let you increase your 401k contribution percentage for just that final check. Another option could be to look at Health Savings Account contributions if you have a high-deductible health plan, or see if you have any business expenses you could accelerate if you have any self-employment income.

That's such a relief to hear from someone in payroll! So even if I work Dec 26-31, since that paycheck won't come until January, none of that will count toward my 2024 income total? I was so worried I'd have to take unpaid time off.

That's correct! As long as your paycheck date is January 3, 2025, those earnings will count toward your 2025 income for tax purposes, regardless of when you actually performed the work. The key is the payment date, not the work date. Since you're staying under $50K with your December 23rd check, you should be fine for your grant requirements. Just make sure to double-check with your grant administrator about their specific income calculation method to be 100% certain.