Has anyone successfully gotten their employer to reduce the withholding BEFORE paying the severance? I'm about to get laid off (they told us it's coming) and want to avoid this exact situation.

The withholding on your severance is unfortunately very typical. I went through this exact same shock when I was laid off 6 months ago - $42k severance with over $18k withheld. What's happening is your payroll system is treating that lump sum as if it's your new regular pay rate, so it's withholding taxes as if you suddenly make $444k annually instead of your actual salary. Here's what I learned: most of that overwithholding WILL come back to you as a refund when you file taxes, assuming your total annual income doesn't actually put you in those higher brackets. In my case, I got back about $11,500 of the $18k they took. One immediate thing you can try - contact your former employer's payroll department and ask if they can process an amended W-4 for any remaining severance payments. Some companies will do this if you haven't received the full amount yet. Also keep very detailed records of everything because you'll need to track this carefully for your tax filing. The cash flow hit is brutal when you're already dealing with job loss stress, but the IRS math will work itself out in your favor come tax time.

Manual reviews for Michigan returns with homestead credits are super common - I went through the same thing last year. The June timeline sounds about right unfortunately. The good news is that "manual review" doesn't mean there's a problem with your return, it's just that certain credits like the homestead property tax credit trigger additional verification steps. They're basically making sure your property info matches up with county records and that you meet all the residency requirements. Just keep checking your eServices account periodically for any document requests, but otherwise there's not much you can do except wait it out. The refund will come eventually!

I'm going through the exact same thing right now! Filed my MI-1040 and homestead credit on January 28th and it's been under manual review since February 5th. The wait is brutal but from what I've read here and other forums, it seems like this is just the new normal for Michigan returns with property tax credits. I called the Treasury department last week and they basically said the same thing - June timeframe for manually reviewed returns. At least we're not alone in this! Hoping we all get our refunds sooner than expected 🤞

Don't forget to check if this affects your eligibility for premium tax credits if you purchased health insurance through the marketplace! If your employer offered this QSEHRA benefit, it might impact your subsidy calculations.

I'm a tax preparer and see this confusion about FF codes pretty frequently. The $2,400 represents the annual limit your employer made available through their QSEHRA plan, not an amount you received or owe taxes on. This is purely informational for tax purposes. Here's what you should do: 1) Ask your employer for the QSEHRA plan documents and claims submission process, 2) Gather any medical expenses you paid out-of-pocket in 2024 (doctor visits, prescriptions, dental, vision, etc.), and 3) Submit eligible expenses for reimbursement before any plan deadline. The fact that your employer and their payroll company seem unaware of this benefit is a red flag. Someone authorized this setup - possibly as part of a benefits package upgrade they didn't fully understand. Don't let their confusion cost you money you're entitled to claim back!

Just pay what they're asking and move on. I had almost the exact same thing happen and wasted MONTHS going back and forth trying to get it fixed. In the end, I still had to pay the amount they calculated using the state wages. The tax authority doesn't care about your W-2 errors - they want their money based on what they consider the correct amount.

I completely agree with Keisha - don't just pay without investigating further. A 23% discrepancy is substantial and could indicate a serious error that might affect you in future years too. Here's what I'd recommend as your next steps: 1. **Gather all 2023 pay stubs** and add up the gross wages to see what the actual total should be 2. **Contact your local tax authority** directly and ask them to explain their calculation - they should be able to tell you exactly how they arrived at the higher amount 3. **Request a detailed explanation** from your wife's former employer about how they calculated local vs. state wages If there is indeed an error on the W-2, you'll want to get it corrected properly rather than paying incorrect taxes. The local tax authority's notice suggests they're confused too ("unable to determine from the Form W-2 the reason"), which indicates this isn't a standard situation. Don't let an unresponsive employer or tax preparer discourage you from getting to the bottom of this. A difference this large is worth the effort to resolve correctly.

This is a great point about getting corrected 1095-As from the Marketplace. I'd definitely recommend trying this approach first before dealing with allocation complexities. However, if the Marketplace won't issue separate forms (which sometimes happens if all three were enrolled as a single enrollment unit), the allocation approach is still valid. Just make sure you document the reasoning behind your allocation percentages. One thing I'd add - when doing allocations, consider each person's repayment limitation based on their income. The daughter making $15,500 would have a much lower repayment cap than the parents at $105,000 combined income. This could significantly impact the optimal allocation strategy and might justify allocating a higher percentage to her even if she didn't pay the premiums directly. Also, make sure all three parties sign an allocation agreement and keep it with your tax records. While not required to be filed with the return, it's good documentation if questions arise later.

This is exactly the kind of complex APTC situation that can be really tricky to navigate! Based on what you've described, I think you're dealing with a legitimate scenario where strategic allocation could benefit your clients significantly. The key insight here is understanding the repayment limitation caps. With the daughter making only $15,500 (likely around 125% FPL), her maximum repayment would be capped at around $325, while the parents at $105,000 combined income would face a much higher cap (potentially $2,700+). This income-based limitation is exactly why the IRS allows flexible allocation agreements. Before going the allocation route though, I'd definitely echo what others have said about first trying to get corrected 1095-As from the Marketplace. If the daughter truly lives independently and isn't claimed as a dependent, she should typically receive her own form. This would be the cleanest solution and eliminate all the allocation complexity. If that doesn't work out, the allocation approach is completely legitimate. Just make sure you: 1. Document the allocation agreement in writing with all parties signing 2. Consider the economic reality (who paid premiums, family contribution arrangements) 3. Factor in the repayment caps when determining optimal percentages 4. Ensure all parties report consistent allocation percentages on their respective returns This isn't a loophole - it's the IRS acknowledging that family insurance situations can be complex and allowing flexibility to achieve fair tax outcomes.