Just a heads up - if your HR/payroll person tries to tell you that this is correct because of a "special tax situation," they're full of it. I've seen companies try all kinds of explanations to justify taking extra money from employees. Some common BS excuses: - "It's because we're a small business under 50 employees" - "It's a special arrangement allowed by the IRS" - "It's company policy because we offer other benefits" - "It's temporary and will be refunded at tax time" None of these are legitimate. Employment tax laws apply to all businesses regardless of size. Document everything if they try to give you excuses.

This is definitely wage theft and completely illegal. Your employer cannot deduct their portion of Social Security and Medicare taxes from your paycheck under any circumstances. As a W-2 employee, you should only pay 7.65% (6.2% Social Security + 1.45% Medicare), and your employer must pay a matching 7.65% from their own funds - not from your wages. I'd recommend taking action immediately: 1. Gather all your paystubs showing the improper deductions 2. Calculate how much you've been overcharged (sounds like about $250/month x 8 months = $2,000+) 3. Approach HR/payroll first with documentation - frame it as "I believe there's an error in my payroll deductions" 4. If they don't fix it immediately, file a wage complaint with your state Department of Labor 5. Consider reporting to the IRS using Form 3949-A for tax law violations Don't let them give you excuses about "company policy" or "small business exemptions" - there are none. This is a clear violation of federal tax law and you're entitled to full reimbursement of the improperly withheld amounts plus interest. Document everything in writing and don't let them drag this out. You've already lost too much money to this illegal practice.

As someone who went through this exact same situation last year, I can tell you that the IRS is actually pretty understanding about first-time contractor mistakes. Here's what I learned: 1. You can absolutely request first-time penalty abatement - it's a real thing and they granted it for me even though I missed the first two quarters. 2. The penalties aren't as scary as they sound. Mine ended up being around $180 for the year, which was way less than I feared. 3. Don't wait! Start making estimated payments immediately. You can make payments anytime through EFTPS (Electronic Federal Tax Payment System) or IRS Direct Pay. Even if you're late, paying something now reduces the penalty amount. One tip that saved me: if your total tax liability this year will be less than what you owed last year, you might qualify for the "safe harbor" rule and avoid penalties altogether. This often applies to people transitioning from W-2 to contractor work mid-year. Also, make sure you're tracking all your business expenses - mileage, home office, equipment, etc. These deductions can significantly reduce what you actually owe in taxes.

I'm in almost the exact same boat! Started contracting 4 months ago and just learned about quarterly payments last week. Reading through all these responses has been super helpful - I had no idea about the first-time abatement or safe harbor rules. One thing I'm still confused about though - when you make estimated payments, do you pay based on what you think you'll owe for the whole year divided by 4? Or do you pay based on your actual income each quarter? My contractor income varies a lot month to month, so I'm not sure how to calculate what to send in. Also, for those who used the online tools mentioned here, did you end up needing a tax professional anyway, or were you able to handle everything yourself? I'm trying to decide if it's worth the cost to hire someone or if I can figure this out on my own.

Does anyone know if TurboTax handles Form 1116 correctly with these HTKO adjustments? I've been using it for years but never really understood if it's doing the qualified dividend calculations properly.

I've been dealing with similar Form 1116 confusion for years with my international investments. After reading through all these responses, it's clear that the HTKO adjustment should use the GROSS amount before qualified dividend adjustments, but I wanted to add something that might help others. One thing that really helped me understand this was realizing that Form 1116 is essentially doing two separate calculations: (1) determining how much foreign tax credit you're eligible for based on ALL your foreign income, and (2) figuring out how that income gets taxed in the US (where qualified dividends get special treatment). The HTKO section is part of calculation #1 - you need the full gross amount to properly establish your foreign tax credit limitation. The qualified dividend preferential treatment happens later in the form when calculating your US tax liability on that income. For Grace's situation with $14,500 in foreign dividends, you'd report the full amount in the HTKO section, then let the form handle the qualified dividend portion separately. This ensures you get the maximum allowable foreign tax credit while still getting the benefit of qualified dividend tax rates where applicable.

I've been using Green Dot for tax refunds for about 4 years now and never had any problems! The IRS definitely accepts prepaid cards - they just need valid routing and account numbers, which Green Dot provides. A few things that might help ease your worry: - Green Dot actually processes IRS deposits pretty quickly, often within 24 hours of the IRS sending it - The deposit limits are high enough that unless you're getting a massive refund, you shouldn't hit any limits - Green Dot doesn't charge fees for receiving direct deposits like tax refunds Since you already filed with your Green Dot info, I'd stick with it rather than trying to change anything now. The IRS system is pretty reliable with prepaid cards, and if there were somehow an issue, they'd automatically mail you a check instead. You can use the "Where's My Refund" tool on the IRS website to track when they send the deposit, and then expect it to show up on your card within a day or two after that. Green Dot also sends text alerts when deposits hit your account if you have that set up. Don't stress about it - you made a good choice going with direct deposit, even to a prepaid card!

I went through this exact same worry last year with my Green Dot card! Filed in February and spent weeks stressing about whether it would work. Turns out I had nothing to worry about - the refund hit my Green Dot account perfectly and actually arrived 2 days earlier than my coworker's refund who used a traditional bank. The IRS processes hundreds of thousands of refunds to prepaid cards every tax season. As long as your routing and account numbers are correct (which they are if you got them from Green Dot), you should be totally fine. One tip - make sure to enable text notifications in your Green Dot app if you haven't already. I got an instant alert when my refund deposited, which was such a relief after all that worrying. The fact that you're concerned about this shows you're being responsible about your taxes. But honestly, prepaid cards like Green Dot are just as legitimate for IRS deposits as regular bank accounts. You made a smart choice going with direct deposit - you'll get your money way faster than waiting for a paper check!

As someone who's dealt with precious metals transactions for years, I want to emphasize something that hasn't been mentioned yet - make sure you're also considering the self-employment tax implications. Since you're doing freelance graphic design work, that gold coin income isn't just subject to regular income tax, but also the 15.3% self-employment tax on the fair market value. Also, don't forget that your client should be issuing you a 1099-NEC if the total value of payments (including these gold coins) exceeds $600 for the year. If they don't, you still need to report it, but it's worth having a conversation with them about proper reporting since they may need to report it on their end too. One more tip: consider opening a separate business bank account and depositing the cash equivalent of each coin's value when received. This creates a clear paper trail and makes record-keeping much easier for both accounting and tax purposes.

Just wanted to chime in as someone who's been through this exact situation! I'm a freelance web developer and had a client pay me with American Gold Eagles last year. Initially tried to report just the face value ($50 per coin) but my CPA immediately shut that down. Here's what I learned the hard way: the IRS doesn't care what the face value says or what you and your client agreed to - they want the actual fair market value reported. I ended up having to go back and recalculate everything based on the gold spot price on each date I received payment. Pro tip: I started using a gold price tracking app to screenshot the daily closing prices whenever I got paid. Also keep any documentation about the coin's condition since some Liberty coins have collector premiums beyond just the gold content. The good news is once you establish the fair market value as your basis, if you ever sell the coins later, you'll only pay capital gains tax on any appreciation above that amount. But yeah, expect to pay both income tax AND self-employment tax on the full market value - it definitely adds up!