Something doesn't add up with your numbers. If the missed RMD was $5,695, the maximum excise tax penalty should be 50% of that, which is $2,847.50. But the IRS is asking for the full $5,695 plus penalties? Did you include the distribution on his tax return for 2022 (even though it was taken in 2023)? If not, the IRS might be considering this unreported income, which would explain why they're including the full amount as a tax increase. Also, I think you misunderstood what Form 5329 does. Lines 53-55 being zero means you calculated no penalty due (requesting a waiver). But you still have to report and pay tax on the RMD amount itself once it's distributed.

Just to add another perspective - my father missed his RMD two years ago, and we went through this same process. We had to: 1. Take the missed distribution immediately 2. File Form 5329 requesting a waiver of the 50% penalty 3. Include a letter explaining WHY it was missed (in our case, health issues) 4. File an amended return to include the missed RMD as income in the correct year The IRS initially sent a similar notice to what you received, but after we responded with a detailed explanation, they waived most of the penalties. We still had to pay the basic income tax on the distribution amount plus some interest, but they removed the failure to file/pay penalties. The key was providing a legitimate reason why it was missed and showing we corrected it immediately upon discovery.

This exact thing happened to my sister last month! The IRS system is so broken - they dated her check in December but it didn't actually get mailed until March. She was going crazy checking "Where's My Refund" every day and it never updated. Here's what worked for her: She tried her bank first (Chase) and they actually accepted the expired check even though it was about 6 weeks past the expiration date. The teller said they have discretion with government checks and since it was clearly just a mailing delay, not her fault, they processed it without any issues. If your bank won't take it, definitely call the IRS early in the morning (like 7:00 AM sharp when they open) - that's when you have the best chance of getting through. My sister had to try a few days but eventually got connected in under 30 minutes. The agent was actually super helpful and apologetic about the delay. They immediately started the reissuance process over the phone and she got her new check in about 3 weeks. They also updated her address in their system to make sure it wouldn't happen again. Don't stress too much - this is apparently pretty common and the IRS knows their mailing system has issues. You'll get your money!

I went through this exact same frustrating situation about 6 months ago! The good news is that you absolutely can get your refund - expired Treasury checks are more common than you'd think and the IRS has procedures in place for this. Here's what I'd recommend based on my experience: 1. **Try your bank first** - Many banks will still honor Treasury checks even after the stated expiration date, especially if it's only been a few weeks. Bring ID and be prepared to explain the situation. Worth trying before going through the reissuance process. 2. **If bank says no, contact IRS directly** - Call early (right at 7 AM when they open) for best chance of getting through. Have your SSN, filing details, and refund amount ready. They can verify your identity and start reissuance over the phone. 3. **Mail option as backup** - If you can't reach them by phone, write "VOID" across the expired check and mail it back with a letter explaining you received it after expiration. Include your contact info and request a new check. Send it certified mail to track it. 4. **Check your address** - Make sure the IRS has your current, correct address! This might be why your check took so long to reach you. They can update it during your call. The whole process took about 4 weeks for me once I got it sorted out. Don't panic - you'll get your $2,873! This happens way more often than it should due to IRS mailing delays.

Great thread! Just wanted to add one more consideration that hasn't been mentioned yet - if you're planning to upgrade to a higher-value vehicle in the future, starting with actual expenses now might limit your flexibility later. For example, if you use actual expenses on your current Honda Accord lease and then want to lease a BMW or Mercedes next year, you'd be locked into actual expenses for that vehicle too. But if those luxury vehicles have high lease inclusion amounts, the standard mileage rate might actually be more beneficial. Also, don't overlook the administrative burden. I switched from actual expenses to standard mileage last year specifically because tracking every single receipt, gas purchase, and maintenance cost was eating up way too much of my time. The standard rate is so much simpler - just track your business miles and multiply by the rate. Given that you're already at 75% business use (which is quite high), the standard mileage method would probably work well for you and keep things simple for your first year in business.

As someone who just went through this exact decision process last month, I'd strongly recommend starting with the standard mileage rate for your first year. Here's why: 1. **Simplicity**: You're already juggling learning how to run a business - don't add unnecessary tax complexity on top of it. Standard mileage just requires tracking business vs personal miles. 2. **Your usage percentage**: At 75% business use, you're in the sweet spot where standard mileage typically works well. The current rate of 67 cents per mile factors in all those costs you mentioned (lease payments, maintenance, gas, insurance). 3. **Flexibility**: If you start with standard mileage, you can always switch to actual expenses next year if your situation changes. But if you start with actual expenses, you're locked in for the entire lease period. 4. **Audit protection**: A simple mileage log with dates, destinations, and business purposes is much cleaner than boxes of receipts if you ever face an audit. For your Honda Accord at $425/month, you'd need to drive quite a few business miles for standard mileage to beat actual expenses, but given that you're doing client visits (which typically means decent mileage), it's likely competitive or better. My advice: Start simple with standard mileage, get a good mileage tracking app, and focus your energy on growing your consulting business rather than managing receipts!

Check your pay stub carefully to make sure "exempt" isn't checked somewhere. Sometimes if you write "EXEMPT" on your W4 (which you should only do if you had no tax liability last year and expect none this year), payroll will not withhold any federal income tax.

Don't panic! This is actually a pretty common issue and it's fixable. Since you caught it early (only 6 weeks in), you're in a much better position than if you'd discovered this in December. Here's what you need to do immediately: 1. **Get a new W4 from HR/payroll** - Tell them explicitly that federal income tax isn't being withheld and you need to correct this ASAP. 2. **When filling out the new W4**, be very clear about your filing status (Single) and consider adding extra withholding in section 4(c) to make up for what you've missed. For your income level (~$31K annually), you'll want to catch up on roughly $450-600 in federal withholding that should have been taken out already. 3. **Double-check your pay stub** after the next paycheck to confirm federal taxes are actually being withheld. The most likely culprits are: your employer entered your W4 incorrectly, accidentally marked you as "exempt," or there was a data entry error in their payroll system. This happens more often than you'd think, especially with new employees. Since you're fixing this now rather than at year-end, you shouldn't face any underpayment penalties as long as you get enough withheld for the remainder of the year. You've got this!

This is such a helpful discussion! I'm dealing with a similar situation with my company's car allowance - they're taxing it but excluding it from 401k calculations. After reading through everyone's experiences, I'm realizing I need to be more systematic about this. The advice about requesting the Summary Plan Description and looking for the specific definition of "eligible compensation" is exactly what I needed to hear. I've been accepting HR's vague explanations without actually seeing the documentation. What really struck me was Rachel's calculation showing $60,000 in lost retirement savings over 30 years. I never thought about the compound effect like that. My car allowance is $600/month, so even with a smaller amount, I'm potentially looking at significant long-term losses. I think my next steps will be: 1) Request the SPD and look for specific language about what's included/excluded, 2) Calculate the actual financial impact like Rachel did, and 3) approach my manager during our next one-on-one to discuss restructuring my compensation package. Has anyone found that companies are more willing to make these changes during annual compensation reviews, or is it better to bring it up as soon as possible? I don't want to wait until next year if there's a chance to fix this sooner.

This thread has been incredibly eye-opening! I'm a tax preparer and I see this confusion all the time with clients. What many people don't realize is that the IRS has different rules for different purposes - what counts as taxable income for Form W-2 purposes isn't necessarily the same as what counts for retirement plan contributions. The key thing to understand is that your employer's 401(k) plan document is essentially a contract that defines the rules for that specific plan. As long as they follow their own written rules consistently and pass IRS non-discrimination testing, they have a lot of flexibility in how they define "eligible compensation." I've seen clients in similar situations who were able to get their issues resolved, but it usually required one of three approaches: 1) Finding an actual error in how the company was interpreting their own plan document, 2) Negotiating a compensation restructure during performance reviews, or 3) Working with benefits administrators to clarify plan language that was genuinely ambiguous. The long-term impact calculations people have shared here are spot-on. Missing employer matching on even $500-1000/month in allowances can easily cost you $30,000-60,000 in retirement savings over a career. That's definitely worth a few uncomfortable conversations with HR! My advice: get the plan documents, run the numbers, and approach it as a financial planning optimization rather than a complaint. Good luck everyone!