Great question about 401(k) interactions! This is actually a really important consideration that most people aren't thinking about yet. From what I understand about current retirement plan rules, 401(k) contribution limits are typically based on "compensation" as defined by the IRS, which generally includes all wages subject to income tax withholding. If overtime pay becomes federally tax-exempt, it would likely still count as compensation for retirement plan purposes - similar to how Roth IRA contributions are made with after-tax dollars but still count toward income limits. However, the percentage-based contribution calculations could get tricky. If your plan automatically deducts a percentage of your gross pay, you'd want to make sure that percentage is being applied to your full wages (including tax-exempt overtime) rather than just your federally taxable income. Otherwise, you might inadvertently reduce your retirement contributions. This is definitely something employers and plan administrators will need to figure out in their system configurations. I'd recommend checking with your HR department once any legislation actually passes to understand how your specific plan would handle it.

This is a really thorough discussion! As someone who works in HR benefits administration, I wanted to add a few practical considerations that employers are already starting to think about: 1) **Timekeeping complexity**: Companies will need to ensure their time tracking systems can clearly distinguish between regular hours and overtime hours for tax purposes, not just pay calculation purposes. This might require system upgrades for many employers. 2) **Multi-state complications**: For employees who work in multiple states or companies with locations across state lines, tracking which overtime is subject to which state's tax rules could become quite complex. 3) **Audit implications**: The IRS will likely scrutinize overtime classifications more closely, so companies will need to be extra careful about properly documenting what constitutes legitimate overtime versus regular hours. 4) **Potential for abuse**: There might be pressure to restructure jobs or schedules to maximize tax-exempt overtime, which could lead to some unintended workplace dynamics. The implementation timeline will be crucial - payroll systems, HR policies, and accounting procedures will all need significant updates. Most proposals I've seen suggest at least a 6-month implementation period, but even that might be tight for larger organizations with complex payroll systems.

I'm dealing with a very similar situation! I've been working remotely for a European company while living in the US and regularly transferring my salary back through various services including Western Union. One thing I learned that might help you - the key distinction is between the original income (which you definitely need to report on your US taxes as worldwide income) and the actual transfer of that money between your accounts (which isn't a taxable event itself). For the FBAR reporting that others mentioned, the threshold is if your foreign accounts had a combined balance over $10,000 at ANY point during the year - even if it was just for one day. This caught me off guard initially because I thought it was based on year-end balances. Also, keep detailed records of the exchange rates on transfer dates. While small currency fluctuations usually don't create significant taxable gains, if there are large swings between when you earned the money and when you transferred it, there could be some currency gain/loss to account for. Have you considered using a service like Wise instead of Western Union? The fees are usually lower and they provide better documentation that's easier for tax reporting purposes.

I've been in a similar boat with international transfers and want to share some practical insights that might help. First, you're absolutely right that you shouldn't be paying taxes twice on the same income - the transfer itself isn't taxable, but there are definitely reporting requirements to be aware of. Beyond what others have mentioned about FBAR filing, make sure you understand the timing requirements. The FBAR is due by April 15th (with an automatic extension to October 15th), but it's filed separately from your tax return through FinCEN's website. Missing this deadline can result in significant penalties even if no taxes are owed. For your Western Union transfers specifically, I'd recommend keeping a simple spreadsheet tracking each transfer with the date, amount in foreign currency, USD amount received, and the exchange rate. This documentation will be invaluable if you ever face questions about the source of funds. One thing to watch out for - if your total transfers for the year exceed certain thresholds (like $10,000 from a single foreign source), you might also need to consider Form 3520 reporting requirements depending on the exact nature of your employment arrangement overseas. Also, since you mentioned working remotely for an Asian company, double-check whether you need to file any forms related to foreign earned income exclusion (Form 2555) if you qualify. This could potentially reduce your US tax liability on the original income.

Colorado DOR implemented enhanced fraud detection algorithms for TY2023 returns that are causing systematic delays across the board. Their internal processing queue prioritizes certain return types based on complexity factors and verification requirements. I've observed that returns with Schedule E income or non-W2 earnings are experiencing the longest delays, while simple returns with only W-2 income are moving through faster. If your AGI exceeds certain thresholds or you've claimed specific deductions like business expenses, expect additional verification steps. The system is functioning as designed, just with significantly reduced efficiency compared to previous filing seasons.

As a new Colorado resident (moved here last year), I'm experiencing this exact same issue! Filed my federal and Colorado returns on the same day in mid-February - federal was processed in 8 days, but Colorado is still showing "processing" after 6 weeks. This is so frustrating because I budgeted for receiving both refunds around the same time based on what friends told me about typical processing times. It's reassuring to know this is a widespread issue and not something specific to my return, but the lack of transparency from Colorado DOR is really disappointing. Other states seem to provide much better communication about delays and expected timelines. Has anyone found any official statements from the state about when they expect to catch up on the backlog?

Has anyone successfully gotten the penalties removed in a CP23 situation? I had a similar issue last year and got the payments sorted out, but they wouldn't remove the failure-to-pay penalty even though it was their mistake.

I went through this exact same CP23 nightmare two years ago! The IRS somehow "lost" three of my quarterly estimated payments despite having valid EFTPS confirmation numbers. What saved me was being extremely persistent and documenting everything. Here's what worked: I sent a certified letter to the IRS address on the CP23 notice with copies of ALL my EFTPS confirmations, bank statements showing the withdrawals, and a detailed timeline of when each payment was made. I also included a formal request for penalty and interest abatement citing "reasonable cause" since the error was entirely on their end. The key is to be very specific about the dates, amounts, and confirmation numbers. Don't just say "I made payments" - give them every single detail they need to trace the payments in their system. It took about 8 weeks, but they eventually found all my payments and reversed everything including penalties and interest. Also, if you have to call again, ask to speak with a "payment tracer specialist" - they have more authority to research misapplied payments than regular customer service reps. Good luck, and don't give up! You're definitely not at fault here.

I've been following this thread closely because I'm dealing with a very similar situation. The IRS processing delays are absolutely ridiculous right now - it's like they're operating with a skeleton crew while drowning in paperwork. One thing that hasn't been mentioned yet is that you might want to contact the Taxpayer Advocate Service (TAS) if this drags on much longer. They're an independent organization within the IRS that helps taxpayers resolve problems when normal channels aren't working. Since you've already been waiting 13-14 weeks for a payment to process (well beyond their stated 12-week timeframe), and you're now receiving incorrect notices, this could qualify as a "significant hardship." You can reach them at 1-877-777-4778 or submit Form 911. They have more authority to cut through the bureaucratic mess and actually get things moving. I had to use them last year for a similar issue and they were able to resolve in about 3 weeks what the regular IRS couldn't fix in 6 months. The key is documenting everything - which it sounds like you're already doing. Keep records of all your calls, the CP23 notice, proof of payment, and any written correspondence. TAS will want to see that you've made reasonable attempts to resolve this through normal channels first. Hang in there - this is unfortunately becoming the norm rather than the exception with IRS processing right now.

I'm going through almost the exact same situation right now! Made my quarterly payment back in January and it's been radio silence ever since. The IRS phone reps keep telling me "it's in the system" but nothing shows up online or on my transcripts. What's really concerning me after reading through this thread is that even when people get through to agents who can "see" the payment, it's still taking months to actually process and apply to accounts. I'm worried I'm going to get hit with a similar notice soon. The advice about the Taxpayer Advocate Service is gold - I had no idea that was even an option. Definitely going to keep that in my back pocket if this drags on much longer. The 877-777-4778 number and Form 911 could be a lifesaver. Has anyone tried making their response to these notices via certified mail? I'm wondering if that helps create a stronger paper trail or if regular mail is sufficient for the 60-day response window.