Has anyone dealt with the "unforeseen circumstances" exception to the 2-year rule for partial exclusion of gain? I know OP had a loss not a gain, but I'm in a similar job relocation situation except I might have a small profit and I'm wondering if I can avoid taxes on it.

I'm dealing with a somewhat similar situation and wanted to share what I learned from my tax professional. While you can't deduct the loss on your personal residence, make sure you're calculating your actual loss correctly. Your basis includes not just the purchase price but also: 1. Closing costs when you bought the home 2. Capital improvements (like your $800k renovations) 3. Some selling expenses (realtor commissions, title fees, etc.) So if you bought for $500k, spent $800k on improvements, and had $50k in selling costs, your basis would be $1.35M. If you sold for $1.03M, your actual loss would be much higher than the $320k you mentioned. While this doesn't help with deducting the loss, it's important for accurate record-keeping. Also, keep every receipt and document related to this transaction - the IRS has been known to audit large losses even if they're not deductible, just to verify the numbers are accurate. One more thing - if any part of your home was used for business (home office, etc.), that portion might have different tax treatment, though it gets complicated with mixed-use properties.

Has anyone used TurboTax for calculating QBI? I tried using it last year and it seemed to miss some deductions. Wondering if H&R Block or TaxAct handle it better for self-employed people?

One thing to keep in mind with your woodworking business - make sure you're tracking ALL your eligible expenses. Beyond the obvious materials and tools, you can also deduct things like: - Portion of your home utilities if you're using garage space exclusively for business - Vehicle expenses for trips to buy materials or deliver furniture - Business insurance premiums - Professional development (woodworking classes, trade shows) - Marketing costs (website, business cards, photography of your work) The more legitimate business expenses you can document, the higher your net profit calculation will be for the QBI deduction. Just make sure you're keeping detailed records and receipts for everything. The IRS loves to see good documentation, especially for home-based businesses. Also, since you're making decent money from this side hustle, you might want to consider making quarterly estimated tax payments to avoid underpayment penalties. The QBI deduction helps, but you'll still owe self-employment tax on that $13,600 profit.

Guys seriously use taxr.ai it changed everything for me. My 2023 return was stuck in limbo for months with a "still processing" message. I finally checked my transcript and saw codes 570 and 971 but had no idea what they meant. The taxr tool explained I had an income verification hold and even estimated when it would be released based on current IRS processing times. The estimate was spot on - refund hit my account exactly when they predicted.

Just to add to what everyone's saying - when you first look at your transcript, don't panic if you see a bunch of codes you don't recognize! The key ones to focus on for refund tracking are the ones Aiden mentioned. Also, pay attention to the "as of" date at the top of your transcript - that tells you when it was last updated. Sometimes it takes a few days for new activity to show up, so if you don't see recent changes, check back in a couple days. The transcript is definitely way more informative than the Where's My Refund tool once you understand how to read it!

What tax software did you use to calculate all this? I've been using TurboTax for years but it doesn't really break down the effective rate clearly.

This is really eye-opening! I think a lot of people get scared by the marginal tax rates they hear about (like "I'm in the 24% bracket!") without realizing that's only applied to income above certain thresholds. Your actual calculation shows how the progressive system works in practice. I'm curious - did you factor in any state income tax in your 9.37% figure, or is that purely federal? Also, for those of us who aren't as financially savvy, do you have any tips on tracking all these different tax components throughout the year? I feel like I'm always surprised by my final tax situation because I don't keep good records of things like sales tax on major purchases. It's refreshing to see someone actually run the numbers instead of just complaining about taxes in general. Makes me want to do my own analysis for this past year!

One thing to consider is filing a new W-4 with your next employer when you get a new job. If you know you've had too much withheld already this year, you could adjust your withholding to compensate. The W-4 has changed in recent years and now has specific sections for multiple jobs and additional income. Just make sure you don't go too far and end up owing at tax time!

I'm sorry this happened to you - the shock of seeing that much taken out is really rough when you're already dealing with job loss stress. Just to add another perspective, you might want to consider whether you had any pre-tax deductions from your regular paycheck (like 401k contributions, health insurance premiums, etc.) that wouldn't apply to the severance payment. Sometimes this makes the tax withholding look even more dramatic by comparison since your regular paycheck had those pre-tax reductions but the severance doesn't. Also, if your company offered any continuation of benefits (like COBRA), factor that into your budget planning. The combination of higher upfront costs for health insurance plus the tax withholding can really squeeze your finances during unemployment. You might want to look into marketplace plans if COBRA is too expensive - sometimes there are better options available depending on your situation. Hang in there, and definitely follow up with HR like others suggested. Even if they can't change the withholding now, they might have other resources or information that could help.