Thanks for this tip! Do I need to specifically ask for a "first-time penalty abatement" using those exact words, or can I just explain the situation? Also, since I'm now disputing part of the 2021 amount with the collection agency, should I wait for that to resolve before addressing the 2022 taxes?

You don't need to use those exact words - just explain that this was your first time dealing with this township's taxes, you weren't aware of the requirement after moving, and you're now trying to get into compliance. Ask if they have any programs for waiving penalties for first-time issues or good-faith mistakes. Being polite and showing that you're trying to fix the problem goes a long way. I wouldn't wait on addressing the 2022 taxes. Handle them separately from your 2021 dispute. The sooner you file and pay your 2022 taxes, the less interest will accrue, and it demonstrates to the township that you're being proactive about compliance going forward. This good-faith effort might even help your case with the 2021 dispute.

Adding to this - some states like PA have really complicated local tax systems where the credits aren't automatic. You have to specifically request them and provide proof of payment to the other locality. Don't assume the townships talk to each other because they definitely don't!

That's absolutely right. The reciprocal agreements exist in many places, but you definitely have to claim them yourself. The townships don't communicate with each other about who paid what. Be prepared to provide documentation showing exactly how much local tax you paid to your previous township during the part of the year you lived there. W-2s, paystubs, and your state tax return can all help establish this. If your employer was withholding for the wrong township entirely (which happens a lot), you might need to request a refund from the incorrect township while paying the correct one.

Thanks for that perspective - makes me feel a bit better about the situation. We actually aren't maxing our 401ks completely. Do you think that would make a significant difference in our situation? And how complicated are quarterly estimated payments to set up?

Maxing out your 401ks would definitely help! Each of you can contribute up to $23,000 for 2025 (assuming you're under 50), which would reduce your taxable income by $46,000 total. At your tax bracket, that could save you roughly $15,000-18,000 in federal taxes. Quarterly estimated payments aren't complicated at all. You can set them up online through the IRS Direct Pay system or through EFTPS. It's basically just making four payments throughout the year based on what you expect to owe. The IRS Form 1040-ES has a worksheet to help you calculate the right amount.

This! I live in California and my state tax bill was almost as painful as federal. Definitely check both withholdings when you update your W-4.

Oh man, I didn't even think about state taxes yet. We're in Massachusetts which isn't quite California rates but still significant. I'll definitely look at both when redoing our withholdings. Thanks for the heads up!

Thank you so much for this insider perspective! I don't have the contract anymore since it was so long ago and I didn't expect any issues. Do you think they're just making up this debt to be difficult, or could there legitimately be a bookkeeping error they just never bothered to tell me about until now?

In my experience, it could be either scenario. Some centers do have disorganized bookkeeping, especially smaller operations. They might have genuinely found an accounting error during tax preparation. However, the timing and the fact they never contacted you about it for a full year is suspicious. Given the personal conflicts you mentioned, it's not unreasonable to think they might be using this as leverage. Regardless of their motivation, withholding tax documentation isn't an appropriate way to handle a payment dispute. Most reputable centers keep these issues separate precisely to avoid these conflicts.

Not a dumb question at all! The Child and Dependent Care Credit can be worth up to 35% of your qualifying expenses, depending on your income. Even for just two months, if your childcare was expensive (as most is these days!), it could be worth $200-500 or more. For example, if you paid $1000/month for those two months, that's $2000 in expenses. If you qualify for a 20% credit, that's $400 back on your taxes. Definitely worth pursuing, especially since you can still claim it without their form!

I can't believe I didn't think of this! Just logged into our employee portal and there's a whole tax documents section I never noticed before. Found my W-2 right there, ready to download. Thank you so much for this suggestion - saved me so much stress. Sometimes the simplest solution is right in front of us!

Glad it worked out! Most employers with online systems make tax documents available electronically these days, but they don't always advertise it well. It's usually my first suggestion because it's the quickest solution when available. Remember to save a copy somewhere safe for your records too! Maybe even print one as backup. Good luck with your filing!

Is the transcript exactly the same as a W-2? I heard some tax software won't accept it and you need the actual form.

What about audit protection? TurboTax always scares me into buying their audit defense. Does FreeTaxUSA offer something similar or is it not really necessary?

FreeTaxUSA does offer audit assistance (they call it "Deluxe") for around $7-8 which is MUCH cheaper than TurboTax's audit defense. It provides priority support and help with audit-related questions if you get audited. Honestly though, for simple returns, your audit risk is extremely low. The IRS mostly targets unusual deductions, self-employment with weird numbers, or very high income returns. If you're just filing W-2 income and standard deductions, the audit risk is tiny. I personally don't buy audit protection anymore for basic returns, but the FreeTaxUSA version is cheap enough if it gives you peace of mind.

Did you notice any difference in refund amount between what you got with TurboTax vs FreetaxUSA? I always worry cheaper software might miss deductions or something.