I tried that route last year and PayPal told me they couldn't change it once the transaction was complete. Even with both parties confirming it was a mistake. They basically said I'd have to handle it on my tax return. But that was my experience - maybe others have had better luck?

Thanks for sharing your experience. That's disappointing to hear. I was hoping to address this before it became a tax issue. I'll probably reach out to PayPal anyway just to try, but will prepare for handling it on my tax return. Did you end up using Schedule C to offset it like some have suggested?

Crypto adds another layer of complexity. If your dad transferred Bitcoin to you as a gift, it's still a gift for tax purposes, but Coinbase may have issued a 1099 because they don't know the nature of the transfer. The important thing to know is that you take on your dad's cost basis in the Bitcoin. You won't owe any taxes until you sell the Bitcoin, at which point you'll pay capital gains tax on the difference between your dad's purchase price and your selling price. Make sure to document that this was a gift transfer so you have proof if questioned.

Isn't the deadline different for Form 3520-A though? I know that's for foreign trusts, but I get confused between all these similar forms.

You're right to ask about that. Form 3520-A (Annual Information Return of Foreign Trust With a U.S. Owner) has a different deadline - it's due March 15 for calendar year trusts, while Form 3520 is due with your individual tax return. But in the original poster's case, we're talking about Form 3520 for reporting a foreign gift, not Form 3520-A which is for foreign trusts with US owners. So the deadline would be the same as their regular tax return filing date (April 15, or October 15 with an extension). Always good to be clear about which form we're discussing since they have similar numbers but different purposes and deadlines.

My cousin got hit with a $10,000 penalty for not filing a 3520 for a gift from his grandmother in Korea. He had no idea about the requirement and the IRS showed zero mercy even though it was an honest mistake. They're definitely enforcing this.

I think there's a little more nuance here too - if the domestic partner was enrolled in Medicare for any part of the year (even just Part A), they would be ineligible to contribute to an HSA for those months, even if they otherwise had HDHP coverage.

That's a smart approach I hadn't considered. Did your state make substantial changes to the template format, or did they just add sections for the new requirements? I'm trying to gauge how different the new SSR should look.

They kept the same general structure of the 2016 template but expanded several sections. The most significant changes were in the areas covering cloud environments, remote access, and encryption requirements. They also added entirely new sections for container security, mobile device management, and the updated incident response procedures. The nice thing about their template is that they clearly marked which requirements were from the 2021 revision, making it easy to see what's new. The overall document ended up being about 20% longer than the old template due to the additional controls.

This is a huge issue for us too. We're moving some systems to Azure GovCloud and trying to figure out exactly what needs to be in the SSR about it. Does anyone know if IRS accepts the FedRAMP authorization package as evidence, or do we need to document all the controls separately?

Wouldn't filing Form W-4V only work for certain government payments? My NQDC is from a private employer. And for the quarterly estimated payments - wouldn't I potentially face underpayment penalties if I reduce them too much, even if I know I'll get a big refund later?

You're absolutely right about Form W-4V - I misspoke. For employer payments, you'd use a regular Form W-4. My apologies for the confusion! Regarding estimated tax payments, you're also correct to be concerned about underpayment penalties. However, the IRS has a "safe harbor" provision - if you pay at least 90% of the current year's tax or 100% of the prior year's tax (110% if your AGI exceeds $150,000), you won't face penalties. So you could potentially use last year's tax liability as your guide for this year's payments, taking into account the expected overwithholding from your NQDC distribution.

That's not accurate for NQDC distributions. While there are mandatory withholding rates for some supplemental wages (like bonuses), NQDC distributions definitely allow for either the aggregate method or the flat rate method. The issue here is that the employer is choosing the method that creates an artificially high withholding rate by annualizing a single payment. The mandatory withholding for supplemental wages over $1 million is 37%, but that's only for the portion above $1M. For someone receiving $165k annually, that's not even relevant.