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7 Your tax RETURN is the paperwork you file. Your tax REFUND is the money you get back. A lot of people mix these up. When you make more money, you move into higher tax brackets. While your overall withholding went up, it might not have increased at the same rate as your tax liability. The withholding tables that employers use aren't perfect for everyone's situation. You didn't necessarily do anything wrong. This is actually pretty common when people get significant raises. If you want a bigger refund next year, you can adjust your W-4 to have additional amounts withheld from each paycheck.
22 Thanks for the terminology correction! I always mess that up π€¦ββοΈ So to get a bigger refund, do I just put a specific dollar amount on line 4(c) of the W-4? Or do I need to change other parts of the form too?
7 Yes, line 4(c) on the W-4 is exactly where you'd put additional withholding. You can specify an extra amount to be withheld from each paycheck. As for how much to add, a rough calculation would be to decide how much extra refund you want, then divide by the number of pay periods remaining in the year. For example, if you want an extra $1,200 in your refund and get paid twice a month, you might put $50 in line 4(c) ($1,200 Γ· 24 pay periods = $50 per paycheck).
23 Has anyone else noticed that the standard deduction doesn't seem to keep up with inflation? When my income went up similarly to OP's, I found that deductions and credits didn't scale proportionally. The whole system seems designed to take a bigger percentage as you earn more.
16 The standard deduction actually does increase with inflation each year. For 2025 it's $14,600 for single filers, up from $14,350 in 2024. The problem is that tax brackets also adjust with inflation, but when you get a big raise that outpaces inflation, you still move into higher brackets regardless. What really doesn't scale well are certain credits and deductions that start to phase out at higher income levels. That could be another factor in why OP's refund was smaller despite paying more tax.
Does anyone know if we need to attach any special forms or documentation to prove eligibility for the American Opportunity Credit? My tax software is asking for the 1098-T form but my school sent it with incomplete information.
You definitely need Form 1098-T from your school, but you don't have to attach it to your return. Just keep it with your tax records. If your 1098-T is incomplete, you should also keep your receipts for qualified expenses and course information to back up your claim if you get audited.
Thanks for the clarification! So I don't need to send the 1098-T with my return, just keep it in my records. That makes things easier.
Just FYI - there are income limits for claiming the full American Opportunity Credit. For 2022, the credit starts phasing out at $80,000 for single filers and $160,000 for joint filers. If you make more than $90,000 single or $180,000 joint, you can't claim it at all.
What if the exchange happens in a different tax year but the value is exactly the same? I ordered something in Nov 2023 for $1500, exchanged it for a different model in Jan 2024 that also cost $1500. Do I still only expense it in 2024?
Yes, you would still expense it in 2024. The tax year for the deduction is based on when you put the item into service for your business, not when the money was spent. If you never used the original item and returned/exchanged it, then the deduction happens in 2024 when you got and started using the correct item.
Thanks for clarifying! That makes sense. I was confused because I technically spent the money in 2023, but I see now that what matters is when I actually started using the item in my business operations.
Actually I think some ppl here are giving wrong info. I'm pretty sure you need to count the refund as income in 2024 and then deduct the new purchase separately. At least that's what my tax guy told me for a similar situation with my LLC.
That's not correct for a straight exchange. If you got a full refund and then made a separate purchase, maybe, but for an exchange of products it's treated as a single corrected transaction. The IRS doesn't expect you to report a refund as income in most cases - especially when it's just correcting a purchase.
As a CPA who's done dozens of these arrangements, here's what those YouTube videos NEVER tell you: 1. Cost segregation accelerates depreciation you would eventually get anyway. You're not creating new deductions, just moving them forward. 2. When you sell the property, all that accelerated depreciation gets "recaptured" at a 25% tax rate. This creates a potentially massive tax bill when you sell unless you do a 1031 exchange. 3. Documentation is EVERYTHING. I've seen clients lose audits because they claimed 100+ hours but couldn't prove it with contemporaneous records. 4. You need to be a "real estate professional" AND materially participate in each property to deduct passive losses against active income. Most W2 folks with demanding jobs fail the first test. These strategies are legitimate but much more nuanced than clickbait videos suggest.
Question about the real estate professional requirements - I've heard you need 750 hours annually in real estate activities to qualify. If my spouse does property management full-time while I keep my W2 job, does that work for us filing jointly? Or do I personally need to qualify?
Your spouse can absolutely qualify as the real estate professional while you maintain your W2 job. This is actually the most common arrangement I see with my high-income clients. As long as your spouse spends 750+ hours annually in real estate activities (and more time on real estate than any other employment), their status allows the rental losses to offset your joint income on a married filing jointly return. Just be aware that your spouse needs to be actively involved in day-to-day operations, not just nominally listed as the manager. The IRS looks closely at these arrangements, so documentation of your spouse's time and activities is crucial. Keep calendars, logs, emails, and all evidence of their involvement.
Has anyone used a short term rental property to offset W2 income and actually gotten through an IRS audit successfully? I'm worried about triggering an audit if I suddenly show huge losses against my $420k salary. Also, anyone used TurboTax to file with this kind of arrangement or do you need a specialized accountant?
I wouldn't recommend TurboTax for this. My brother tried doing this himself with TurboTax and missed several key forms and elections that would have maximized his deductions. He ended up hiring a real estate tax specialist who amended his return and found an additional $23k in tax savings he'd missed.
Yuki Kobayashi
Listen, I used to work at the IRS (not anymore thank god lol). The REAL truth is they don't care how big your package is π but they DO care if it's disorganized. My advice: 1. Make a cover letter explaining EXACTLY what you're requesting 2. Include a table of contents for your docs 3. Number ALL pages 4. Highlight the important parts on each doc 5. Include the relevant IRS rule that allows for late election (Rev Proc 2013-30) I processed thousands of these. The ones that got approved fastest were the organized ones, not necessarily the smallest ones.
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Carmen Vega
β’Would you recommend mailing it certified so I have proof they received it? I've had stuff "lost" by the IRS before.
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Yuki Kobayashi
β’Absolutely use certified mail with return receipt. That gives you proof of when it was received and by whom. Keep a complete copy of everything you send (EVERYTHING) including the certified mail receipt. Also good practice to follow up by phone about 30 days after sending to confirm it's been received and assigned to someone. Ask for the status and document who you speak with. If you get nowhere with that call, wait 2 weeks and try again.
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QuantumQuester
Has anyone actually successfully done a late s-corp election? I'm in the same boat (forgot to file my 2553 when I started my business in 2023) and now trying to fix it before filing 2024 taxes. My accountant says it's possible but I'm worried about getting denied and having to pay the higher taxes.
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Andre Moreau
β’I did it in 2022 and got approved! The key is showing that you've been consistently treating the business as an S-corp in all your filings and operations. In my case I had filed corporate returns, taken reasonable salary, etc. They approved it retroactively even though I was like 18 months late with the election.
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