No other income sources - just my regular W-2 job. No investments that generate significant income, no side hustles. That's why the high withholding seems odd to me. I don't mind getting some money back at tax time, but $4k feels excessive when I could be using that money throughout the year.

In that case, you're definitely overwithholding. With just W-2 income, you should be able to get pretty close to breaking even. The suggestions above about adjusting your W-4 are solid. One more tip - after you submit a new W-4, check your next few paychecks to make sure the changes took effect correctly. Sometimes payroll departments make mistakes implementing withholding changes. Also, if you don't want to mess with the complicated calculations, a simple approach is to just use Line 4(c) of the W-4 to specify an exact dollar amount LESS to withhold per pay period. If you're getting $4k back and have 24 pay periods, you could just put -$167 on that line to reduce each paycheck's withholding by that amount. Just make sure your payroll system allows negative numbers there.

I used it last month and it's slightly better than before but still pretty confusing. You need to have your most recent paystub AND last year's tax return handy to use it effectively. The biggest issue I had was that it doesn't handle irregular income well. I got a bonus early in the year and it threw off all the calculations. Ended up just guessing at how to adjust my W-4.

Are there any minimum amounts needed to start a DAF? And do you still get the tax benefit if you don't immediately distribute the money to end charities?

Most major DAFs have minimums in the $5,000-25,000 range to open an account, which shouldn't be an issue given the size of your potential donation. Some smaller community foundations might have lower minimums if you're looking to start smaller. You absolutely get the full tax deduction in the year you contribute to the DAF, regardless of when you distribute the money to end charities. That's the main benefit! You could theoretically put in millions this year, claim the deduction now, and then take your time over many years to thoughtfully distribute the funds. The money can even be invested and grow tax-free while in the DAF. Just be aware that once money goes into a DAF, it can only come out as charitable donations - you can't take it back personally.

I donated about 3 ETH to the Red Cross last year. They have a dedicated crypto donation page with wallet addresses for different cryptocurrencies. The receipt they provided showed the USD value at the time of transfer based on market rates. I had to fill out Form 8283 for noncash charitable contributions with my tax return. My accountant said for donations over $5,000 I would have needed a qualified appraisal too, but I was under that threshold.

Thanks for sharing your experience! I didn't realize they would have dedicated wallet addresses ready to go. Did you have any issues with the Form 8283? I'm nervous about getting the valuation right since crypto prices fluctuate so much.

Thank you for bringing up the "member of household" test. Would this still apply even with her daughter's 50/50 custody situation? My girlfriend will definitely be living with me the entire next tax year, but her daughter will still split time with her dad. As for getting married, we've discussed it but aren't quite ready for that step yet. Is there a good calculator you'd recommend for figuring out the tax implications?

For the daughter with 50/50 custody, she wouldn't meet the member of household test because she doesn't live with you year-round. However, your girlfriend could potentially qualify as a dependent if she lives with you the entire year and her gross income is below the threshold (around $4,500). For marriage tax calculations, I recommend the Tax Policy Center's marriage calculator or TurboTax's free tax calculator - both let you run scenarios as married vs. single/HOH. With your income disparity and supporting multiple people, you'd likely benefit from marriage tax-wise, but it's worth running the actual numbers. Married filing jointly often benefits couples where one person earns significantly more than the other.

The Other Dependent Credit phaseout starts at pretty low income levels though. If OP is supporting three additional people, I'm guessing their income is high enough that they might phase out of this benefit. Worth checking the income limits before counting on it.

3 Would the Foreign Earned Income Exclusion even apply to someone who has a green card? I thought you had to be physically present in the foreign country to claim that, but don't green card holders need to maintain their primary residence in the US?

14 Yes, green card holders can claim the Foreign Earned Income Exclusion if they meet either the physical presence test (physically present in a foreign country for at least 330 days in a 12-month period) or the bona fide residence test (foreign resident for an uninterrupted period that includes an entire tax year). Green card holders do need to maintain their intent to live permanently in the US, but they are allowed to work and live abroad temporarily. However, staying outside the US for too long (typically more than a year) without a reentry permit can potentially lead to abandonment of permanent resident status. So it's a balance - they can work abroad and potentially claim the exclusion while maintaining their green card, but they need to be careful about how long they stay away from the US.

18 Would this apply even if someone's net worth is relatively low? I thought the exit tax was only for really wealthy people giving up citizenship. Are the rules different for green card holders?

Wait, so are you saying that by asking them to correct it to Box 2 royalties, I might actually end up paying MORE in taxes? I hadn't even considered the self-employment tax angle.

That's possible, yes. Royalty income that's part of your regular business activity would typically be subject to self-employment tax, while Box 3 "Other Income" generally isn't. However, you should still report it correctly regardless of tax implications - misclassifying income to pay less tax could cause problems later. Even if it means paying more now, correctly classifying the income as royalties establishes the nature of your business, which can be beneficial for other business deductions and for consistent treatment in future years. If you're concerned about the tax difference, you might want to consult with a tax professional who can look at your complete situation.

What happened in the end? Did you have to pay the amount they said or did they accept your explanation?

They eventually accepted our explanation without us owing anything additional. We sent a copy of our contract showing the nature of the income and referenced the relevant IRS publications for how that type of income should be reported. The most annoying part was that it took about 3 months to get resolved, and we received automated follow-up notices during that time that made it seem like we hadn't responded at all. I had to call multiple times to confirm they had our response and it was still being processed. Definitely document everything and follow up persistently!