Wait, seriously? How do you make sure they apply the payment correctly? I do have estimated taxes due soon too, so this is a real concern.

When you make a payment, you need to clearly indicate which tax period and which liability you're paying. If you're paying online through IRS Direct Pay or EFTPS, there are options to select the specific tax year and type of payment. If you're sending a check, include your name, SSN, tax year, and form number on the check and attach the payment voucher if you have one. If you're dealing with both back taxes and estimated taxes, it's actually best to make two separate payments to avoid confusion.

Does applying for a payment plan automatically stop interest from accruing? Or do you still get charged interest while on a payment plan?

This is really helpful, thank you! I definitely have expenses for tools, my truck, and work clothes that I haven't entered yet. I also pay for my own health insurance which is crazy expensive. Can I deduct that too?

Yes, health insurance is a big one I forgot to mention! Self-employed people can deduct 100% of their health insurance premiums as an adjustment to income (meaning you get the deduction even if you don't itemize). This includes medical, dental, and vision insurance for yourself, your spouse, and your dependents. The truck expenses will also be significant - you can either deduct the actual expenses (gas, insurance, repairs, depreciation) or take the standard mileage rate for business miles. For most people, tracking mileage and taking the standard rate is easier, but run the numbers both ways if you have a particularly expensive vehicle to maintain.

I use Quickbooks Self-Employed and it's been a lifesaver. It connects to your bank accounts/credit cards and automatically categorizes expenses. You can also track mileage with the app. Around $15/month but worth every penny for the headache it saves.

I definitely don't have any payment plans from previous years. I've always gotten refunds and never owed anything before. I did use TurboTax this year, but I paid for it upfront with my credit card, not from my refund. And you're right, $395 would be crazy expensive for tax software! I paid like $70 for the version I used. The "TREAS" part is what makes me think it's legitimate too, which is even more confusing because I can't figure out why they'd be taking money from me.

Based on what you've shared, I'm leaning toward this being an adjustment to your return then. The timing (several months after filing and receiving your refund) fits the pattern of an IRS review finding a discrepancy. Common triggers include: mismatched income reporting (maybe a 1099 you didn't include), incorrect claiming of credits, or math errors that the initial processing didn't catch. The amount ($395) suggests it could be related to a specific tax credit that was partially reversed. Definitely pursue getting through to the IRS or checking your online account. In the meantime, watch for that notice in the mail - it should arrive within 2 weeks of the charge.

Seconding this! Had something similar happen to me last year and it turned out someone had filed a return using my info. Such a nightmare to fix. Call the IRS Identity Protection Specialized Unit at 800-908-4490 if you suspect this might be the case.

Would including this statement flag my return for audit? I'm already worried about getting in trouble for this mistake, and I don't want to make things worse by drawing attention.

Including the statement won't increase your audit risk. In fact, it might decrease it. The IRS computer systems will automatically flag the discrepancy between the Box 1 amount reported by your employer ($0) and the higher amount you're reporting. The statement simply explains this discrepancy upfront. Without the statement, you might receive an automated notice asking about the difference, which you'd then need to respond to. With the statement, if your return gets reviewed by an actual person, they'll immediately see the explanation and potentially avoid sending the notice in the first place. It's all about being transparent and proactive, which the IRS generally responds well to.

I work in payroll and this is correct. We can absolutely issue a W-2c to correct these types of issues. The employer is required to provide accurate tax documents. I'd recommend sending a formal written request (email is fine) specifically asking for a W-2c correction due to the W-4 processing error. If they refuse, you can actually report them to the IRS.

Do you know which tax form you'd use to claim that theft loss? And would you need to have filed police reports or anything to back it up?

You'd report theft losses on Form 4684 (Casualties and Thefts) and then carry that information to Schedule A if you're itemizing deductions. But there's a catch - under current tax law, personal theft losses are only deductible if they're attributable to a federally declared disaster. However, if the theft is connected to a business or income-producing property, you might be able to deduct it anyway. Some tax professionals argue that money in investment apps could qualify as income-producing property. For documentation, yes, you'd ideally want police reports, documentation of all your attempts to recover the funds, complaint filings with CFPB and other agencies, and proof that the company is unresponsive or insolvent. Without these, the IRS might reject the theft loss claim.

I actually did this last year! Filed in small claims against one of these apps for $800 they were holding. Won by default because they didn't even show up to court. Getting them to actually PAY was another story, but I eventually got my money back after sending the court judgment to their legal department. Tax-wise, I didn't have to report anything special since it was just my own money being returned to me, not new income. Definitely worth the $75 filing fee in my case.