I went through almost the exact same situation last year! My company's payroll system automatically switched my state tax withholding when they temporarily moved me to a different cost center, even though I never actually relocated. Here's what I learned from my experience: Don't wait for your payroll department to fix this - they probably won't, especially if it's outsourced. The fastest path is to handle it yourself through tax filings. You'll definitely want to file in both states. In your home state, report all income as earned there. For the state where taxes were incorrectly withheld, file a non-resident return showing zero income actually earned in that state. Most tax software can handle this multi-state situation pretty easily. The key is having good documentation. Save any emails about the reassignment error, your actual work schedules showing you were at your home location, and anything that proves this was a payroll mistake. I attached a simple one-page letter with my non-resident return explaining the error, and it made the process much smoother. It took about 8 weeks to get my refund, but I recovered every dollar that was incorrectly withheld. The states deal with these payroll errors all the time, so don't stress too much about it. Just be thorough with your documentation and clear in your explanation of what happened.

I work for a CPA firm and we see this exact situation several times a year. The good news is that it's completely fixable, and you have multiple options depending on how cooperative your payroll company is. First option (cleanest): Push harder for a W-2C from your payroll company. The person telling you they "can't make changes after W-2s are issued" is either misinformed or trying to avoid the work. W-2C forms exist specifically for this purpose. Ask to speak with a supervisor and reference IRS Publication 15-A, which clearly states that employers must correct W-2s when there are errors in state tax allocation. Second option (if W-2C isn't possible): File in both states as others have mentioned. Your home state gets all the income reported, and you file a non-resident return in the wrong state claiming zero income earned there. Include a brief explanation letter with documentation of the payroll error. Pro tip: If you're using tax software, most major programs (TurboTax, H&R Block, etc.) have specific workflows for handling incorrect state tax withholding due to payroll errors. Look for "multi-state filing" or "payroll error correction" in the help sections. The key is acting quickly since you're approaching filing deadlines. Don't let the payroll company drag this out past April 15th, as that could complicate things unnecessarily.

I'm dealing with a similar situation right now and this thread has been incredibly eye-opening! I had no idea about the Treasury Offset Program until my refund disappeared last month. What's really frustrating is that I never received any advance notice - the first I heard about it was when I checked "Where's My Refund" and saw it had been offset. Based on what everyone's sharing here, it sounds like I should have received a Notice of Intent 60 days prior, but I definitely didn't get anything. I've been putting off calling SSA because I've heard horror stories about the wait times, but it seems like there's no way around it. Has anyone had success disputing the lack of proper notice? It feels like if they didn't follow their own procedures for notification, that should be grounds for getting the offset reversed, right?

I'm going through this exact same nightmare right now! My $3,200 refund was intercepted last month for an alleged SSA overpayment from 2019 that I thought was already resolved. The most infuriating part is that I moved twice since then and never received any of the notices people are mentioning here. I've been reading through everyone's experiences and it's both helpful and terrifying - helpful because now I know what forms to file (SSA-561 and SSA-L725), but terrifying because it sounds like this could drag on for months. I'm a single parent and was planning to use that refund for my daughter's school expenses and car repairs. Has anyone had success getting emergency relief or expedited processing when financial hardship is involved? I can't afford to wait 5-7 months like some of you had to. Also, for those who got their money back - did you receive any interest or compensation for the time your money was held incorrectly?

I completely understand your stress about this situation! Depreciation recapture can be overwhelming when you're not prepared for it, but you're definitely not the first person to go through this. Your CPA's decision to fully depreciate the vehicle might actually still be beneficial depending on your tax brackets in 2022 vs 2023. If your business income was significantly higher in 2022, that $144k deduction could have saved you more in taxes than you'll pay on the $132k recapture in 2023. It's essentially borrowing tax savings from your future self. For the mortgage situation, I'd recommend being very proactive with documentation. Create a clear timeline showing your normal business income before 2022, the strategic depreciation decision in 2022, and the planned recapture in 2023. Include projections for 2024+ showing normalized income levels. This helps lenders see it as sophisticated tax planning rather than business volatility. Also consider getting pre-qualified with multiple lenders before you start house hunting. Some are much more experienced with self-employed borrowers and understand these depreciation strategies. Credit unions and community banks sometimes have more flexibility than big banks with rigid automated underwriting systems. The timing issue with your business showing a loss while dealing with recapture is definitely challenging for mortgage applications, but it's not insurmountable with proper explanation and documentation.

I've been through a very similar situation and wanted to share some insights that might help ease your concerns. The depreciation recapture on your vehicle sale is definitely a significant tax event, but it's important to understand that this is essentially just unwinding the tax benefit you received in 2022. Since you fully depreciated the $144k vehicle, your adjusted basis is now $0, which means the entire $132k sale price becomes taxable income. However, this will be taxed at your ordinary income rates (since vehicles are Section 1245 property), not automatically at 25% like some sources suggest. The key question is whether the timing strategy still benefits you overall. If your tax bracket was higher in 2022 when you took the $144k deduction, you may still come out ahead even after paying recapture taxes in 2023. For the mortgage situation, I'd strongly recommend being proactive rather than defensive. Prepare a clear narrative showing this was strategic tax planning - include your normal business income from prior years, the 2022 depreciation decision, 2023 recapture, and projected normalized income going forward. Many lenders understand these strategies when properly explained. Consider working with a mortgage broker who has experience with self-employed borrowers. They know how to present depreciation timing differences to underwriters effectively. Some lenders are definitely more sophisticated about business tax strategies than others. The business loss impact on your mortgage application is real, but it's manageable with proper documentation showing this was a deliberate strategy, not poor business performance.

This thread has been incredibly helpful! I'm in a similar situation and was completely overwhelmed by all the IRS rules until reading through everyone's experiences here. I wanted to add one practical tip that saved me a lot of headaches - I started keeping a simple log of all payments to household workers from day one, even when I thought I was safely under all thresholds. Just a basic spreadsheet with date, amount, and what work was done. When I unexpectedly went over the federal limit mid-year (my cleaner started coming weekly instead of monthly), I had all the documentation ready and didn't have to scramble to reconstruct everything. Also, after reading about all the state-specific requirements, I called my state's Department of Labor just to double-check our rules. Turns out my state has a $1,200 threshold for unemployment insurance - way lower than the federal $2,800! The person I spoke with was actually really helpful and sent me a packet with all the forms I'd need if I ever crossed that line. One last thing - definitely get that working agreement in writing, even if it's just a simple one-page document. Having it clearly state whether they're bringing supplies, setting their own schedule, etc. makes the employee vs. contractor determination much clearer if questions ever come up.

This has been such an educational thread! I'm dealing with a similar situation and wanted to share what I learned from my accountant that might help others. The key thing my CPA emphasized is that the $2,800 threshold is per worker, per year - not total across all household workers. So if you have both a cleaner at $2,000 and a dog walker at $1,500, neither one triggers the household employee tax requirements even though your total payments are $3,500. Also, something I hadn't seen mentioned yet - if you do end up with a household employee situation, you can actually choose to pay the employee's share of Social Security/Medicare taxes yourself instead of withholding from their pay. This can be simpler administratively and many workers prefer getting their full agreed-upon amount. You'd pay the full 15.3% (both employer and employee portions) but avoid the complexity of payroll withholding. The state requirements everyone's discussing are definitely the tricky part. My state (Texas) doesn't have income tax but still has unemployment insurance requirements that kick in at just $1,500 per quarter for household workers. Really glad I checked before I got too far into regular payments! One resource that helped me was IRS Publication 926 - it's specifically about household employer tax responsibilities and much clearer than trying to piece together information from general employment tax publications.

Same thing is on mine did you get your refund?

Code 898 on your transcript indicates that your refund was offset to pay a debt - this could be for student loans, child support, state taxes, or other federal debts. The $0 amount in the 898 line shows that your refund was reduced to zero after the offset, but you should see another line (usually code 896) showing where your refund money actually went. Check your transcript for any Treasury Offset Program entries that will specify exactly what debt was paid with your refund.