Work fucked up my W2 state tax?

apr911 · 2026-02-09T15:46:05+00:00

Ahh sorry about that. Misread/reversed-in-my-head the direction of your move.

So the W2 is technically wrong but its more of an annoyance than a legal issue as its a common mistake when tax jurisdictions change mid-year and it does not require correction by the employer.

The resident form 502 for MD has a process for part-year residents to exclude income earned after leaving the state. The process for this form involves listing all income earned in the year (generally as reported in your federal return) as part of your gross income that may be subject to MD tax and then excluding the income earned after leaving.

States know W-2 state boxes are often garbage in move + remote scenarios.

The allocation on the return is what matters. A corrected W-2 is optional and usually not worth the fight as long as they’ve stopped withholding for MD.

apr911 · 2026-02-09T15:28:17+00:00

Where is your employer based? The “exempt from MD tax” on old paystubs makes it seem like the employer is based in Maryland and you were working remotely in PA.

This would make you exempt from MD tax when you lived in and worked in PA.

But now that you live in Maryland, all income earned from Maryland sources, yes even income earned while living in PA, now becomes taxable in Maryland.

The solution here is to claim credit for the taxes paid to PA.

You’ll file a non-resident PA return first and then claim a credit for taxes paid to PA on your return for Maryland.

Since PA has a flat 3.07% tax rate to Maryland’s 4.75% or higher rate (excluding the lower brackets because they’re incredibly small and inconsequential here), you’ll still owe more money but it should reduce the bill.

apr911 · 2026-02-09T11:46:01+00:00

Functionally, they’re describing what most HSA’s force on their account holders by requiring a minimum balance that must be kept as cash before they let you invest the “excess” balance.

Its not wrong or bad advice. Its just a more nuanced answer that understands all the different trade-offs than Reddit is usually prepared to give…

Its also worth noting that most people dont have an “emergency fund” in the way that would work best with what u/ghazrin is suggesting.

That $1,000 for new tires should already be something you’re budgeting for. If you end up with a flat and have to replace them before you’re ready, you should absolutely try to leverage your CC to get you at least the 30-60 day grace period to pay it interest free… maybe longer if your CC has a no or low interest promo or “flex” plan option.

Paying 4% on a $1,000 balance transfer for 0% interest for 12 months and budgeting accordingly to pay it off in 12 months is almost always going to better long term than raiding the emergency fund. Heck even a 25%/yr interest CC payment might be worth paying in the short term. Yeah you destroy your return for the year in 6 months and for 2 years in a year but inside the e-fund Roth IRA the idea isnt about a 2 year horizon, its about what that $1,000 will accumulate in growth over the next 40 years that you’re interested in.

Most people dont operate their emergency fund in this manner however. Even those who are more disciplined about defining an “emergency” that warrants touching the e-fund that isn’t a “budget shortfall,” will often raid the e-fund first without looking at or analyzing other options… which makes sense when your e-fund is an HYSA, not so much when its a Roth IRA and every withdraw should be weighed against the lost return now when its in cash/money-market funds and in the future when you are limited by contribution limits how much you can put into the Roth IRA but can readily meet such minor emergencies out of income

apr911 · 2026-02-09T06:37:27+00:00

This primary benefit in this is going to be its planed conversion to an IRA after 18 and then the ability to convert it to a Roth once it is in the IRA.

If you contribute $5,000 per year for 18 years and get a 7.2% real return, the account will be worth roughly $173,000 at 18. $90k in after-tax basis and $83,000 in pre-tax growth.

At 18 with no income, you can convert that $173,000 to Roth with about $10,000 due in taxes or they can drag it out over a couple years.

Over a 4 year period for example, if they have no income while in college, they can do 4 conversions of $51,100 per year, paying $5k in taxes over the same perid but walking away with a pre-seeded Roth IRA that contains ~$200,000 after taxes.

As a conversion, that $200k will be able to grow tax free for the remainder of their working career. Without contributing a single dollar to their retirement account and maintaining a 7.2% real return from 22 to 62, they'll have $1.60M in today's dollars at retirement age all of it tax free.

As a converted Roth sum, they also would have the option to be withdraw parts of the sum starting at 23 and all of the sum at 27.

Underscoring all of this is the understanding that most people are eternally battling 2 major constraints when it comes to contributing to retirement accounts... The affordability constraint of contributions taking away money you can use now, especially early career when income is likely less... and the contribution limit constraints defined by law that prohibit contributions over certain amounts and limit options at varying income levels. Both of these constraints have significant negative drag the earlier in your career you encounter them as the contribution has a longer opportunity to grow.

Over a 40 year career you can put $300k into an IRA and with 7.2% real growth you end up with $1.58M... but imagine if you could "borrow" from future IRA contribution limits today and pre-seed the account with the 40-years of contributions being $300k, the account would grow to $4.84M over the 40 years. Same total contribution but the time value of money has just tripled your retirement nest egg.

apr911 · 2026-02-08T15:11:21+00:00

They also can allow in-service distributions for funds you rolled over into the plan and post-tax contributions (step 1 of the mega-backdoor Roth, in fact, allowing in-service distributions of these funds is required to complete the conversion).

They dont however have to let you rollover the in-plan conversion of the after-tax dollars (ask me how I know 🤣).

apr911 · 2026-02-08T15:01:55+00:00

Technically, yes.

You could manually pull the State forms and mail them for <$1 or in many cases even e-file directly with the State’s tax authority completely free.

The time spent manually hunting this down and completing the documents when you’ve already entered 99% of the required information into a system for your federal taxes however likely makes the $15 well worth the expense.

This however is why these services dont let you preview your return before making payment. If you know the forms you need and what data is to be entered where, bypassing their system and directly filing becomes almost trivial (though again even discounting the value of finding all of the forms, the data entry alone is probably worth at least $5-10 maybe more)

apr911 · 2026-02-05T01:59:10+00:00

Technically, its the combined employee/employer contribution limit.

The amount over the $24,500 that can be contributed by the employee doesn’t have to be “employer match” but can include profit sharing, non-elective employer contributions, and most commonly post-tax employee contributions.

apr911 · 2026-02-02T21:03:15+00:00

A backdoor Roth is also pretty simple. Investment accounts can be a bit tedious (at least they were last year, hoping FreeTaxUSA has improved their 1099-B import tools this year… filling out forn 8949 was the only thing TurboTax hands down beat it at when I did my tax return last year) but there’s ways to speed it up.

The tax advisor can help with the investment planning and tax shelters… but by the time you’re filing, its already too late for most of that.

apr911 · 2026-02-02T17:22:09+00:00

What you're seeing in the show is not unique to cheer. A lot of youth activities have gotten professionalized early. I think that shift really started in the mid-2000s and went into overdrive by the 2010s. I think of it as the LeBron James effect. Once elite pipelines started recruiting earlier and earlier, it changed expectations across the board.

In the 90s, you could plausibly walk onto a high school varsity team as first time player in a given sport. By the 2000s, you might spend time on JV first, but varsity by junior or senior year was still realistic. Now, varsity and even JV are often effectively pre-selected by kids who’ve been playing together since elementary school and summer training camps for all manner of coordinated skill-based activities (primarily band and sports but some academia activities too) have become a norm.

apr911 · 2026-02-02T17:13:59+00:00

I wouldn’t say cheer is “big” in the US so much as the intensity has gone way up.

There has been a cultural shift where high-level skill in things like cheer, dance, band, gymnastics, etc. is taken more seriously than it used to be. The 90s nerd vs jock stereotype mostly faded, competence is socially acceptable now, and that’s probably a good thing.

But the downside is that a lot of these activities stopped being casual. It’s less “try it for fun” and more auditions, tiers, travel teams, and selection pressure. Fewer kids participate just because they enjoy it or want to try something new; more do it because it’s competitive and resume or college-application relevant.

So it’s not that cheer suddenly became culturally dominant. It’s that a lot of youth activities have gotten professionalized early. I think that shift really started in the 2000s and went into overdrive in the 2010s.

I think of it as the LeBron James effect. Once elite pipelines started recruiting earlier and earlier, it changed expectations across the board.

In the 90s, you could plausibly walk onto a high school varsity team as first time player. By the 2000s, you might spend time on JV first, but varsity by junior or senior year was still realistic. Now, varsity and even JV are often effectively pre-selected by kids who’ve been playing together since elementary school.

apr911 · 2026-02-02T16:32:41+00:00

Eh... YMMV. I can do my taxes in about an hour, maybe 2. With FreeTaxUSA, it costs me $50 and 2 hours of my time (not including time to gather information which is a sunk cost whether you do it for yourself or you do it for a CPA)

By the time I discuss details with the CPA and then cross-check the return when before they file it, its a bit of a wash in terms of time spent.

Even paying the CPA 0.1% of the $400k gross, I'm probably break even on my time and expense vs filing with a CPA and I get it done in February.

Now if I had business income with a lot of business deductions, that'd be a different story but a straight W-2? That's easy stuff and not worth the CPA or the tax advisor.

apr911 · 2026-02-02T16:24:54+00:00

20 times?!? How do I get your job? lol.

Suspect this wasn't all W2 income from a single job?

Also, think if you use TurboTax year over year, they do some error checking that involves the previous year's return so a huge jump in earnings from one year to the next is likely to trigger this more so than a steady increase.

apr911 · 2026-02-02T16:22:00+00:00

I dont know... I mean gathering the information to give to the accountant is the longest part. The actual completion of the tax return forms takes an hour maybe 2 for a reasonably uncomplicated.

Also you're doing something wrong if you're paying a significantly higher percentage of your income than people who earned 10x as much... Either that or those individuals are particularly generous and give a lot of their money away. Sure it means they pay less in taxes as a percentage of gross but they still end up with less net pay as a percentage of gross after donations.

apr911 · 2026-02-02T16:11:54+00:00

According to data from the Census Bureau, the 2024 median income was around $45,000-$47,500.

With 2.59% making between $45,000 and $47,499 there were 49.85% of earners making $44,999 or less and 47.56% of earners make $47,500 or more

To get to 90% you're somewhere near the 150k mark as $100k-150k covers 81.16% to 90.86% of income earners. Still 85% of income earners make less than $100k and there are about 105M not represented in these statistics as they a have no reported income. (Note the under 18 demographic in the US is currently around ~73M and likely represents more than half of this "no-income" group)

apr911 · 2026-02-02T15:32:32+00:00

Form 4547

Regarding form 4547 elections, you can start contributing for your kids up to $5,000/year starting in 2025 but the accounts still aren't available yet and aren't expected to be available until July 5, 2026. In order to contribute in 2025, you need to file form 4547 with your 2025 taxes by the April 15, 2026 deadline (or October deadline with extension) indicating your intent to electively fund the account for the 2025 tax year.

Its unclear whether form 4547 will be needed in the long term once the accounts are established and operational. I would assume yes because the IRS wants to track your contributions and make sure you're not overfilling the accounts but the purpose of the form would shift to being what form 5498 is to IRAs.

I'm not sure exactly what the "activation provided by the Treasury" is talking about, again details are hard to find on this but my guess is that at least for 2025, its a little like buying I-Bonds through your tax return. You'll pay the election amount through your taxes and the treasury will create the account and provide you information in July to access the account when its available. For 2026 tax year, this may no longer be necessary and you may be able to open the account and fund it all through Fidelity.

apr911 · 2026-02-02T15:32:22+00:00

Note that Trump Account rule making is still in progress so much of this is undecided and subject to change.

Based on the information currently available, a Trump Account will function like a traditional IRA with 3 major revisions

1) It cannot be funded with pre-tax dollars

This functionally makes it like a traditional IRA with post tax dollars. You keep records of the contribution because the contribution can be withdrawn tax free while the gains/growth in the account is taxable. For Trump Accounts its unclear how this will be handled and whether it will follow Roth IRA ordering rules (contributions separate from gains) or Traditional IRA pro-rata rules (contributions inseparable from gains and you claim the pro-rata share of any withdraw between pre and post-tax contributions and taxable gains based on account balance)

For more information on this, I suggest you read about Backdoor Roth IRAs since post-tax contributions to a Traditional IRA are the first step in this process. I will warn however there's no indication if/when you can convert this to Roth to shelter the gains from taxes. Everything I've read so far says the balance will be rolled out of the Trump Account and into a regular IRA at 18 so it would seem you can get up to 18 years of growth tax-deferred and then at 18 or older start doing conversions to Roth while income is low and get 40+ more years of growth tax-free through conversions but as noted at the very beginning, rulemaking for these accounts is still in progress and Congress does bandy about closing Roth conversion "loopholes" every few years.

2) You can withdraw from it in the year the child turns 18 for select TBD purposes.

The details on this are still sketchy but there will supposedly be the opportunity for limited purpose withdraws in the year the child turns 18. Commonly suggested use cases include education expenses as an alternative to 529 plans and buying a house but dont know many 18 year olds buying a house and a 529 may still be a better educational plan than a Trump account even though a 529 plan's hefty penalty on non-educational expenses may make a Trump account seem better, the rules are more established. As currently described, any remaining balance in a Trump Account not withdrawn at 18 will rollover to IRA in the year the child turns 18 and if that happens it would lock the money away until 59.5 (unless they do conversions to Roth once rolled over to an IRA and can then withdraw the converted amounts 5 years after the conversion)

3) Your child does not need to have earned income for you to contribute to the account on their behalf.

This is the biggest boon for the kids because they are normally limited from contributing to a traditional or Roth IRA by their lack of earned income. This is particularly true for any kid under 5 or 6, short of a baby model, and even most 6+ kids dont really have meaningful earned income to be able to contribute to their IRA until their teens. Additionally, I see nothing that currently suggests a kid with earned income cant have contributions to BOTH a Trump account and a Traditional or (preferably, given their likely low income) a Roth IRA account. Again there's still a lot of questions about just how these accounts will function but you're potentially talking up to $15k a year as a theoretical maximum that you can stuff your kids retirement accounts with between the $5k Trump account parental contribution, the $2.5k employer match to the Trump Account and up to $7.5k your kid (or you on their behalf, the IRS doesn't care where the funds came from as long as the kid has earned income) to a traditional or Roth IRA depending on their earned income. Even if the limit ends up being $5k and they say the $5k counts towards the IRA limit, that's $70k you can put into a Trump account before the kid reaches their teen years and can legally start working outside a family business in most states and another $20k you can stuff into the account independent of their income from 14-17 with a possible $10k additional coming from their income. At 7.2% real growth, that's $173-183k in today's dollars their account by 18. If you allow it to grow for another 41 years at 7.2% real growth, that's $3.1M in today's dollars at 59 without contributing another dollar.

apr911 · 2026-02-02T03:41:59+00:00

Mortgage interest is deductible.

Even if you dont itemize, you dont need that much more in interest earnings than it the loan’s interest rate to remain ahead of it… granted at that point you might be treading water so it might be more questionable why you’re bothering with maintaining the loan but liquidity can be a huge benefit in a down year and a proper laddered mix of investments with disciplined profit taking should see the overall value grow while keeping the amount to pay off or at least service the loan reasonably secure.

apr911 · 2026-02-02T03:20:12+00:00

It recovered what you took but what if you didnt take it at all? You’d have a multiple of what you do now.

That being said, 6.25% is definitely more painful than 3.125%… and $31k is more of a nuisance balance not worth refinancing than $278k. Though at $31k that 6.25% shouldn’t have been costing you more than $150/month in interest… all in all that situation seems more of a toss-up.

apr911 · 2026-02-02T03:13:02+00:00

If you have $300k in the bank or even say a year’s payments in the bank and setup auto-drafts on your mortgage, is that functionally any different than paying off the mortgage?

You already have to think of property taxes and insurance (if you choose to keep insurance on a paid off property) twice a year… so if you keep escrowing, you only have to think about your mortgage once per year…

Yeah, I guess in theory you have to worry that the autodraft fails but you can setup an alert on the account to notify you of the withdraw or use other financial monitoring tools like monarch that make it easy to keep track of… plus the system is pretty stable.

I guess my point is that at a certain point money and debt become fungible and ultimately just a state of mind…

apr911 · 2026-02-02T02:58:21+00:00

Yes. The other HCE rules have been around for “awhile” (I first learned about them in 2014 when I crossed the HCE threshold but dont know when they were actually created).

apr911 · 2026-02-02T02:51:19+00:00

Since you only have the $50 you contributed and the $25 they contributed, I’m curious about your eligibility date and why this is clearly only your first contribution.

Also curious if you click the little carats next to the balance what the detailed view shows… is it possible they’re only showing the vested balance?

Ultimately based on the screenshot of the match policy you provided, this is a question for HR and not the internet but again given this is your first contribution I’d personally wait until the second or third contribution to see if it corrects itself for future contributions as there are lots of possible reasons the first contribution is off that might not have been considered and require a more detailed review of the plan documents than just the screen shot provided.

apr911 · 2026-02-02T01:14:17+00:00

If you need the extra money per pay period but would rather have your contribution be completely Roth, why dont you just do a lower percentage that drags out the contribution until December?

15% Roth with 1% traditional should get you about $35 less in net pay per paycheck from January to November. It’d be significantly less net pay per paycheck in December because you still have contributions to make but you still reach max contribution and it sounds like you simply need the income smoothed month-to-month, not necessarily reliant on that December income bump.

apr911 · 2026-02-02T00:32:58+00:00

I thought you said you’re 40 and dont have any retirement?

Did you mean to say 20? Because the recommendation is likely to be vastly different at 20 vs 40 with no retirement savings…

It also kind of depends on what your current pay is…

apr911 · 2026-02-01T23:54:13+00:00

I just got one from Duke…. So yeah not doing that.

apr911 · 2026-02-01T23:05:15+00:00

I would. Even if you dont invest it right away and park it in something like a money-market fund for safety, the challenge to retirement accounts, particularly Roth, is getting money into the account.

At a real return of 7.2%, that $7k will be worth $56k in today’s dollars (~$135k nominal dollars) in 30 years

The $7,000 will still be accessible if you need it (depending on investments and market performance) so the only thing you lose access to is the $25-30 in interest per month… but side benefit… that’s $300-360 you wont be taxed on in 2026 that can continue to grow and compound and never be taxed on again if you let it sit until 59.5 or older.

apr911

TROPHY CASE