How One Client Got a $21,000 Tax Refund Instead of Paying $17,000

Hi, I’m David from Tax Shack, and I want to share a recent success story that shows the difference professional tax preparation can make.

We had a client who had always done his taxes online. Last year, he made a big financial move: he bought a new home. To help with the down payment, he withdrew $120,000 from his 401(k). When he entered everything into his tax software, he was shocked to see he owed the IRS $17,000. Panicked, he reached out to me at Tax Shack.

After diving deep into his case, we discovered he had purchased the home in a federally designated Disaster Relief Area. This designation qualified him for special tax benefits, including a provision that made the first $100,000 of his 401(k) withdrawal tax-exempt. This meant he only owed tax on the remaining $20,000.

Even better, when he took out the funds, he’d already had federal taxes withheld. This led to an unexpected twist: instead of owing $17,000, he qualified for a refund of $21,000!

The Takeaway: “Friends Don’t Let Friends Do Their Own Taxes.”

Tax laws can be complex, and life changes—like buying a home, cashing out retirement funds, or relocating—can open the door to substantial tax benefits. A tax professional can help uncover those opportunities, potentially saving thousands of dollars.

If you want to maximize your refund and minimize what you owe, reach out to us at Tax Shack. We’re here to help you make the most of your finances.

This approach presents the story with clear takeaways, practical insights, and a call to action, making it more relatable and effective.