I'm an accounting student working on a project about this exact topic. From my research, I think there are three possible scenarios: 1. If assets were held in a revocable trust of the first spouse to die and then transferred to the surviving spouse outright or to their revocable trust, you get stepped-up basis at both deaths. 2. If assets were held in an irrevocable bypass/credit shelter trust after the first death with the surviving spouse as beneficiary but not owner, you only get stepped-up basis at the first death. 3. If assets were in a QTIP trust after the first death, it gets complicated and depends on other factors. Has anyone here actually filed taxes using either the first death date or second death date as basis? What documentation did the IRS require to support your position?

As someone who recently went through a similar situation with my grandmother's estate, I can tell you that the trust language is absolutely critical here. We had what seemed like a straightforward case where grandma had control of grandpa's assets after he passed, but the devil was in the details. The key thing that saved us was finding language in the trust that gave her the power to "invade principal for any purpose she deemed appropriate." Our estate attorney explained that this type of broad language constitutes a general power of appointment, which means the assets were included in her taxable estate and we got a stepped-up basis when she died. However, if the trust language limits the surviving spouse's power to specific purposes (like health, education, maintenance, and support - often called "HEMS" provisions), then you're likely looking at the 2001 date for your basis calculation. Given that you're dealing with a $450,000 difference in basis, I'd strongly recommend getting both trust documents reviewed by an estate planning attorney who specializes in tax issues. This isn't something you want to guess on, and the specific wording can make or break your case with the IRS.

Remember that different PARTS of your settlement might be taxed differently. This is something my accountant explained that I hadn't considered: 1. Compensation for physical injuries/sickness: NOT taxable 2. Emotional distress stemming from physical injuries: NOT taxable 3. Emotional distress without physical injury: TAXABLE 4. Punitive damages: Always TAXABLE 5. Lost wages/back pay: TAXABLE 6. Interest on any of the above: Always TAXABLE The paperwork should break this down. If it doesn't clearly state how much falls into each category, you should absolutely ask for clarification from whoever is administering the settlement.

One thing that hasn't been mentioned yet is the timing of when you receive your settlement versus when it's taxable. I learned this the hard way with my own harassment settlement - even if you receive the money in December, you might be able to defer some of the tax impact depending on how the settlement is structured. Some settlements are paid out over multiple years, which can help with the tax bracket issue that Yuki mentioned. Others allow you to choose between a lump sum or structured payments. If you have that option, it's worth running the numbers both ways since spreading the income over several years could significantly reduce your overall tax burden. Also, don't forget about state taxes! Some states don't tax settlement income the same way the federal government does. I was so focused on federal taxes that I completely forgot to research my state's rules until tax time. The key is getting all this figured out BEFORE you receive the money so you can plan accordingly. Once that check is deposited, your options become much more limited.

Will filing form 4852 delay your refund? My friend did this last year when her employer messed up her W2 and she said her refund took forever to process.

I've been through this exact situation and it's incredibly frustrating! One thing that worked for me was checking if your former employer is registered with your state's business licensing department - many states have online databases where you can search by company name and find their EIN listed in their registration documents. Also, if you paid into unemployment insurance while working there, your state's unemployment office might have the employer's EIN on file and could provide it to you. I called my state's workforce commission and they were able to look it up for me using just the company name and my employment dates. Don't let their negligence stress you out too much - the IRS understands that some employers are unresponsive, which is exactly why Form 4852 exists. Just document your attempts to contact them (save those emails and call logs) in case the IRS ever asks. You're doing everything right by being proactive about this!

Has anyone dealt with state taxes on an EEOC settlement? I'm in California and they wanted their cut too, not just the feds!

I went through a similar EEOC settlement situation two years ago and can share what I learned. The key thing is understanding what your settlement was compensating you for - this determines the tax treatment. From your description, it sounds like a typical employment discrimination settlement. Here's what you need to know: 1. You'll likely receive a 1099-MISC for the full $42,000, even though you only got $28,000 after attorney fees. 2. The taxability depends on what the settlement covers: - Lost wages/back pay: Fully taxable as ordinary income - Emotional distress: Taxable (unless related to physical injury) - Punitive damages: Fully taxable - Attorney fees: You can deduct these as an above-the-line deduction 3. Even if the settlement agreement doesn't mention taxes, the IRS still has rules about how to report it. My advice: Keep detailed records of what the settlement was for, and consider consulting with a tax professional who has experience with employment settlements. The attorney fee deduction alone could save you significant money, and there might be other aspects of your case that could affect the tax treatment. Don't wait until tax season to figure this out - start gathering your documentation now!

I've been using Turbotax for years and had the same question. The key is looking for the "Print" option instead of anything labeled "preview" or "review" - for some reason Turbotax hides it this way. Once you click print, you'll get PDF options where you can see everything before paying. Just a tip - I always check the "Cost Basis" for any investments super carefully. That's where I've found most errors in my returns, especially if you had any stock sales or cryptocurrency transactions.

For the online version of TurboTax, try looking for a small "Print" link in the top right corner of your screen while you're in the review section. Sometimes it's also hidden under a "Tools" or "More Options" menu. Once you click on Print, you should see options like "Print return for your records" or "Save as PDF" - this will generate a complete copy of all your forms including federal and state returns before you pay anything. Since you mentioned having such a complex return this year, I'd also suggest double-checking that TurboTax correctly allocated your income and deductions between the different states. Multi-state returns can get tricky, especially with business income involved. The preview will show you exactly how everything was calculated across all your forms.