I'm going through this exact same nightmare right now! Been trying to verify my identity for over a week after the online system failed. Reading through all these comments has been really helpful - I had no idea there was a dedicated identity verification number (800-830-5084). I've been calling the main IRS line like an idiot and getting nowhere. Definitely going to try the 7am Tuesday strategy that several people mentioned. It's reassuring to know I'm not alone in this - the IRS system really is as broken as it feels when you're stuck in it. Question for anyone who's gotten through recently: once you finally talk to an agent and get verified, how long did it take for your refund to actually process? I'm also counting on this money for rent and trying to figure out if I need to make other arrangements.

I went through this exact same frustrating process about 3 months ago and wanted to share what worked for me. After reading through all these helpful comments, I tried the 7am Tuesday approach with the dedicated identity verification line (800-830-5084) and it was a game changer. The key things that made the difference: I had to redial about 12 times in that first 10 minutes after 7am, but eventually got into the hold queue. Once on hold, I waited exactly 73 minutes but finally got through to an agent. Having all my documents organized beforehand was crucial - previous year's return, current W-2s, driver's license, and Social Security card. One tip I didn't see mentioned: when you finally get an agent, ask them to email you a confirmation of the verification completion. This saved me when I had questions later - I had written proof that my identity was successfully verified on a specific date. My refund hit my account 6 days after the verification call. The relief was incredible after weeks of stress! Don't give up - the system is definitely broken but you can get through it with persistence and the right strategy.

I've been through this exact scenario and wanted to share what I learned after consulting with a tax professional. The accrued market discount reporting can be tricky because it involves multiple tax concepts working together. Your $675 market discount is indeed taxable as ordinary income, but here's an important detail many people miss: if your bond was a Treasury security (which it sounds like it might be based on the "Accrued Treasury Interest Paid" notation), you may need to check whether any portion of that income is exempt from state taxes. Also, regarding the $13 in "Accrued Treasury Interest Paid" - this typically represents interest that had accrued on the bond before you purchased it. This amount was likely included in your purchase price but is being separately identified for tax purposes. You generally don't report this as additional income since it was part of what you paid for when buying the bond. The key takeaway is that you should report the $675 market discount as ordinary income (which will be taxed at your regular income tax rate, not capital gains rates) plus the $65 interest from your 1099-INT. When your tax software asks about including market discount in current year income, select "yes" - this is the standard treatment unless you've made a prior election to amortize the discount annually. One final tip: keep good records of this transaction. If you have similar bond investments in the future, understanding how your broker calculates and reports market discount will help you better estimate the tax implications before you invest.

I went through a very similar bond situation recently and can confirm what others have said about the market discount treatment. The $675 shown on your 1099-B as "Accrued Market Discount" is definitely taxable as ordinary income, even though your cost basis equals proceeds (showing no capital gain). What helped me understand this was thinking of it as two separate transactions happening simultaneously: (1) You're getting back your principal with no gain/loss, which is why cost basis = proceeds, and (2) You're separately receiving $675 in "discount income" that the IRS treats like interest income. When your tax software asks about including the market discount in current year income, definitely select "yes" - this is the standard treatment. The $675 will be added to Schedule B along with your $65 from the 1099-INT, giving you $740 total in taxable interest income. One thing to double-check: if this was a Treasury bond (which the "Accrued Treasury Interest Paid" notation suggests), both the $65 interest and the $675 market discount should be exempt from state income tax in most states, though you'll still owe federal tax on both amounts. The tax treatment of bonds can definitely be confusing compared to stocks, but once you understand that market discount is just another form of taxable income (like interest), it becomes much clearer. You're definitely on the right track wanting to make sure you report this correctly!

One thing that might help clarify this - think of it as two separate tax systems that don't really "talk" to each other during the calculation process. Your federal tax is calculated on your full gross income ($135k in your case), and your state tax is also calculated on that same gross income. The only place they interact is if you choose to itemize deductions on your federal return, where you can deduct up to $10,000 of state and local taxes paid. But with the current standard deduction amounts, most people come out ahead just taking the standard deduction anyway. So to directly answer your question - neither is calculated "first." They're calculated independently on your gross income, and then you get to choose the most beneficial approach (standard vs itemized) when filing your federal return.

Just to add some practical perspective here - I went through this exact confusion when I started making similar income. The key thing that helped me was realizing that your employer's payroll system handles the withholdings simultaneously, but your annual tax liability is calculated separately for each jurisdiction. For planning purposes at your $135k income level, you'll likely pay federal tax on the full amount (after standard deduction of around $14,600 for 2025), and state tax on the full amount too. The withholdings from your paycheck should roughly balance out what you owe when you file, assuming your W-4 is filled out correctly. One tip: if your state tax rate is 9.5% like you mentioned, you might want to run the numbers on itemizing vs standard deduction. With high state taxes plus any mortgage interest, charitable donations, etc., you could potentially exceed the standard deduction threshold and benefit from itemizing (which would let you deduct up to $10k of those state taxes).

I've been reading through this entire discussion and wanted to add my perspective as someone who went through this decision process just six months ago. The advice here has been fantastic, especially the emphasis on communication and setting clear boundaries. What really helped me decide was creating a simple pros/cons list after talking with my CPA. On the pros side: potential missed deductions, time savings, and more accurate categorization. On the cons: privacy concerns, security questions, and just general discomfort with the idea. I ended up going with a hybrid approach - I used one of those financial organization tools (similar to the taxr.ai mentioned earlier) to pre-categorize my transactions, then shared just the tax-relevant summaries with my accountant rather than giving direct bank access. This gave me the benefits of automated categorization while keeping full control over what information was shared. The result was pretty great - my tax prep was much more organized than previous years, and we did catch a few deductions I had missed. But more importantly, I felt comfortable with the process throughout. For anyone still on the fence, I'd say the key is finding an approach that aligns with your comfort level. Whether that's full bank access with proper safeguards, a tool-assisted middle ground, or sticking with manual methods - all can work well if you're thoughtful about the implementation.

This has been such an incredibly thorough and helpful discussion! As someone who's been hesitant about sharing financial information with professionals, reading through everyone's real-world experiences has been eye-opening. What really stands out to me is how much the CPA's communication style and transparency seems to matter. The stories from @4a8e8e343f71 comparing two different accountants, and @715a9786a701's hybrid approach really show that there are multiple ways to handle this situation successfully. I'm particularly intrigued by the middle-ground solutions that have emerged - whether it's the trial period approach with limited accounts and expiration dates, or using tools like taxr.ai to pre-categorize transactions before sharing. These seem to capture many of the efficiency benefits while maintaining much more control over your financial privacy. For anyone else reading this thread, the consistent theme seems to be: 1) Get a clear explanation for why your CPA needs this, 2) Set boundaries that make YOU comfortable, 3) Use official bank features if you proceed, and 4) Remember that manual methods work perfectly fine too. The fact that people have found hundreds of dollars in missed deductions is compelling, but as several folks have emphasized, those benefits should never come through pressure or at the expense of your peace of mind. A good professional will work within whatever boundaries you set. Thanks to everyone for sharing such detailed, balanced perspectives - this is exactly the kind of community wisdom that helps people make informed decisions!

I just went through this exact same situation with my uncle's railroad retirement last month, and I completely understand the confusion! Those RRB forms are definitely not intuitive at first glance. One thing that really helped me was understanding that the Railroad Retirement system essentially replaces both Social Security and a traditional pension for railroad workers. That's why you see two different forms/sections - the Tier 1 (green) replaces Social Security and the Tier 2 (blue) replaces the pension portion. For the Tier 1 benefits, you'll need to do the "provisional income" test just like you would for Social Security benefits. Add up her adjusted gross income, any tax-exempt interest, and half of her Tier 1 railroad retirement benefits. If that total is under $25,000 (single) or $32,000 (married filing jointly), none of the Tier 1 is taxable. Above those thresholds, a portion becomes taxable using the same percentages as Social Security. For Tier 2, it's generally taxable as pension income, but check if there's anything in Box 5 of the 1099-R showing a non-taxable portion based on after-tax contributions she may have made. The fact that your mom has been doing her own taxes for years is actually a good sign - she's probably been handling it correctly! But it's definitely worth double-checking, especially if her income has changed recently.

I went through this exact same maze of confusion with my father's railroad retirement benefits last year, so I completely feel your pain! The RRB forms are honestly some of the most confusing tax documents out there. One thing that really helped me was creating a simple checklist to work through the forms systematically: 1. **Identify the two parts**: The green RRB-1099-R (Tier 1) and blue 1099-R (Tier 2) on that combined sheet 2. **For Tier 1 (green)**: This is like Social Security - calculate her "provisional income" (her other income + half of Tier 1 benefits) to see if any of it's taxable 3. **For Tier 2 (blue)**: This is generally taxable like a pension, but check Box 5 for any non-taxable portions Since your mom has been doing her own taxes for years, she's probably been mostly correct! The rules haven't changed dramatically. But it's definitely worth double-checking, especially if her income situation has shifted. Also, if she's in Illinois (saw you mention that), that's great news for state taxes - Illinois doesn't tax retirement income at all, so you only need to worry about getting the federal calculation right. Don't feel bad about being overwhelmed - even professional tax preparers sometimes struggle with railroad retirement. You're being a great son by helping her sort this out!