Has anyone used TurboTax to claim a large worthless stock loss like this? I'm wondering if the regular version handles this or if I need to upgrade to their premium version. Last time I tried to enter something complicated like this, it kept giving me errors.

I'm sorry to hear about your situation with the First Republic Bank stock. This is unfortunately becoming more common with recent bank failures. One thing I'd add to the excellent advice already given - make sure you have proper documentation of the inheritance date and fair market value at that time. Since you inherited this 4 years ago, you'll need records showing the stock's value on the date of your family member's death (or the alternate valuation date if the estate elected that). This becomes your "stepped-up basis" for tax purposes. Also, don't rush to sell immediately. First Republic Bank went through a specific FDIC resolution process when it failed in May 2023, and shareholders typically received nothing. However, you should verify with your broker that there truly are no residual distributions expected before claiming it as completely worthless. If you do need to execute a sale, most brokers can handle transactions in defunct securities - they'll often sell for $0.01 per share or similar. The key is having the transaction recorded properly so you have documentation of the sale for your tax return. Given the size of this loss, I'd strongly recommend consulting with a tax professional who has experience with worthless securities and inheritance situations. The $417,000+ loss could provide significant tax benefits over many years if handled correctly.

Don't forget about foreign tax complications if your ETFs or index funds hold international stocks! My Vanguard VXUS generates foreign taxes that I can claim as either a deduction or credit.

Great question! I was confused about this exact same thing when I started investing. Yes, you absolutely still owe taxes on those reinvested dividends - the IRS treats them as if you received the cash and then immediately used it to buy more shares. Since you mentioned you're holding VTI and VXUS, most of those dividends will likely be "qualified dividends" which get the favorable capital gains tax treatment (0%, 15%, or 20% depending on your income level) rather than being taxed as ordinary income. Your brokerage will send you a 1099-DIV that breaks down qualified vs. non-qualified dividends. One silver lining - those reinvested dividends do increase your cost basis in the funds, so when you eventually sell, you'll have less capital gains to pay taxes on since your purchase price will include all those reinvestments you already paid taxes on. $780 in dividends isn't too bad for your first year! Just make sure to save some cash for the tax bill if you haven't been setting aside money for taxes on your investment gains.

Another option is to have your friend open an account at your bank. My credit union gives me access to the first $500 of any check immediately, and the rest clears in 1-2 days max. Much better than dealing with this tax confusion.

I've been in a similar situation helping my sister with her checks from her part-time job. What really helped me was keeping simple records of these transactions - just a note in my phone showing the date, check amount, and that I gave her the full cash amount. From everything I've researched and the responses here, you're definitely not creating taxable income for yourself since you're not keeping any of the money. The IRS looks at economic substance, not just which account money flows through temporarily. One practical tip: if your friend's bank is consistently putting long holds on his paychecks, he might want to ask his employer about direct deposit. Most payroll companies can set that up pretty quickly, and it would eliminate the whole check-cashing issue entirely. Direct deposits usually clear much faster than paper checks.

Great advice from everyone here! I went through this exact situation when I first got my real estate license. Just to add a few practical tips based on my experience: 1. Create a dedicated folder (physical or digital) for ALL settlement statements - these are your proof of income even without 1099s 2. Set up quarterly estimated tax payments right away since no taxes are being withheld - this saved me from a big penalty at year-end 3. Consider opening a separate business bank account for your real estate activities to keep everything organized One thing I wish I'd known earlier - even though the amounts seem small now ($8,500), the self-employment tax (15.3%) adds up quickly. On top of regular income tax, you'll owe about $1,300 just in SE tax on that amount. Also, since you're flipping properties AND she's earning commissions, make sure you're clear on which income is which. Commission income goes on Schedule C, but income from property flips might be reported differently depending on whether it's considered dealer vs investor activity. The IRS looks at frequency and intent when making this determination. Keep detailed records from day one - it'll save you headaches later as your business grows!

For setting aside taxes on commission income, I typically recommend saving 25-30% of each commission check. This covers federal income tax, state tax (if applicable), and the 15.3% self-employment tax. It's better to save too much than get caught short! For quarterly payments, you'll want to calculate based on your total expected income for the year (both regular W-2 income and self-employment). The IRS wants you to pay either 90% of this year's tax liability or 100% of last year's (110% if your prior year AGI was over $150k). One more tip - since you're both flipping properties AND your wife is earning commissions, consider whether it makes sense to elect to treat the real estate commissions as part of your existing property business rather than a separate Schedule C. Sometimes consolidating can simplify things, but you'd want to run this by a tax pro since it depends on your specific situation. Also, don't forget about the QBI deduction (Section 199A) - as self-employed individuals, you might be able to deduct up to 20% of your qualified business income, which can provide significant tax savings!

This is such a common confusion for restaurant owners! I made the same mistake in my first year running a diner - tried to claim both the deduction AND the credit for the same FICA taxes on tips. My CPA caught it during our year-end review and explained that the IRS specifically prohibits this double-dipping. What helped me understand it better: think of it as choosing between getting $1 off your tax bill (credit) versus reducing your taxable income by $1 (deduction). The credit is almost always more valuable since it's a direct reduction in what you owe, while the deduction only saves you money based on your tax bracket. One tip that saved me headaches - I now track all our tip-related FICA taxes in a separate spreadsheet throughout the year so I can easily calculate the maximum credit available when tax time comes. Makes the whole Form 8846 process much smoother!

Great question about Form 8846! As others have confirmed, you definitely cannot claim both the deduction and the credit for the same FICA taxes - that would be double-dipping and is specifically prohibited by IRS rules. Here's what I'd recommend: calculate both scenarios to see which gives you the bigger tax benefit. The credit on Form 8846 reduces your tax liability dollar-for-dollar, while the deduction only reduces your taxable income. In most cases, the credit will save you more money, especially if you're in a lower tax bracket. One thing to keep in mind - make sure you're only claiming the employer portion of FICA taxes on tips, not the employee portion. The credit is specifically for the 7.65% you pay as the employer (Social Security and Medicare taxes), not what your employees pay. Also, double-check that your restaurant qualifies - the business needs to be in the food and beverage industry where tipping is customary. Given that you mentioned running a restaurant, you should be good there. With $8,700 in eligible FICA taxes, this credit could provide significant tax savings, so it's definitely worth claiming correctly!