This thread is incredibly thorough and helpful! As someone who works in cybersecurity, I wanted to add one more layer to the security discussion that hasn't been mentioned yet. When you're setting up both accounts, consider using a password manager (like Bitwarden, 1Password, or Dashlane) to generate and store unique, complex passwords for each service. Even though you'll primarily be using 2FA codes to log in, having strong unique passwords as your first line of defense is crucial for government accounts. Also, a quick heads up about the ID.me facial recognition process - if you wear glasses, have facial hair, or have changed your appearance significantly since your driver's license photo, be prepared for potential verification delays. I've seen people get stuck in manual review for several days because of appearance mismatches. One more security tip: after you set up both accounts, log out completely and then test logging back in to make sure everything works smoothly. There's nothing worse than discovering authentication issues when you're under deadline pressure during tax season! The "digital flag planting" strategy you mentioned is spot on - establishing your identity early creates a stronger paper trail and makes it much harder for bad actors to impersonate you later.

Really glad you asked this question! I went through the exact same confusion a few months ago and ended up doing a deep dive into both systems. Here's what I'd recommend based on my experience: **Definitely set up both accounts now.** The IRS is still using ID.me for 2025, but the Login.gov transition is inevitable - it's just a matter of when, not if. Having both ready eliminates any last-minute scrambling. **Timing considerations:** - ID.me verification took me about 3 days (longer during busy periods) - Login.gov was approved in under an hour - Both require different documentation, so plan accordingly **Your identity protection instinct is correct.** Creating your Login.gov account now does establish your identity in their system first, which adds a layer of protection against someone else trying to create an account with your information. **Practical benefits I've discovered:** - Login.gov works great for other federal services (I use it for Social Security and VA benefits) - Having both accounts made me more comfortable with the systems before I actually needed them for tax purposes - The peace of mind factor alone was worth the setup time Pro tip: Use the same recovery email for both accounts and enable 2FA immediately. Also, take screenshots of your successful verification pages - they've been lifesavers when I had minor login issues later. You're being smart by thinking ahead! Most people wait until February and then get frustrated with verification delays.

I'm going through a similar situation right now and this thread has been incredibly helpful! My divorce won't be final until May, but I've been separated since September and have my two kids living with me full-time. I was planning to file Married Filing Separately, but after reading about the Head of Household option, I'm wondering if I qualify too. One question I haven't seen addressed - if I do qualify for Head of Household, do I need any special documentation to prove the separation timeline or that I paid more than half the household expenses? I want to make sure I have everything properly documented in case the IRS has questions later. The last thing I need during this stressful time is an audit because I didn't have the right paperwork to back up my filing status. Also, for those who mentioned the tax calculation tools - do they factor in state taxes too? I'm in California and wondering if the filing status choice affects state taxes differently than federal.

As someone who works in tax preparation, I want to emphasize something that hasn't been fully addressed - the timing of when you actually separated matters a lot for Head of Household eligibility. The IRS requires that you lived apart from your spouse for the LAST SIX MONTHS of the tax year, not just any six months during the year. So if you separated in August like one commenter mentioned, you'd meet this requirement since August through December is more than six months. But if someone separated in July, they'd need to count July through December to make sure it's at least six months. Also, regarding documentation - the IRS doesn't require you to file proof with your return, but you should definitely keep records. I recommend creating a simple timeline document showing: separation date, when kids started living with you primarily, major household expenses you paid each month, and any relevant court documents or separation agreements. One more tip: if you're unsure about your filing status, you can always file an amended return if you discover you qualified for a more beneficial status after filing. It's better to be conservative and potentially amend later than to file incorrectly and face penalties. The Head of Household status can save significant money compared to Married Filing Separately, so it's definitely worth exploring if you think you might qualify!

I see a lot of advice here but I'm confused about one thing... if I have $5000 in winnings (including a $3000 jackpot) but $7000 in losses for the year, do I still have to report the $5000 as income and then separately deduct $5000 in losses? Or can I just report the net loss of $2000? Does turbo tax handle this correctly?

Something to keep in mind - even if you get your withholding back, you'll need to be prepared for potential scrutiny from the IRS if your gambling losses are substantial compared to your income. They sometimes flag returns where gambling losses seem unusually high relative to someone's financial situation. The key is having rock-solid documentation. Beyond what others have mentioned, I'd also recommend keeping photos of your losing tickets if possible, and if you play table games, try to get pit boss signatures on your session records when you have big losses. Some casinos will do this if you ask. One more tip: if you're planning to claim gambling losses this year, consider opening a separate bank account just for gambling funds next year. It makes tracking much cleaner and provides a clear paper trail of your gambling activity that's separate from your regular expenses.

I've been reading through this entire discussion and it's clear that legal malpractice settlements involving estate matters are incredibly complex from a tax perspective. What strikes me most is how many different factors can influence the tax treatment - from the "origin of the claim" doctrine to stepped-up basis issues to potential windfall considerations. For anyone else facing similar situations, this thread really highlights the importance of getting proper documentation from your settlement attorney about what exactly the payment represents. It sounds like having a clear breakdown of damages (lost inheritance vs. interest vs. punitive elements vs. reimbursement of costs) could make a huge difference in how the IRS treats the settlement. The suggestion about potentially filing an extension to get professional guidance rather than rushing to meet the deadline also seems very wise, especially with larger settlements that could draw IRS scrutiny. Better to invest in proper tax advice upfront than deal with audits, amendments, and penalties later. Thanks to everyone who shared their experiences and knowledge - this has been really educational about an area of tax law that doesn't get discussed very often but can have major financial implications for families dealing with estate disputes.

As a tax professional who has handled several similar cases, I want to emphasize something that hasn't been fully addressed yet - the importance of timing your consultation strategically. Since you're dealing with a 2024 settlement that needs to be reported on your 2024 return, you'll want to get professional guidance soon even if you file an extension. One key issue I've seen in estate malpractice cases is when the settlement compensates for assets that would have received a stepped-up basis at death but didn't due to the attorney's errors. If your parents' estate included appreciating assets that should have passed to you with a stepped-up basis but didn't due to the malpractice, the settlement might need to be analyzed under different rules than a simple inheritance recovery. Also, make sure your tax professional coordinates with your malpractice attorney before finalizing any position. I've seen cases where well-meaning attorneys structured settlements in ways that created unnecessary tax complications because they didn't consider the tax implications upfront. Getting both professionals working together now could potentially save you thousands in taxes if any adjustments to the settlement characterization are still possible. Document everything thoroughly - the IRS tends to scrutinize large settlements, especially those involving estate matters where the tax treatment isn't immediately clear from standard forms.

I've had this exact same problem! The IRS phone system is notorious for audio issues. Here are a few things that have worked for me: First, try calling from a landline if possible - cell phone connections can be spotty with their old system. Second, make sure you're in a quiet room and speak directly into the microphone (not on speaker). If they still can't hear you, don't waste time trying to make it work - immediately ask to be transferred to a different agent or line. I've also had success calling the early taxpayer assistance line at 1-800-829-1040 and pressing 2 for personal income tax questions - sometimes that routing has better audio quality. The key is being proactive about the audio check right when they pick up instead of trying to struggle through a bad connection. Good luck!

I work for a tax preparation service and deal with IRS calls regularly - this audio issue is SO common! Here's what I've found works best: Before you even start talking about your tax issue, immediately do an audio test with the agent. Say "Can you hear me clearly?" and wait for confirmation. If there's any static, cutting out, or they ask you to repeat yourself, don't waste time - ask to be transferred right away. Also, I've noticed their system works much better with corded phones vs wireless/Bluetooth. If you're using a cell phone, try switching to WiFi calling if your carrier supports it. One more trick: if you have to call back, mention to the new agent that your previous call had technical difficulties - they'll often prioritize getting you to someone with better equipment. The IRS knows their phone system is problematic and the agents are usually very understanding about these issues!