Just to clarify something important - when you say "letterhead," are you referring to the actual notice they sent you, or a separate cover sheet they provided? This makes a big difference. A few years ago, I had a similar situation. What they wanted was for me to fax the first page of their notice back with my documents so they could scan the barcode on it. If that's what they mean by "letterhead," you definitely should try to include it somehow. If you no longer have the original notice, I'd suggest calling them to explain. Sometimes they can email you a replacement cover sheet with the proper barcodes. I learned this the hard way after having documents rejected twice because I didn't include their coded cover page.

I've been through this exact scenario twice in the past year. The IRS will typically accept your documents without their specific letterhead, but you absolutely must include proper identification information. Here's what has worked for me: Create a clear cover sheet that includes: - Your full name and current address - Last 4 digits of your SSN - The complete notice number (e.g., CP2000, LTR 525C, etc.) - Tax year and form type - Date you received the notice - Clear statement: "Response to IRS Notice [Number] dated [Date]" Most importantly, if your notice has a barcode or control number at the top, try to photocopy that section and include it with your fax. The IRS uses these codes for automated processing. I'd also recommend sending it with a fax confirmation receipt and following up in about 10 business days. In my experience, as long as they can clearly identify what notice you're responding to and match it to your account, they'll process it. The 30-day deadline is firm though, so don't delay sending it while trying to get their letterhead. One last tip: if you have access to a local IRS office, you could also hand-deliver the documents, which eliminates any formatting concerns entirely.

Are there specific state tax implications for the K-1 Box 20 Code Z properties? My wife's trust has properties in 3 different states and I'm not sure if that affects how we file.

I dealt with this exact same situation last year with my spouse's family trust K-1! The Box 20 Code Z information was overwhelming at first, but here's what I learned: The key thing to understand is that Code Z is supplemental detail - the partnership has already calculated your wife's share of income/losses from all those rental properties and included the totals in Box 2 (ordinary business income) or Box 5 (rental real estate income/loss) on the main K-1 form. When you're entering information into FreeTaxUSA, you'll input the amounts from the main boxes, not each individual property from the Code Z breakdown. The software will walk you through this step by step. However, don't completely ignore that supplemental information! Keep those property details handy because: 1. You may need the "Unadjusted Basis" amounts if you qualify for the Section 199A (QBI) deduction - FreeTaxUSA will prompt you for this if applicable 2. If the properties are in different states, you might need those breakdowns for state tax filing purposes The good news is that FreeTaxUSA's interview process should guide you through exactly what information to enter and when. Just follow the prompts and don't try to manually calculate or combine the Code Z details yourself.

I had almost this exact situation last year. Make sure you're also checking if your cousin had other Schedule A deductions that might impact the recovery calculation! In my case, I focused so much on the SALT cap that I forgot to consider how my charitable contributions and medical expenses affected the overall calculation on Worksheet 2. This actually made a portion of my state refund taxable even though I thought the SALT cap would protect me.

You're absolutely right to be careful with this calculation! I went through a similar situation last year when I switched from MFJ to Single after my divorce. The key insight you've identified is correct - if the nondeductible portion of your SALT (the amount over $10k) exceeds your state tax refund, then none of the refund is taxable. This is because you didn't receive a tax benefit for that portion of your state taxes in the prior year. However, I'd recommend double-checking a few things: 1. Make sure you're only considering your cousin's portion of the joint SALT deduction, not the full amount from the MFJ return 2. Verify that all other itemized deductions from the prior year are properly accounted for in the worksheet calculations 3. Consider whether any of the state taxes that generated the refund were actually deductible under the prior year's circumstances The Publication 525 worksheets are designed exactly for these filing status change situations. If Worksheet 2a is indicating that none of the refund is taxable, that's likely correct. But given the complexity and potential for errors, you might want to have a tax professional review the calculation before filing, especially since the stakes are relatively high with a $3,600 refund.

Don't forget to look into state taxes too! Federal is only part of it. Some states have inheritance taxes that are separate from federal estate taxes. For example, in PA where I live, there's an inheritance tax even if the estate is below the federal threshold.

This is a complex situation that really highlights why estate planning and proper documentation are so important. Based on what you've described, it sounds like the estate should be filing Form 1041 since the mobile home was still owned by the estate at the time of sale. The arrangement where your in-laws put the property in someone else's name for the sale creates some potential complications. That person might technically be considered the seller for tax purposes, even if they're just acting as an agent. The signed contract you mentioned should specify whether they're acting on behalf of the estate or the beneficiaries. Given the $33,000 gain and the unusual sale arrangement, I'd strongly recommend consulting with a tax professional or estate attorney who can review the specific contract language and advise on the proper reporting. The IRS can be very particular about how these transactions are structured and reported, especially when there are agency relationships involved. Also, make sure the executor is aware of their filing obligations - they may need to file Form 1041 even if the estate doesn't owe any tax, depending on the gross income of the estate.

You know what's funny (but not really)? I've been checking my transcript so often that I think the IRS website recognizes me now. 😅 "Oh look, it's THAT person again..." But seriously, I noticed last year that sometimes the transcript status can jump from N/A straight to fully processed without any in-between status. It's like watching water boil - nothing happens for ages and then suddenly everything happens at once. As long as your return was accepted and you have that confirmation, you're probably fine. The system is just... how do I put this nicely... not the most efficient technology in the world.

I'm going through the exact same thing right now! Filed about 10 days ago and my transcript is still showing N/A while WMR just says "processing." Reading everyone's responses here is really reassuring - it sounds like this is totally normal timing. I've been obsessively checking both systems daily (I know, I know, probably not helping my anxiety). What's interesting is that I filed a simple return with no credits or complications, so I was expecting it to move faster, but apparently even straightforward returns can take the full 21 days during busy season. Thanks for posting this question because I was starting to wonder if something went wrong with my filing!