When my dad passed away, we had a similar issue with the IRS claiming unreported income. In our case, it was because a retirement account distribution had been reported under the estate's EIN (Employer Identification Number) rather than my dad's SSN. The financial institution had filed the 1099-R incorrectly. Check if any financial institutions might have filed information returns using an EIN instead of your dad's social security number. This creates a mismatch in the IRS system and can trigger these kinds of notices.

I'm so sorry you're dealing with this during an already difficult time. Estate tax issues can be really overwhelming, especially when you're still grieving. One thing that might help is to look through any mail your father received in the months before and after he passed away. Sometimes financial institutions send year-end statements or tax documents to a different address, or they might have been mixed in with other mail. Even small accounts like CDs that auto-renewed or savings accounts with accumulated interest could generate 1099 forms that you weren't aware of. Also, if your dad had any employer benefits or pensions, there might have been a final distribution or rollover that generated taxable income. Sometimes these get reported to the IRS but the paperwork doesn't make it to the family right away. The good news is that the IRS is usually pretty reasonable about working with families to resolve these kinds of discrepancies, especially when there's clearly no intent to hide income. Document everything you find (or don't find) and keep copies of all your communications with them. You've got this - just take it one step at a time!

Has anyone used a tax advocate service for something like this? I'm also dealing with a CARES Act issue and wondering if that might help me navigate it.

I'm dealing with a similar CARES Act situation and want to add some clarity here. The key thing to understand is that you have until the tax filing deadline (including extensions) of the third year after your distribution to make repayments. So if you took your distribution in July 2020, you likely had until October 15, 2023 (with extensions) to repay. If that deadline has passed, you'll need to amend your 2020 return using Form 1040-X and include Form 8915-E to report the full $27k distribution. The good news is that CARES Act repayments are indeed treated as rollovers, not contributions, so they don't count against IRA contribution limits. One important point I haven't seen mentioned - even if you can only make a partial repayment now, it's still worth doing. Any amount you repay reduces your taxable income. And yes, you can repay to your current IRA even though it's different from the original 401k. My advice: First determine if you're still within the repayment window. If so, make whatever repayment you can afford and file the amended return showing both the distribution and repayment. If the window has closed, just amend to report the full distribution and pay the taxes owed. Don't let this stress you out further - the IRS has seen plenty of these situations and they're generally straightforward to resolve once properly documented.

I completely understand your frustration, Hunter! I went through this exact same process a few months ago and felt like I was going in circles. What helped me was realizing that there are actually TWO separate things happening: 1) Having an ID.me account (which you already have), and 2) Authorizing that account specifically for IRS access. Think of it like having a driver's license but still needing to register to vote - they're related but separate steps. The key is making sure you complete that authorization step when you log in through the IRS website. Once I understood this distinction, the whole process made much more sense. You've got this!

Hunter, I completely feel your pain on this! I just went through the exact same thing two weeks ago and was pulling my hair out. What finally worked for me was going to irs.gov, clicking "Sign into Your Online Account," then selecting ID.me, and here's the crucial part - when it asks you to authorize the IRS to access your ID.me information, you HAVE to click "Allow" or "Authorize." I had been logging into ID.me successfully but kept missing that final authorization screen. It's like having the right key but forgetting to actually turn it in the lock! The whole process took me about 10 minutes once I realized what I was missing. Don't give up - you're probably closer than you think!

For anyone facing a Section 1341 situation, make sure you're keeping ALL documentation related to both the original payment and the repayment. I got audited on my claim of right deduction and the IRS wanted to see: 1) Original pay stubs/documentation showing I received the income 2) Evidence I included it in my prior year taxable income 3) Documentation proving I repaid it 4) Calculation worksheets showing how I determined which method was better Also worth noting that the repayment has to be involuntary or due to legal obligation - you can't just voluntarily return money and claim Section 1341.

This is such a helpful thread! I'm dealing with a similar situation where I have to repay $18,500 in commission income that was incorrectly calculated by my employer in 2023. One thing I wanted to add that might help others - when you're doing the calculations for both methods, make sure you consider any state tax implications too. In my case (I'm in Oregon), the state follows federal Section 1341 treatment, but I had to dig into their specific guidance to confirm this. Also, @Evelyn Martinez - since your repayment is $28,000 (well over the $3,000 threshold), you definitely qualify for the Section 1341 calculations. Based on what others have shared here, it sounds like you'll want to calculate both methods and see which gives you the better result. If your tax situation changed significantly between 2023 and 2024 (different income levels, filing status, etc.), one method could save you substantially more than the other. Has your employer provided you with any documentation about the repayment? You'll need that for your records as @Vanessa Chang mentioned.

One thing I'd add to the great advice already shared - make sure you get written documentation from the bank about the account structure. Ask them for a letter or official document that states you were a joint account holder with rights of survivorship (if that's what it was). This documentation could be valuable if you ever face questions from the IRS or need to prove the account's status. Also, consider opening a separate account and transferring the funds there rather than keeping them in the original account. This creates a cleaner paper trail and separates any future transactions from the original joint account history. Plus, you'll want to update the account to remove your aunt's name from any remaining documentation. The fact that you're being so careful about doing this right shows you're on the right track. Most people in your situation don't owe any federal taxes on joint accounts, but having proper documentation gives you peace of mind and protects you if any questions arise later.

I went through almost the exact same situation when my grandfather passed and I discovered I was on his checking account. The key thing that helped me was getting a copy of the original account signature card from the bank - this document showed exactly how the account was set up and whether it had survivorship rights. One thing I learned is that even though you didn't know about the account, the IRS treats joint ownership based on the legal structure, not your knowledge of it. Since you were already a legal owner, you're generally not receiving an "inheritance" in the taxable sense. However, I'd strongly recommend consulting with a tax professional or CPA, especially since $42,000 is a significant amount. They can review your specific situation and ensure you're handling everything correctly. The consultation fee is worth it for the peace of mind, and they can help you understand if there are any state-specific rules in your area that might apply. Also, don't feel rushed to make any decisions about the money right now. Take time to get proper advice and documentation first.