In our case, the trust paid the taxes before distributing to beneficiaries. Our accountant said it depends on whether the trust is a "simple" or "complex" trust for tax purposes. For us it was complex since it had the option to accumulate income. Ur trust might be different tho. The accountant said the $200k was technically a capital gain to the trust since it was essentially selling its right to the property. They said the trust's basis in the property was the important part in calculating how much of that $200k was actually taxable gain.

This is a really complex situation that highlights why trust taxation can be so tricky! Based on what you've described, there are several key factors that will determine the tax treatment: 1. **Trust Classification**: Whether your trust is "simple" (must distribute all income annually) or "complex" (can accumulate income) will largely determine who pays the tax. 2. **Nature of the Settlement**: Since this was malpractice insurance compensating for a lost property interest, it's likely treated as a capital transaction rather than ordinary income. The tax calculation would compare the settlement amount to your trust's basis in the lost 21% property interest. 3. **Trust Document Language**: The specific provisions in your trust document about how settlements and capital transactions are allocated between income and principal will be crucial. Given the $200,000 amount and complexity involved, I'd strongly recommend getting professional guidance from a CPA who specializes in trust taxation before making any distributions. They can review your trust document, determine the trust's basis in the lost property, and calculate the proper tax treatment. The good news is that if it's determined to be a recovery of basis (rather than a gain above basis), the tax impact could be minimal. But you definitely want to get this right before distributing the funds!

Does anyone know if the tax treatment is different for RSUs vs stock options? My company gives us both and I'm completely lost about how to handle either of them on my taxes.

@Liam Sullivan - I went through this exact same confusion last year! Here's what I learned the hard way: First, your RSU income should definitely be on your W-2 in Box 1, combined with your regular salary. It won't be listed separately, which is why you might have missed it. When RSUs vest, they're treated as regular compensation income, not as a special type of income. The process is actually simpler than it seems: 1. The fair market value of your RSUs when they vested gets included in your W-2 Box 1 (wages) 2. Any taxes withheld appear in Box 2 (federal income tax withheld) 3. You report this on your 1040 just like regular wages - no special forms needed for the vesting event itself If you're absolutely certain the RSU income isn't on your W-2, that's a red flag. Your employer is required to include it. I'd recommend calling your payroll department again and specifically asking them to walk you through where the RSU income appears on your W-2. Also check if you received any supplemental documents from your company or brokerage that show the vesting details - these can help you verify the amounts even if they're combined on your W-2. The good news is once you locate it on your W-2, reporting it is straightforward since it's just regular income!

The IRS Refund Hotline is 800-829-1954, which is specifically for refund inquiries. However, it's mostly automated just like the Where's My Refund tool. For actual human assistance, use 800-829-1040. Current average wait times are 73 minutes according to the IRS's February 2024 service report. If you filed electronically, they won't discuss your return until exactly 21 days after acceptance. If you mailed your return, they won't discuss it until precisely 6 weeks after mailing. Have you verified if either of those timeframes applies to your situation?

As someone who went through this exact situation last year as a newlywed, I completely understand your frustration! Here's what worked for me: First, definitely try the Where's My Refund tool and check your account transcript online - sometimes the issue is something simple that resolves automatically without needing to call. For actually reaching a human, I had success calling 800-829-1040 at exactly 7:00 AM EST when they open. Have your Social Security number, filing status, and exact refund amount ready. The key is persistence - don't get discouraged by busy signals. Since you mentioned this is your first year filing as married, double-check that you both didn't accidentally claim the same dependents or credits. That's a common newlywed mistake that can delay processing. If you've been waiting more than 21 days since e-filing (or 6 weeks if you mailed), and the online tools aren't giving you answers, then calling is definitely worth it. The agents can see much more detail about what's happening with your return than what shows up in the automated systems. One last tip: if you do get through and they say everything looks normal but just needs more time, ask them to put a note on your account about the inquiry. This can sometimes help expedite things. Good luck - the waiting is always the hardest part!

14 Has anyone dealt with having an installment agreement request rejected? I'm worried mine might get rejected because I had a previous one that I defaulted on about 3 years ago. Just wondering what the process is like if they say no.

I went through this exact same situation about 6 months ago! Submitted my Form 9465 and waited what felt like forever. Here's what I learned: First, definitely start making payments now according to your proposed schedule. The IRS continues charging penalties and interest while they process your request, so you're just costing yourself more money by waiting. Any payments you make will be credited to your account regardless. Second, the processing times are really unpredictable right now. Mine took about 7 weeks to get approved, but I've heard of people waiting 2-3 months. The $7,800 you owe should qualify for streamlined processing since it's under $50,000, but that doesn't seem to be speeding things up much lately. One thing that helped me was calling the Practitioner Priority Service line (if you have a tax professional) or trying to get through to the regular customer service line very early in the morning. They were able to at least confirm my request was in the system and being processed. Don't stress too much - the vast majority of installment agreement requests get approved as long as you proposed a reasonable payment amount based on your financial situation. Just keep making those payments!

You might consider implementing a quarterly dividend strategy alongside a reasonable base salary. This is what I do - I pay myself a consistent reasonable base that covers my actual work (based on market rates for my position), then distribute profits as needed through distributions. Remember that while S-Corp distributions aren't subject to self-employment tax, they ARE subject to income tax. And the IRS is very clear that you can't take distributions without a reasonable salary first.

The uncertainty you're facing is totally understandable - that's a massive potential revenue jump! Here's what I'd recommend based on going through something similar: Start with a conservative approach for Q1. Set your salary based on a blend of last year's performance plus modest growth expectations - maybe bump from $65k to around $75-80k to start. This keeps your fixed commitment manageable while acknowledging some growth. Then implement quarterly reviews. As you hit Q2 and Q3, if the revenue is materializing as projected, you can either: 1. Increase your base salary mid-year (requires payroll adjustments) 2. Pay yourself W-2 bonuses quarterly to catch up 3. Take the excess as distributions (though remember you need that reasonable salary first) The IRS doesn't expect you to predict the future perfectly, but they do expect you to make reasonable adjustments as circumstances change. Document everything - why you set the initial salary, what factors you considered for increases, and how you determined what's "reasonable" for your role and industry. Most importantly, focus on what you'd need to pay someone else to do your job, not on percentages of profit. Your duties might not change much even if revenue quadruples, so your salary shouldn't necessarily scale directly with profits.