Thanks for this specific example! Do you physically mail in that statement or is there a way to include it when filing electronically? We're in California, and the payments are coming through In-Home Supportive Services (IHSS) which I believe is a Medicaid waiver program, but I need to double-check.

When I file electronically, I include that statement in the section for "additional information" or "miscellaneous statements" - most tax software has a place for this. If your software doesn't have that option, you can also mail the statement separately to the IRS after e-filing, with your name, SSN, and tax year clearly marked. California's IHSS is indeed funded through Medicaid (called Medi-Cal in California) and typically qualifies for the difficulty of care exemption. Just make sure your fiancé keeps documentation of the payment source in case of questions later. The program administrators should be able to provide a letter confirming it's a Medicaid waiver program if needed.

You're right that it's not automatic, but most Medicaid waiver programs DO qualify. The fact that you had to pay taxes might mean your program wasn't a qualified Medicaid waiver program. Did you check specifically? We were incorrectly paying taxes on exempt income for TWO YEARS before we realized our mistake!

No, I didn't claim any special credits or deductions - just the standard deduction. All my info should be correct (same SSN, address, etc. as last year). I e-filed and requested direct deposit to the same bank account I've always used. That's why I'm so confused about the delay! I literally did nothing different from previous years when I got my refund quickly.

In that case, it's likely just the general processing backlog the IRS is experiencing this year. There have been reports that they're still working through a backlog from previous tax seasons, which affects current processing times. If it helps ease your mind, returns with no red flags almost always process successfully, it's just a matter of waiting. The 21-day guideline is just that - a guideline, not a guarantee. Many people are reporting waits of 30-45 days this year even for simple returns.

This happened to me too! My bank (Wells Fargo) held my tax refund for verification for 3 business days before releasing it to my account. When I called the IRS they said the refund had been issued a week earlier!

Do they help with finding deductions specifically for gig workers? That's been my biggest struggle since switching to 1099 work.

Yes, they have a really good section dedicated to independent contractor/gig work deductions. They walk you through all the common deductions like mileage, phone bills, hot bags (for food delivery), cleaning supplies, phone mounts, etc. They also have a helpful feature that lets you track expenses by percentage of business use. So if you use your phone 80% for gig work, it calculates the appropriate deduction. They're not as pushy as TurboTax, but they don't miss any potential deductions either.

Seconding this! VITA helped me with my DoorDash and Instacart 1099s last year. Just make sure to bring ALL your documentation - car mileage logs, expense receipts, etc.

That's a fair point about the simplicity. I guess I was just frustrated with having multiple accounts in different places and the CD rate seemed low compared to my index funds which have been doing well. Are there any downsides to transferring it to another institution as an inherited IRA like others suggested?

The main downsides to transferring would be paperwork hassles and potential for errors. Some financial institutions aren't very experienced with handling inherited IRAs, which operate under different rules. If you do decide to transfer, make absolutely sure it's done as a direct trustee-to-trustee transfer of an inherited IRA. Don't let them give you a check or close the account, as that would trigger full taxation. Also ensure the new account is properly titled as an inherited IRA with the original owner's name and your name as beneficiary. Finally, confirm the new institution understands you're subject to the pre-SECURE Act RMD rules based on your life expectancy. When done correctly, the transfer itself isn't taxable.

Where did you hear this? I haven't seen anything about changes to inherited IRA rules in the current tax proposals. Do you have a link?

You're right to question this. I should have been more specific. There's no direct "Tax Reform 2.0" package targeting inherited IRAs specifically right now. What I was referring to are some of the ongoing discussions around retirement security legislation following the SECURE Act 2.0 passed in 2022. There are occasionally proposals floated about harmonizing pre-2020 and post-2020 inherited IRA rules, but nothing concrete has advanced through committees. I apologize for creating unnecessary concern. The current rules for pre-2020 inherited IRAs like the OP's should remain stable for the foreseeable future, and I shouldn't have implied otherwise without specific legislation to reference.

What tax software would you recommend specifically for options trading? I did mostly puts and calls, nothing too exotic.

For relatively straightforward options trading like puts and calls, I've found H&R Block Premium to handle it well. TurboTax Premier is also good but more expensive. TaxAct Premier+ is a less expensive option that still handles investment income properly. The key is making sure you import your trading data directly from your brokerage rather than entering it manually. This dramatically reduces errors and saves tons of time, especially with the volume of trades you're describing.

This is such an underrated point! I got hit with a $400 underpayment penalty in California because I didn't realize my trading income required quarterly payments. The federal underpayment penalty wasn't as bad, but still annoying.