That's really helpful information! I just checked his business card and he does have a CPA license number listed. Do you remember how long the complaint process took before you got a response? I'm worried about the timing with the deadline so close.

The complaint process took about 10 days before I heard anything, but things moved quickly after that. He contacted me within 24 hours of the board reaching out to him. Since you're so close to the deadline, I'd recommend proceeding with the extension filing and document retrieval processes others suggested while simultaneously filing the complaint. It's worth mentioning that just the threat of a complaint sometimes works - send an email stating you'll be filing a complaint with the state board in 48 hours if he doesn't respond, and copy the email address of your state's CPA board. That alone worked for a friend of mine in a similar situation.

This is honestly great advice. Sometimes there's a simple explanation. My "ghosting" preparer last year had actually died suddenly, and the firm was in chaos trying to handle everything. They were grateful when I showed up because they were trying to figure out how to contact everyone.

Thanks for the suggestion! I've actually considered a 529, but I want to give my daughter more flexibility with the funds in case she doesn't go to college or has other goals. Does the 529 have to be used for education, or can it be used for other things too?

A 529 plan is primarily designed for educational expenses. If the funds are used for qualified education expenses (tuition, books, room and board, etc.), the earnings are completely tax-free. If the money is used for non-educational purposes, you'll pay income tax on the earnings plus a 10% penalty. However, there are exceptions to the penalty in certain situations, like if your child gets a scholarship. Also, recent changes allow using up to $10,000 from a 529 to repay student loans, and you can now roll some unused 529 funds into a Roth IRA. So there's a bit more flexibility than there used to be, but definitely less than a custodial account.

Not a dumb question at all - that's actually what my financial advisor suggested when I was in a similar situation! Just calculate approximately what the tax liability might be and reduce the gift by that amount. Keeps everything clean and simple.

Thanks for this - my settlement does break down different amounts. About $21k was compensatory for financial losses and about $7k was listed as "other damages." Is there a way to deduct at least the compensatory part?

Based on your breakdown, if the $21k compensatory damages were related to financial losses from a business activity or investment property, then yes, that portion would likely be deductible in the appropriate section (Schedule C for business, Schedule E for rental property, etc.). The $7k listed as "other damages" is more ambiguous and would depend on the specific nature of those damages. If they're punitive damages, those typically aren't deductible. If they're for emotional distress without physical injury, those generally aren't deductible either. But if they relate to a business loss in some way, they might be.

Do cancelled checks count as proof or do you need more than that? I paid my settlement in 3 installments and have the cancelled checks but wondering if I need more documentation.

Oh that's a good point I hadn't considered! I'm in California so I'm guessing they'll want their share too. How do I figure out if I need to make an estimated payment? Is there a threshold amount?

California definitely taxes game show winnings, so you'll need to report them on your state return too. For estimated tax payments, the general rule is you should make them if you expect to owe $1,000 or more when you file your federal return. Given the value of your prizes at $7,800, depending on your tax bracket, you could easily owe over $1,000 in additional taxes. You can use the IRS's 1040-ES worksheet to calculate the amount. For California, you'd use the 540-ES form. Making estimated payments helps you avoid underpayment penalties and spread out the tax impact rather than getting hit with a big bill at filing time.

This is so true! My friend won a trip on Wheel of Fortune and declined it because after calculating the taxes, it wasn't worth it to her. You can actually refuse prizes if the tax burden is too high.

We actually don't pay for childcare since we're staggering our work schedules, but that's good to know for the future. Are there any other tax benefits we should be considering for our situation? I heard something about a credit for having a baby during the tax year too.

You're thinking of the Child Tax Credit, which is available for each qualifying child. Since your daughter was born in 2025, you can claim the full credit even though she wasn't your dependent for the entire year. The credit is worth up to $2,000 per qualifying child. Another benefit to consider is the Earned Income Tax Credit (EITC), which is particularly valuable for lower and moderate-income workers. At your girlfriend's income level of around $18,000, she could potentially qualify for a significant EITC if she claims your daughter. This might result in a larger combined refund for your household compared to you claiming the child, even though you qualify for Head of Household status.