3 Does it matter if the house was going through probate during that time? My situation is similar but the property was in probate for 2 years before we got the inheritance officially. Would the stepped-up basis be from date of death or date when probate closed?

10 The stepped-up basis is almost always determined as of the date of death, regardless of when probate closes. So if your relative died 2 years ago, but probate just finished recently, the property's value for calculating your basis would still be what it was worth 2 years ago at the date of death. This can work in your favor or against you depending on the housing market in your area during that time. If property values went up during probate, you might owe taxes on that increase. If they went down, you might actually have a deductible loss.

14 Not OP but when we had a similar situation, getting that bank appraisal was super helpful for our taxes. The IRS never questioned anything because we had the official appraisal document. If your brother didn't get a mortgage, it might be worth splitting the cost of a formal appraisal between all siblings just for documentation.

Do you have to file the same status for both state and federal? Like if we file jointly for federal can we still file separately for state? This is so confusing!

Most states require you to use the same filing status that you use on your federal return. However, a few states have exceptions. In general, if you file jointly for federal, you'll need to file jointly for state as well. The confusion is understandable! Tax rules vary by state, which is why it's important to check your specific state's requirements. For example, in my case with California, we had to calculate both scenarios completely since the state calculations can differ significantly from federal ones, but we had to use the same status for both.

Wait, seriously? I had no idea about this rule. I was planning to have my wife itemize her business expenses while I take the standard deduction. This might change our whole strategy.

I disagree completely. The mortgage interest deduction is one of the few tax breaks that helps the middle class. Not everyone who itemizes is "rich" - in high cost areas like California or New York, even modest homes can cost $750k+. Taking this away would crush homeowners in those regions.

The data doesn't support that position. About 80% of taxpayers now take the standard deduction after the 2017 tax changes, meaning they get zero benefit from the mortgage interest deduction regardless of whether they're homeowners. The primary beneficiaries are households making over $200k. In high-cost areas, I'd support adjusting the cap based on local median home prices rather than having a flat national cap. But the current system primarily benefits the wealthy while doing very little to expand homeownership rates for middle-income families, which was supposedly its purpose.

Yes! This is so messed up. My neighbor is a doctor who works at a hospital (doesn't qualify for the deduction) but her husband is a lawyer who set up his own practice and gets the full 20% QBI deduction. They make similar incomes but he pays way less in taxes. Makes no sense.

Thanks for mentioning the lifetime limit - I had completely forgotten about that! This is actually our first 529-to-Roth rollover, so we're well under the $35,000 cap. Do you know if I need to report somewhere that we've used up $6,700 of our lifetime limit? I'm not seeing any specific form or box to track this.

There's currently no specific tracking mechanism on tax forms for the $35,000 lifetime limit. It's one of those things you need to track yourself, similar to backdoor Roth contribution history. When you file your taxes, you'll just report the qualified distribution from the 529 and the contribution to the Roth IRA separately. The IRS doesn't have a centralized system monitoring your progress toward the $35,000 cap, so keeping your own records is essential. I recommend creating a simple spreadsheet with dates, amounts, and which 529/Roth accounts were involved for each rollover you do.

That's not entirely accurate. While the beneficiary does need to be under 30 for the 529-to-Roth rollover, there's one exception: the age limit doesn't apply if the beneficiary is disabled. Just wanted to clarify in case someone reading has a special situation.

I did try looking at Colorado's site but got lost in all the options. There seems to be a direct file system but it wasn't clear which forms I needed since I already filed federal. Do you know if these state systems typically require you to enter all your info again from scratch or can they import data from your federal return somehow?

Most state systems don't import directly from your federal return, unfortunately. You'll need to manually enter the relevant information again. The key things you'll need from your federal return are your AGI (Adjusted Gross Income), any federal tax paid, and potentially some specific line items depending on Colorado's form. Colorado's system is actually better than most. Look specifically for their "Revenue Online" portal and create an account there. They have a guided interview process that asks questions to determine which forms you need rather than expecting you to know upfront. It takes about 30-45 minutes to complete if you have all your documents ready.

I used FreeTaxUSA for state-only last year! You actually have to go through their federal section first, but you don't submit it. Complete the federal portion (which is free anyway), get to the end where it shows your federal return, then look for the "File State Only" option. It'll be in the left sidebar or sometimes as a text link near the federal filing buttons. Their state filing fee was only about $15 when I used it, which was cheaper than most others. The interface is pretty straightforward too.