Does your accountant take into consideration things like health insurance, Social Security survivor benefits, inheritance laws, etc? The tax piece is just one part of the financial picture of marriage. Curious how those other factors weighed in.

Yes, we did a comprehensive analysis. For our specific situation (both have good employer health insurance, substantial retirement savings, and have proper estate planning with attorneys), the tax penalty outweighed other benefits by a significant margin. We're fortunate to be in a state that has strong domestic partnership protections. We don't have children and have advanced healthcare directives in place. It's definitely not a one-size-fits-all decision, but the tax impact was too substantial for us to ignore.

This is an excellent point that many people miss. When you combine incomes but have the same deductions, those deductions have less "power" to reduce your overall tax liability.

Oh no, I didn't even think about that! Is there some way she can plan these withdrawals to minimize the tax impact on her Social Security? She really relies on that money.

Your aunt might want to carefully plan her withdrawals to stay under the threshold where Social Security becomes taxable if possible. For a single filer, Social Security can become partially taxable when combined income exceeds $25,000. She should also check if her state taxes Social Security benefits - some states do while others don't. Given her situation, she might want to talk to a tax professional who specializes in retirement planning for low-income individuals. Some communities offer free tax counseling for seniors through programs like VITA or Tax-Aide that could help her plan this out.

The 10-year rule doesn't apply the same way to all inherited accounts though. If the original owner had already started RMDs, the beneficiary might need to continue taking annual distributions AND empty the account within 10 years. It got even more complicated with the SECURE 2.0 Act.

Did you end up getting any notices or letters from the IRS after filing with the substitute W2 form? That's what I'm most worried about - getting some scary letter months later saying my numbers don't match their records.

I didn't get any notices from the IRS after filing with the substitute form. I was worried about the same thing, but it seems like they handle these situations fairly routinely. If your former employer never reported your wages to the IRS (which seems to be the case based on your wage transcript), then there's nothing for your estimates to "not match" against in their system. The key is making a reasonable, good faith effort to report accurately and keeping documentation of how you arrived at your figures in case questions ever do come up.

This is good advice! I actually had success with this approach. Found a former manager on LinkedIn who had contact info for the payroll company they used. Turns out the payroll company still had all our records even though the business closed.

Where exactly did you find this supplemental information? I've looked all over my Wealthfront account and can't seem to locate any state-by-state breakdown. Is it a separate document they send?

It should be available in your Wealthfront tax documents section when you log in. Look for something called "Supplemental Tax Information" or "State Tax Information." It's often a separate PDF from your main 1099-DIV. If you don't see it there, check your email for tax document notifications from Wealthfront - sometimes they include links to all the supplemental forms. As a last resort, you can contact Wealthfront support directly and request the state tax exemption breakdown.

Yes, TaxHawk and FreeTaxUSA are actually the same company/software with different branding. The interface and how you enter state tax-exempt dividends would be identical in both.

Are those still deductible? I thought the Tax Cuts and Jobs Act eliminated unreimbursed partnership expense deductions? My accountant told me they're not deductible anymore for 2023 taxes.

You're mixing up two different things. The TCJA eliminated unreimbursed employee business expenses (that used to be on Schedule A), but unreimbursed partnership expenses reported on K-1 are still deductible. If you're a partner and you pay for business expenses out of pocket (without being reimbursed), these expenses can still be deducted on your Schedule E. The key is that they must be properly reported on your K-1 in box 13 with code W. This is different from employee expenses - it's because as a partner, you're not an employee of the partnership.

Could you explain more about why a negative amount creates a taxable gain? I think mine shows negative but I didn't report anything extra and now I'm worried.