Thanks for bringing that up. There is a traditional IRA in the mix, but I was planning to leave that alone and just sell the regular investment account holdings. Does it matter which assets I choose to liquidate to pay the debts? Are there tax advantages to picking certain types of assets over others?

You're making a smart choice by leaving the IRA alone if possible. Generally, it's more tax-efficient to sell the regular investment account assets first because of the step-up in basis we've discussed - those sales will likely generate little to no tax. If you did need to tap the IRA to pay estate debts, distributions would be taxable as ordinary income, which typically carries a higher tax rate than long-term capital gains. Additionally, if the estate is the beneficiary of the IRA (rather than individuals), the distribution options may be more limited and could accelerate income recognition. As for which regular assets to sell first, consider liquidating those that have gained the least (or even lost value) since the date of death to minimize any capital gains tax. Also, if there are any assets your siblings particularly want to keep, that might influence your liquidation strategy as well.

Is that $13.61 million threshold before or after debts are subtracted? My parents' estate might be close to that range depending on how some business assets are valued.

Is there any way to tell TurboTax to be more consistent? Like maybe a setting to always include explanations or something? I'm preparing returns for multiple family members and it would be easier to explain if they all had similar structures.

Nah, not really. The tax software has to include certain forms based on specific tax situations - there's no override for that. The IRS expects specific forms for specific situations, and the software complies with those requirements. For the explanation worksheets, those are typically included based on automated triggers within the software. TurboTax might include more detailed explanations when amounts are close to thresholds or when there are multiple factors affecting a calculation.

Yes! The desktop version tends to include more supplementary worksheets and explanations. I've used both and the desktop version consistently produces longer returns with more supporting documentation. I think it's actually a feature of the desktop version since it's marketed more toward complex situations.

Does the ordering matter? Like what if I have both short-term and long-term losses carried over, and both short-term and long-term gains this year? Is there a specific way these have to be applied?

Yes, the ordering definitely matters because it can affect your tax rate. The IRS has specific rules for how losses and gains are netted against each other. First, short-term losses offset short-term gains, and long-term losses offset long-term gains. Then, if you have net losses in one category and net gains in the other, those net figures are used to offset each other. This is important because short-term gains are taxed at your ordinary income rate, while long-term gains get preferential tax rates.

You're absolutely right. You have to actually sell the investment (realize the loss) to claim it on your taxes. Holding onto stocks that have gone down in value doesn't create a tax loss you can claim - it's only when you sell them that the loss becomes "realized" and can be used on your tax return.

Thanks for confirming! That explains why I couldn't find any loss carryover from last year. At least i'll be able to use this year's losses to offset the gains I had earlier in the year, plus the $3000 against regular income.

I've heard about OIC but wasn't sure if I'd qualify. Do they look at your assets too? I own my house with some equity in it and have a couple of vehicles. Would that disqualify me?

Yes, they absolutely look at your assets. The IRS typically expects you to liquidate or borrow against assets with equity before they'll approve an OIC. They calculate your "reasonable collection potential" based on your income, expenses, and asset equity. For your home, they'll consider the quick sale value (usually 80% of market value) minus any mortgages and exemption amounts. For vehicles, they'll look at equity beyond what's needed for basic transportation. Having assets with equity doesn't automatically disqualify you, but you'll need to account for that equity in your offer amount.

I got a Partial Payment Installment Agreement (PPIA) last year. It's definitely easier than OIC but still required full financial disclosure with Form 433-F. The key difference is that with PPIA, you make payments based on what you can afford until the collection statute expires (usually 10 years from assessment). After that, the remaining balance is forgiven.

Thanks for the insight! I did make around $8,900 over the summer, so that percentage makes sense. Do you think sharing my bank info with them is safe? That's my main concern honestly.

Sharing your bank info with a legitimate tax service is generally safe. They're handling millions of transactions and have security protocols in place. Account and routing numbers are actually printed on every check you write, so they're not your most sensitive financial information. That said, only provide this info through their secure portal, never via email or text. And if you're still uncomfortable, you can absolutely request a paper check instead as someone suggested earlier. It'll take longer but might give you more peace of mind. Most reputable companies offer both options.

THIS! I had the same experience. They called it a "refund management fee" on top of the tax prep fee I already paid. Check the paperwork you signed.