That's a really good point! I just checked and she didn't receive a 1099-NEC, just this weird mostly-empty MISC form. I wonder if they did start filling out the wrong form. This makes me even more convinced I need to contact the employer to figure out what's going on.

Definitely contact them then. It's also possible they reported her regular W-2 wages correctly but had some small miscellaneous payment they needed to report separately. Either way, the employer needs to clarify what that payment was for since it affects how you'll report it on your return. Better to get this sorted out now than have issues later if the IRS computers match up the reported income differently than what you filed on your return. Those automated mismatch notices can be a real headache to resolve after the fact.

This happened to me too! And the worst part was that the company that issued it had gone out of business by the time I discovered the error, so I had nobody to contact for a corrected form. Nightmare.

Can you explain what you mean by tax loss harvesting? I'm in a similar situation with about $8K in losses this year.

Tax loss harvesting means strategically selling investments that have declined in value to realize losses that can offset capital gains or up to $3,000 of ordinary income per year. Since you already have $8K in losses, you'll use $3K this year against ordinary income, then have $5K carrying forward. In future years, if you have investments that have appreciated significantly and you want to sell them, your carried-over losses will offset those gains, potentially reducing or eliminating the tax impact. Just be careful of the wash sale rule - don't buy substantially identical securities within 30 days before or after selling at a loss.

Learned this the hard way too. Does anyone know if turbotax carries this info forward correctly if you use them consecutive years?

22 I use it every year for my seasonal business. It's definitely more work but WORTH IT if your income is lumpy. Instead of being required to pay equal amounts each quarter, you calculate based on what you've actually earned by the end of each quarter. My Q1 and Q2 payments are tiny, then Q3 and Q4 are massive when we hit our busy season. Your accountant is right that it's complicated though. You basically have to do a mini tax return for each quarter. I wouldn't try it without professional help the first time.

Oh man, I didn't even think about credit implications. Just checked my wife's credit report and thankfully nothing shows up about her being deceased. But that's a great tip for anyone else dealing with this bureaucratic nightmare. Did you have to contact each credit bureau separately or was there a single place to fix it?

Unfortunately, you have to contact each credit bureau separately. Each one had their own process for proving my husband was alive. One required a notarized letter, another wanted copies of his ID and Social Security card, and the third made us mail in a "proof of life" form with a utility bill. It was ridiculous! The good news is that once you get it fixed with the SSA completely, you can use the SSA documentation to help with the credit bureaus. Just keep detailed records of everyone you talk to and get everything in writing.

This is great advice! My sister had the same issue and the IP PIN totally solved it. Once she had that, it forced the IRS systems to recognize her as alive. You can request one online at the IRS website, and it serves double duty as protection against identity theft.

That's really interesting! I hadn't thought about the self-employed angle. I've actually been considering creating some specialized workbooks based on my after-school curriculum. How complicated is the tax situation if I start selling those? Do I need to set up a formal business or can I just report it as additional income?

You don't need to set up a formal business - you can simply report it as self-employment income on Schedule C. You'll list your income from selling the workbooks and then deduct all legitimate business expenses against that income. This includes costs for creating, printing, marketing, and distributing your materials. If you use a part of your home exclusively for this business activity, you might also qualify for the home office deduction. Just be aware that you'll need to pay self-employment tax (around 15.3%) on the profits, but you'll also be able to deduct 50% of that tax on your return. It's worth it for the additional deductions you'll get compared to just having W-2 income.

Unfortunately no. The IRS has pretty strict rules about clothing - it needs to be not suitable for everyday wear to be deductible. Think things like uniforms with logos, specialized protective gear, or costumes. Just because your workplace has a dress code doesn't make the clothes deductible. I tried deducting my "professional wardrobe" a few years ago and my accountant shut that down fast.