That's really helpful, I didn't even think about state-specific requirements. Do you happen to know if most tax software handles this automatically, or is it something I need to specifically look for?

Most major tax software should prompt you about state-specific gambling income forms if you indicate you have gambling/fantasy winnings, but it's not guaranteed. It depends on the software and how thorough their questionnaires are. I'd recommend specifically looking for gambling/fantasy sports sections in your state return once you complete the federal portion. If you're using software like TurboTax or H&R Block, search for terms like "gambling," "fantasy sports," or "other income" in the state section. If nothing comes up, check your state's department of revenue website - they usually have guides for reporting different types of income.

Actually this isn't quite right for fantasy sports/gambling. The threshold for gambling winnings is generally based on the amount of the win and the type of gambling, not a simple $600 threshold. For fantasy sports specifically, platforms typically issue 1099-MISC forms when net profits exceed $600, but some use other criteria.

Thanks for the correction! You're right that it's more complicated than I stated. Fantasy sports sites typically issue 1099-MISC forms for net winnings (winnings minus entry fees) over $600, but even that can vary by platform. Some might use a 1099-K for certain payment thresholds instead. The main point still stands though - just because you didn't get a 1099 doesn't mean you don't have to report the income. Always better to report everything properly rather than risk issues with the IRS later.

16 Did you file yourself or use a professional? I'm trying to decide if I need to hire someone or if I can handle this on my own with tax software.

3 I started with tax software for the most recent year I hadn't filed, since that was the simplest one. I was able to handle it myself pretty easily since I just had W-2 income like you do. For the older years, I ended up using a tax preparer because my situation got more complicated (had some 1099 income and moved states). If your tax situation is straightforward with just W-2 income, you can absolutely do this yourself with tax software. Many of the major tax software companies offer versions for prior years. Just make sure you're filing paper returns for prior years since electronic filing is usually only available for the current tax year.

20 Is there an application process for the payment plan? And do they charge interest while you're paying it off?

What about medical expenses she had before passing? Can those be deducted on her final return? My family member had nearly $30k in out-of-pocket medical costs in their final months.

Yes, medical expenses can be deducted on the final tax return, and they're subject to more favorable rules in this situation. Medical expenses paid by the estate within one year of death can be treated as if they were paid at the time of death, and can be deducted on the final income tax return. The threshold for deducting medical expenses is typically 7.5% of adjusted gross income, but given the potentially large expenses in a final illness, it's quite possible you'll exceed that threshold and be able to take a substantial deduction.

How much did it cost to hire a third-party executor? We're considering this option because tensions are already high.

Thanks for bringing this up! How do the tax benefits compare between UGMA/UTMA accounts and a 529? I'm pretty confident my kids will attend college, but I like having flexibility.

The tax treatment is completely different. With a 529, your earnings grow tax-free and withdrawals for education are tax-free - it's a much better tax advantage if you know the money will be used for education. With UGMA/UTMA accounts, you get the "kiddie tax" benefit where a portion of the investment income is taxed at the child's (typically lower) tax rate. But once that income exceeds about $2,300 (in 2023), the excess is taxed at the parent's rate. And there's no tax-free withdrawal feature - when they take money out, any earnings are subject to capital gains tax.

You can change account ownership in most states, but there are some restrictions. In my state (Virginia), I changed my daughter's 529 ownership to her grandparents when they retired to a higher-tax state that offered better deductions. But some states don't allow ownership transfers or treat it as a new contribution. Call your specific 529 plan administrator to check their rules.

Thanks for the info! I'll call my state's 529 administrator tomorrow. I'm in Ohio and my son is in Pennsylvania, so I'll need to figure out which state's plan makes more sense now.

Thanks for mentioning this! I didn't think about the Additional Child Tax Credit. Do you know if unemployment income counts toward eligibility for that? And does the Child and Dependent Care Credit apply if the childcare was only for part of the year (Jan-Mar before I lost my job)?

Unemployment income does count toward eligibility for the Additional Child Tax Credit, which is good news in your case. The ACTC looks at your total income, not just earned income like the EITC does, so your unemployment benefits will help you qualify. For the Child and Dependent Care Credit, you can absolutely claim it for just part of the year. You can claim expenses you paid for childcare during the months you were working (January-March). Even though it was only a few months, every bit helps when it comes to maximizing your refund.

I just checked the IRS website and unfortunately I think the EITC lookback provision expired. It was specifically extended for 2021 taxes (filed in 2022) but I don't see anything about it being available for 2023 tax returns. That might explain why your refund is lower.