That's a good point about tax-advantaged accounts! But no, these are definitely regular taxable investment accounts they've had for years, not IRAs. The 1099s were issued by their bank and a brokerage firm for normal taxable accounts. I think at this point it's pretty clear the CPA made a mistake. Do you think this kind of oversight indicates my parents should look for a new tax preparer, or is this the kind of mistake anyone might make occasionally?

Based on your confirmation that these are regular taxable accounts, this is definitely an error that shouldn't have happened. While everyone can make an occasional mistake, missing multiple 1099 forms is concerning because it's such a fundamental part of tax preparation. I would suggest having a conversation with the CPA first. Their response will tell you a lot - a good professional will acknowledge the error, fix it promptly at no additional cost, and explain what steps they'll take to prevent similar mistakes in the future. If they're defensive or try to charge for fixing their own mistake, that's a red flag. What makes this particularly troubling is that tax software and even manual checklists that CPAs use are specifically designed to prompt for 1099 income. This suggests either carelessness or possibly that some documents were misplaced during preparation.

That's not how tax reporting works though. Interest income and dividends aren't netted against capital losses on Schedule D. They're entirely separate types of income reported on different lines of the 1040. Capital losses can offset capital gains, but not interest or dividend income.

I tried the Taxpayer Advocate last year and they told me they couldn't help with identity verification cases unless there was a genuine financial hardship. Has this policy changed recently?

The policy hasn't officially changed, but in practice, it varies by office and how you present your case. Identity verification cases can qualify if you can demonstrate actual financial hardship (like facing eviction, utility shutoff, inability to pay for medications, etc.) caused by not receiving your refund. What's also changed is that some Taxpayer Advocate offices now have specialized staff just for handling identity verification backlogs. Worth calling your local office to check their current procedures, as they've been updating their approach to handle the massive backlog of these cases.

I did this last month and it worked perfectly! Called the appointment line (844-545-5640), got an appointment for the following week at my local office. Brought my ID, social security card, the IRS letter, and copies of my tax returns. The agent verified my identity on the spot and released my return for processing. Refund showed up 3 weeks later!

Does the spouse need to file anything special along with the return when they mark the other person as deceased? Like a death certificate or anything official?

For a joint return where one spouse is deceased, you generally don't need to submit a death certificate with the return itself. You simply write "DECEASED" after the deceased spouse's name at the top of the return, and include the date of death. If the surviving spouse is filing as the deceased taxpayer's personal representative, they should sign the return and write "Filing as surviving spouse" in the signature area. For more complex situations involving larger estates that require Form 706, additional documentation would be needed, but for typical joint returns, the notation is sufficient.

So sorry for your loss. I went through this with my husband last year. Another tip: request a tax transcript from the IRS for the past few years. Sometimes there are refunds or issues you didn't know about, and it gives you a complete picture of what the IRS has on file.

Thanks for the advice! Did you use any specific resources to learn about the S-corp requirements when you first started? And approximately how much extra time did it add to your tax preparation compared to just doing personal returns?

When I first started, I found the IRS's "Tax Information For S Corporations" publication really helpful, along with some YouTube videos from CPAs. The Small Business Administration website also has good resources. As for time commitment, my first year doing S-corp returns took about an extra 8-10 hours beyond my normal personal returns. There was a lot of learning and double-checking. Now I can knock it out in about 3-4 extra hours each year. The key is keeping good records throughout the year - that makes tax time so much easier! If your husband's businesses have clean bookkeeping, you're already halfway there.

I had the opposite experience! Paid an accountant $1,800 for S-corp returns that weren't very complicated. Learned how to do it myself the next year and saved a ton. Just needed to read up on the rules first.

Thanks for this simple breakdown! So just to confirm - in my case with $10,400 paid, $6,500 deducted, and $1,400 refunded - the refund is completely non-taxable? And would I still get a 1099-G from my state for the refund even though I don't need to report it?

Yes, your $1,400 refund would be completely non-taxable since it's less than the $3,900 difference between what you paid and what you were able to deduct. And yes, you'll still receive a 1099-G from your state because they don't know your specific federal tax situation. You'll need to report it on your federal return, but the tax software or worksheet will help you calculate that the taxable amount is $0. Don't skip reporting it just because the taxable amount is zero - that can trigger a mismatch notice from the IRS.

You'll need to report the state refund on Schedule 1, Line 1. But you should complete the "State and Local Income Tax Refund Worksheet" in the 1040 instructions first to determine how much (if any) is actually taxable. If you're dealing with the SALT cap situation described in this thread, you may well calculate that $0 is taxable, but you still need to work through the worksheet.