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.

3 Yes, this is related but slightly different. With backdoor Roth, you make a non-deductible Traditional IRA contribution first, then convert it to a Roth. You'll need to file Form 8606 to report the non-deductible contribution. For basis calculation: your basis in the Traditional IRA is what you've contributed after-tax (non-deductible contributions). When you convert to Roth, you'll pay taxes on any earnings plus any pre-tax money in ANY Traditional IRA accounts you have (pro-rata rule).

10 Thanks! I didn't realize I needed to file Form 8606 for the backdoor Roth. And I completely forgot about the pro-rata rule. I have an old Traditional IRA from a 401k rollover that would definitely complicate things.

1 That's really helpful to know! I wonder if I can still call Fidelity now about my 2023 distribution and have them update the coding retroactively? Has anyone tried this?

This is absolutely correct. I made the mistake of exercising right at our IPO and selling within the year. Ended up paying nearly 45% (combined federal, state, local) in taxes on the full value. A colleague who exercised a year earlier paid ordinary income on the smaller pre-IPO spread, then only 15% on the huge jump from exercise to IPO price. Difference was over $100k in taxes on roughly similar option grants.

That's a really important point about the 409(a) potentially increasing! I hadn't considered that but it makes total sense as we get closer to IPO. I like the idea of a partial exercise strategy. Regarding cashless exercise - I've heard rumors that we'll have that option at IPO, but nothing confirmed in writing. I should probably ask our finance team about this. Would that essentially mean I could exercise and immediately sell enough shares to cover the exercise cost and taxes?

Exactly - a cashless exercise at IPO would let you exercise options and immediately sell enough shares to cover both the exercise cost and the resulting tax bill, without needing to come up with cash out of pocket. Very common for IPOs. If that's an option, you might want to hold some options for that route, especially if you're cash-constrained. The tax hit will be higher, but you won't need liquidity. Many people do a mixed approach - exercise some now for tax advantages (if you have the cash), and save some for cashless exercise at IPO to diversify risk. Definitely get confirmation from your finance team though - some companies require you to exercise before IPO to participate in the offering!

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.

Would you recommend attaching some kind of profit projection or business plan to my return? I did have one when I started, showing how I planned to monetize once I hit certain view thresholds. Just wasn't sure if that would help or draw more attention to the loss.

I wouldn't attach the full business plan to your return as that might actually draw unnecessary attention. Instead, keep it with your tax records in case of an audit. What can be helpful is a brief statement with your return explaining the nature of your business, that you operated with an intent to profit, and mentioning that you have documentation of your business plan and efforts. This shows you're aware of the requirements without overwhelming the initial filing with extra documents.

This is actually a common misconception. Schedule C losses don't reduce your Social Security wages from W2 employment. Your W2 income is still fully reported for Social Security purposes regardless of Schedule C losses. The losses might reduce your overall income tax, but your Social Security contributions and credits remain based on your W2 earnings.