This is exactly why having a second opinion is so valuable for complex tax situations. Your Big 4 tax preparer should definitely know better than to classify insurance proceeds as ordinary business income without proper analysis. Based on what others have shared here, it sounds like you have a strong case for treating this as an involuntary conversion under Section 1033. The key factors working in your favor are: (1) you received insurance proceeds for property damage, (2) you reinvested those proceeds in repairing the same property, and (3) you completed the repairs within the allowable timeframe. Since your total repair costs ($158k based on your comment) exceeded the insurance payout ($135k), you actually have a net casualty loss of $23k rather than taxable income. For S-Corp business property, this loss should flow through to your K-1 without the personal casualty loss limitations. I'd strongly recommend getting documentation together showing the total damage, insurance settlement, and complete repair costs, then having a frank conversation with your tax preparer about why they're not considering the involuntary conversion rules. If they're not familiar with this area, it might be worth consulting with a tax professional who specializes in casualty losses and Section 1033 elections.

This thread has been incredibly helpful - I'm dealing with a similar situation where my accountant wanted to classify flood damage insurance proceeds as regular business income. After reading through all the responses here, I realized I needed to educate myself more on casualty loss rules. One thing I'd add for anyone in a similar situation: make sure you understand the difference between insurance proceeds that exceed your property's adjusted basis (which could result in a gain) versus total repair costs that exceed the insurance payout (which results in a loss). The distinction is crucial for tax treatment. Also, timing matters a lot. If you received insurance money in one tax year but made repairs in another, you need to be careful about which year you report the casualty event and whether you're making a Section 1033 election to defer any potential gain. The documentation aspect can't be overstated - keep everything related to the damage, insurance claim, and repairs. I learned this the hard way when I had to reconstruct my records months later. Having a clear paper trail showing the progression from damage → insurance claim → actual repair costs makes the tax treatment much clearer to defend if questioned.

I went through this exact same situation a few years back and can confirm that filing Form 8606 separately is absolutely the right approach here. Don't overthink it or stress about amending your entire return - that's unnecessary paperwork for something that doesn't change your tax liability. Here's exactly what I did: Mailed the Form 8606 with a simple cover letter to my IRS processing center stating "Form 8606 filed separately - nondeductible IRA contribution made after filing 2024 tax return." Made sure to include my name, SSN, and tax year clearly on everything. The key things to remember: Send it certified mail for your records, keep copies of everything, and make sure your contribution was actually made before the April 15, 2025 deadline. The IRS processed mine without any issues or follow-up questions. One thing I'd add that others haven't mentioned - if you're planning to do backdoor Roth conversions in the future, having this Form 8606 properly filed and documented becomes even more critical. It establishes your nondeductible basis which affects the tax calculations on future conversions. You're doing the right thing by addressing this now rather than letting it slide. The IRS is pretty accommodating with these separate 8606 filings since they know people often make last-minute IRA contributions after filing their returns.

I've been following this thread closely since I'm in a very similar situation - filed early in February but then made a nondeductible IRA contribution in late March. Reading everyone's experiences here has been incredibly helpful and much clearer than anything I could find in the official IRS guidance. What really stands out to me is how consistent everyone's positive experiences have been with filing Form 8606 separately. It seems like this is such a common scenario that the IRS has essentially streamlined the process, even though the official instructions make it sound more complicated than it actually is. I'm particularly grateful for the specific details people shared about cover letters, mailing addresses, and what kind of confirmation to expect. The tip about getting written documentation from your IRA custodian is something I definitely wouldn't have thought of on my own, but it makes perfect sense for building a solid paper trail. For anyone else reading this who's in the same boat - it sounds like the consensus is clear: don't stress about amending your entire return, just file the 8606 separately with proper documentation and certified mail. The peace of mind from doing it correctly far outweighs the small hassle of mailing the form. Thanks to everyone who shared their real-world experiences here. This kind of community knowledge sharing is invaluable for navigating these tax situations that aren't always clearly addressed in official publications.

Filed mine on Feb 3rd and just got my refund yesterday! Took exactly 8 business days with direct deposit to Chase. For anyone still waiting, I'd recommend checking the Kansas Department of Revenue portal - mine showed "approved" status about 2 days before it actually hit my account. Hang in there everyone!

Filed mine on Feb 6th and still waiting here too. Seems like there's definitely some variation in processing times even for e-filed returns. I've been checking the KDOR portal daily but still shows "received" status. Good to see people are getting theirs though - gives me hope! Has anyone noticed if certain types of returns (like those with certain deductions or credits) are taking longer than others?

As a newcomer to this community, I'm so relieved to have found this discussion! I literally just checked my transcript this morning and saw the exact same "Tax period blocked from automated levy program" code. My immediate reaction was panic - I thought I had done something wrong with our filing. Reading through all these explanations has been incredibly reassuring. Learning that this is actually a PROTECTIVE measure working in our favor, rather than a red flag, completely changes how I view IRS transcript codes. I had no idea their systems were sophisticated enough to automatically recognize major life changes and apply safeguards during transition periods. What really stands out to me is how the tax professionals here emphasized that this is one of the BETTER codes you can see on a transcript. The fact that actual problems would show up as completely different types of codes (like examination or penalty codes) gives me so much more confidence in understanding what to worry about versus what's actually working in my favor. I'm particularly grateful for everyone who shared their personal experiences - knowing that other people went through the exact same worry and it turned out to be nothing makes this so much less stressful. This community is exactly what I needed to help navigate these confusing tax processes. Thanks to everyone who took the time to share their expertise and experiences!

As a newcomer to this community, I want to thank everyone for this incredibly informative and reassuring discussion! I've been trying to understand my own transcript codes for weeks and stumbled upon this thread - what perfect timing! Like so many others here, when I first saw "Tax period blocked from automated levy program" on my transcript, my heart dropped. The language sounds so official and potentially threatening! But reading through all these explanations from tax professionals and community members has completely shifted my understanding. What really amazes me is learning that this code is actually the IRS PROTECTING us rather than flagging us for problems. The fact that their systems automatically recognize when taxpayers are going through major life changes - like marriage, moves, or filing status changes - and apply these safeguards is honestly more thoughtful than I expected from a government agency. The insights from tax professionals about how this is one of the BETTER codes to see, and that real issues would manifest as examination or penalty codes instead, gives me so much more confidence in reading my transcripts going forward. I love how this community combines technical expertise with real-world experiences - having people share both professional knowledge AND personal stories like "I panicked about this too but everything was fine" makes these complex concepts so much more approachable. This thread is exactly why community forums are so valuable. You've all helped transform what could have been ongoing stress and confusion into a fantastic learning experience. I feel much more empowered to understand my tax documents now, and I know where to come for reliable advice in the future!

As someone who recently went through a similar situation with an inheritance windfall, I can definitely relate to wanting to just "solve" the property tax issue once and for all. The peace of mind aspect is really appealing! However, after reading through all the excellent advice here, I think everyone has made a compelling case for the dedicated savings account approach instead. The combination of Westchester County's 1-2 year prepayment limit, the SALT cap restrictions, and the opportunity cost of earning 0% on prepaid taxes versus 4-5% in a high-yield account makes the financial math pretty clear. What really sealed it for me was learning about the potential complications with refunds if you ever move or sell. Life circumstances can change unexpectedly, and maintaining liquidity seems crucial, especially with such a large sum. I'm planning to follow the "tax sinking fund" approach that several people mentioned - allocating maybe $15,000 from my inheritance to jumpstart the account, then setting up automatic monthly contributions to keep it funded. This way I get the psychological benefit of having taxes "handled" while still earning returns and keeping my options open. Thanks to everyone who shared their experiences and expertise - this discussion really helped clarify what initially seemed like a simple decision but turned out to have much more complexity than I realized!

I'm a tax preparer who works with a lot of clients in similar situations, and I want to echo what others have said while adding a few practical points from my experience. First, regarding Westchester County specifically - I've had multiple clients there attempt multi-year prepayments, and they consistently get told the limit is current year plus one additional year maximum. The county is pretty strict about this policy. But more importantly, I've seen what happens when clients actually do prepay even the maximum allowed amount. The most common issue is that they lose track of their prepayment status and end up either double-paying in subsequent years or missing important assessment notices because they assume everything is "handled." Property tax bills serve an important function beyond just collecting money - they notify you of assessment changes, new exemptions you might qualify for, or errors that need correction. When you prepay, you often stop paying attention to these notices, which can cost you money in the long run. The sinking fund approach everyone's discussing is definitely the way to go. I typically recommend clients set aside 110% of their current annual property tax (so about $4,235 in your case) to account for increases, then adjust the amount annually. This builds in a small buffer while still keeping you engaged with the actual tax process each year. One last tip - whatever approach you choose, make sure to document it clearly for tax season. I've seen too many clients get confused about what they've paid when and create unnecessary complications for their tax preparation.