I was in one of the test states last year. It's pretty basic but works fine for simple returns. The interface is clean but there's minimal guidance - it basically asks you questions and fills in the forms. No fancy explanations or hand-holding like commercial software. The big limitation is it doesn't support all tax situations yet. I couldn't use it because I had HSA contributions. But if you have W-2 income, some 1099 interest, and standard deduction, it works perfectly fine. And you can't beat the price!

I've had the opposite experience. I did a test last year and entered identical info in TurboTax, H&R Block and FreeTaxUSA. All three gave me exactly the same refund amount. The difference was TurboTax wanted $120, H&R Block wanted $75, and FreeTaxUSA only charged $15 for state filing (federal was free). Tax math is tax math - a deduction or credit works the same way regardless of which software you use.

How much did it cost to have an attorney prepare the 706? I've heard it can be several thousand dollars even for straightforward estates. Wondering if it's worth it when no tax will be owed.

We paid around $8,000 for the attorney to prepare the Form 706, which included a full inventory and appraisal of assets. This was for a moderately complex estate with some business interests and multiple properties. The cost can vary significantly based on the complexity of the estate and your location. While it seemed expensive at the time, especially since we knew no tax would be due after applying the DSUE, I now view it as insurance against future complications. The step-up in basis alone was worth documenting properly, as it saved significant capital gains taxes when certain assets were later sold. Some attorneys offer more competitive rates for "no-tax-due" 706 filings, so it's worth shopping around.

Can confirm this! We scrambled at the last minute and the rush appraisals cost us almost double. Also, make sure to elect portability of any unused exemption even if you don't think the surviving spouse will need it. Tax laws and situations change.

Does your explanation letter need to follow any specific format? I'm worried about writing something that makes things worse instead of better.

The letter doesn't need to follow any specific legal format, but it should be professional and concise. Mine simply stated: "This is my first year filing 1099s as a business owner. I was unaware of the January 31 deadline. Upon discovering my error, I immediately collected the necessary information and am filing these forms as soon as possible. I've implemented a tax deadline calendar to ensure timely filing in the future." Keep it simple, honest, and focus on the steps you've taken to correct the issue and prevent it from happening again. Don't make excuses or include unnecessary details.

What software do you recommend for filing late 1099s? Can regular tax software handle it or do you need something special?

Any tax software that handles 1099s can work for late filing. I use QuickBooks for my business and it lets me generate 1099s anytime, even well past the deadline. The forms look exactly the same, they're just submitted late. If you don't have accounting software, you can use something like Tax1099.com or even IRS free fillable forms. Just make sure to include the transmittal Form 1096 with your paper submission, as that's required when submitting 1099s by mail. And remember to check the box on Form 1096 indicating these are late-filed returns.

Thanks for this suggestion! I just checked my IRS transcript online and found a TC 971 from about 5 months ago but never received any notice. Would you know what my next step should be? Should I call and reference this specific code?

Yes, definitely call and reference that specific TC 971 code along with the date it shows on your transcript. That's proof they've at least started processing your amendment. When you call, ask specifically what notice was issued related to that code. It's very common for IRS notices to get lost in the mail or sent to old addresses. Tell them you never received anything and ask if they can reissue the notice or tell you what information they need from you to continue processing your amendment. Having this specific code information will help get you to a more knowledgeable agent when you call.

I second this approach. I had a similar issue with an amended return and my senator's office was able to help. The caseworker told me they're seeing a huge increase in IRS cases because of the backlog. Worth trying if other methods don't work.

Thank you for this suggestion! I never thought about contacting my congressional rep for a tax issue. How exactly did you start this process? Did you call their office or is there a form on their website?

Yes, you should definitely mark that your child can be claimed as a dependent if that's the case. The kiddie tax (Form 8615) specifically applies to dependents with unearned income above a certain threshold. If you don't indicate they're a dependent, the tax calculations will be incorrect.