Thank you for mentioning potential refunds! I hadn't even considered that possibility. Do you know if receiving a refund for one year could offset what I might owe for other years automatically? And what exactly is a CP2000 notice? Is that something I should be worried about?

The IRS will generally apply any refunds to outstanding tax debts automatically. So yes, if you're due a refund for 2022 but owe for 2018, they'll typically apply that refund to reduce your 2018 balance. This happens automatically in most cases. A CP2000 is a notice of proposed adjustment to your tax return. It basically means "we think you didn't report all your income." It's not an audit, but it means the IRS identified a discrepancy between what you reported and what they have on record from W-2s, 1099s, etc. Not something to panic about, but you'll need to either agree with their assessment or provide documentation showing why they're incorrect.

Plus if you lived in different states during those years you might need to file partial year returns for each state! I had to file in 3 different states for one tax year when I moved around for work. Total nightmare.

Do you know if there's a way to easily determine which states require their own estate tax returns? I'm in Florida but my mom owned property in two other states as well.

Florida doesn't have a state estate tax, so you're good there. But if your mom owned property in other states, you may need to file non-resident estate tax returns in those states depending on which ones they are. Currently, only 12 states plus DC have estate taxes: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. If the properties are in any of these, you'll likely need to file. Some states have exemption thresholds much lower than the federal one, so even smaller estates might owe state estate taxes. I'd recommend checking the tax department websites for each state where property was owned just to be safe.

I used TaxAct for my father's estate last year and it handled the K-1 from his business partnership really well. It was much cheaper than TurboTax and had specific guidance for estate returns. They have a section specifically for fiduciary returns that walks you through the 1041 step by step.

Thanks for the encouragement! Did you end up owing a lot in penalties when you finally filed? That's what I'm really worried about.

For the years where I owed taxes, yes, there were penalties - but they weren't nearly as bad as I had built up in my head. The failure-to-file penalty is 5% per month up to 25% maximum, plus interest. But for the years where I was due a refund, there were no penalties at all (though I could only claim refunds for the most recent 3 years). The IRS was actually reasonable about setting up a payment plan. My monthly payment is around $120, which is manageable. The mental relief of not having this hanging over my head anymore is worth way more than what I'm paying in penalties.

THIS! I filed all my federal back taxes but completely forgot about state. Got a nasty surprise letter from my state tax agency six months later with additional penalties. Handle both at the same time if you can.

Thanks for bringing this up! We do have the au pair through an official agency program, so they handle a lot of the employment paperwork. But I wasn't sure if we needed to do anything additional for tax purposes. Do you know if we still need to file a Schedule H if the agency is involved?

Even with an agency involved, you'll typically still need to file Schedule H as the host family is usually considered the legal employer. The agency facilitates the match and handles visa sponsorship, but they don't typically handle the employment taxes. You should check your contract with the agency, but in most cases, you need to be withholding Social Security and Medicare taxes and paying the employer portion. The good news is that properly documenting this employment relationship strengthens your case for any related tax deductions or credits you're claiming.

I've done it, but ONLY for the portion related to medical care for my son with autism. We had our developmental pediatrician write a letter specifically stating that our au pair was implementing his therapy plan at home, and we documented the hours spent on those activities vs regular childcare. We deducted about 30% of our au pair costs as medical and took the dependent care credit for the rest. No audit issues for 3 years now.

4 So how long do you have to wait before you can buy the same stock again and still claim the loss? Is it exactly 30 days?

21 Yes, it's exactly 30 days before or after the sale. So to be safe, you need to wait a full 31 days before repurchasing the same or substantially similar securities if you want to claim the capital loss. It's important to note this applies across accounts too - so selling in your regular account and buying in your IRA within that window would still trigger the wash sale rule. And it's not just identical stocks - the IRS considers "substantially identical" securities to fall under this rule as well, which can sometimes include options on the same stock or very similar ETFs.

8 You don't really have a choice. The tax code requires you to claim the $3,000 loss against your current year income, and then carry forward the remaining $9,000 to future years. You can't voluntarily "save" the entire $12,000 for future years when you might be in a higher bracket.