Thanks for sharing your experience! Neither of us has any tax debts or child support, so it sounds like joint is probably the way to go for us. Did you use any particular tax software that was helpful for comparing the two options?

We used H&R Block's online software which made it pretty easy to compare. We entered all our info for a joint return first, noted the refund amount, then created a new return and selected married filing separately to see the difference. TaxAct also has a good comparison feature that's a bit more straightforward - it can show you both scenarios side by side after you enter all your information once.

That's actually a common misconception. The married filing separately brackets aren't the same as single brackets - they're exactly half of the married filing jointly brackets. So there's usually no tax bracket advantage to filing separately if both spouses have similar incomes. The only exception is if one spouse has significant itemized deductions that would be limited by the other spouse's income. But with the higher standard deduction now, that's rare for most people.

That's a really smart idea I hadn't thought of! I just checked our business account online and can see the check was deposited at First National Bank, but I'm not seeing any account details. Is there something specific I should ask our bank for to get more information?

You'd want to contact your bank and ask for the "deposit information" from the cleared check. Sometimes they can provide the routing and account number where it was deposited. Not all banks will share this, but many business accounts give you access to this information. Once you have that, you still won't have their TIN, but you'll have more documentation to show the IRS that this was indeed a real vendor who received payment. The bank info combined with their name, email and phone gives you a stronger paper trail.

This is good advice. Also mention that if they refuse to provide a W-9, you're required to do backup withholding at 24% of any FUTURE payments and report them to the IRS. Even though you can't do that for past payments, just knowing you're aware of the requirements might make them reconsider.

Wait really? I didn't know the IRS pays interest! Do they just add it automatically or do you have to request it somehow? I'm still waiting on my 2021 refund too.

They add it automatically! You don't have to do anything to request it. The interest starts accumulating from the original filing deadline for that tax year (so for 2021 returns, interest started accumulating from April 18, 2022). They'll keep adding interest until the day they issue your refund. Just be aware that the interest payment IS taxable income, but you'll report it on next year's return. They'll send you a Form 1099-INT in January 2026 for any interest paid during 2025. The current interest rate is pretty decent too - around 7% annually.

Thanks for this! I just created an account on the IRS website to check my transcript, but it says I need to wait for a verification code in the mail. Is that normal?

Actually it's the opposite. "Being processed" is the normal status, while "still being processed" often indicates some sort of review or delay. The transcript is definitely the way to go for more info though!

Thanks for sharing your experience! Did you respond to everything by mail or did you have the option to upload documents electronically? I'm curious about how the process actually works.

They initially contacted me by mail with a request for the documentation, but I was able to create an account on their examination portal and upload all my documents electronically. It was actually pretty straightforward - I scanned everything, created a single PDF, and uploaded it with a cover letter explaining each item. They did have questions about two of my documents which required a follow-up phone call, but overall the process was less painful than I expected. Just make sure you respond within their deadlines and keep copies of absolutely everything you send them. The digital option definitely sped things up compared to mailing everything.

I had the exact opposite experience. IRS increased my NIIT by $1200 and when I got audited, they found they had made the mistake. Took forever to get resolved tho. Like 8 months of back and forth.

But what about Section 336(e)? Doesn't that election let you treat the liquidation differently for basis purposes? I thought that gave corporations some flexibility in how assets are valued during liquidation.

Good question about 336(e). That election is different - it applies to certain stock dispositions, not to the liquidation itself. A 336(e) election can apply when a corporation sells stock of a subsidiary, and it essentially treats the transaction as an asset sale rather than a stock sale. But in a straight 332 liquidation where the parent is receiving assets directly from its subsidiary, 334(b)(1) controls and mandates carryover basis. The flexibility you're thinking about might relate to planning opportunities before the liquidation, but not to the basis determination once you're in a qualifying 332 liquidation.

Totally agree. My company did a subsidiary liquidation last year and we got caught by the built-in loss limitations we didn't know about. Cost us a fortune. Would have been worth paying a specialist!