I'm dealing with a similar situation with my grandmother's trust audit, and I found that getting documentation from the original attorney who drafted the trust was incredibly helpful. The attorney was able to provide a letter explaining the specific provisions that made it qualify as a grantor trust under IRC 671-679. If the original attorney isn't available, consider having another estate attorney review the trust document. They can provide a written opinion on whether it properly qualifies as a grantor trust during the audit period. This kind of professional documentation carries a lot of weight with IRS agents and can prevent you from having to argue the technical details yourself. Also, don't forget that you have the right to request a different agent if the current one seems unfamiliar with grantor trust rules. Sometimes a fresh perspective from another agent who specializes in trust matters can resolve the issue quickly.

You're absolutely right to be concerned about this EIN request during the audit. I went through something very similar with my late husband's trust audit two years ago, and the key is understanding the timing distinction. For the 2022 tax year when your mother-in-law was alive, if the trust properly qualified as a grantor trust, it should have been using her SSN - not an EIN. The IRS agent may be confused about the requirements or applying current post-death rules to the historical audit period. I'd recommend preparing a clear timeline showing: (1) During 2022, mother-in-law was alive and the trust was a grantor trust using her SSN, (2) After her death, the trust status changed and may now require an EIN going forward. These are two separate tax periods with different requirements. Consider requesting to speak with the agent's supervisor if they continue to insist on an EIN for the 2022 audit period. In my experience, supervisors tend to be more familiar with the nuanced grantor trust regulations. Also, document everything in writing - send a follow-up email after any phone conversations summarizing what was discussed and your position. The most important thing is not to let them pressure you into getting an EIN just to move the audit along if it wasn't required for that tax year. That could create unnecessary complications for future filings.

I'm dealing with a very similar situation and this thread has been incredibly enlightening! I have about $16k in COBRA payments from a 5-month gap between jobs, and I'm currently in final negotiations with my new employer. Based on what I'm reading here, it sounds like the magic is in getting the language right in the offer letter to establish this as a qualified health benefit rather than taxable compensation. I'm particularly interested in the Section 105 plan approach that Sean mentioned - that "transition period" concept seems like exactly what I need. My question is about implementation timing: if I get the right language in my offer letter this week, how quickly can most companies actually process the reimbursement once I start? I'm hoping to get these COBRA costs off my credit card sooner rather than later. Also, for those who successfully negotiated this, did you find that having a specific dollar amount helped or hurt during negotiations? I'm wondering if I should present it as a lump sum or break it down by monthly COBRA payments. The taxr.ai tool sounds promising too - might upload my documents tonight to see what specific language gaps they identify before my final negotiation call tomorrow.

As someone who went through a similar situation with COBRA reimbursements, I wanted to share a few practical tips that might help others navigating this process. First, timing is absolutely critical - you need to get the right language in your offer letter before signing, not after you start. I learned this the hard way when my first employer just treated it as taxable income because we didn't establish the proper framework upfront. Second, be prepared to educate your employer's HR team. Many smaller companies haven't dealt with Section 105 health reimbursement arrangements before, so having specific references to IRS publications (like Pub 15-B) and being able to explain how it benefits both parties really helps move the conversation forward. Third, document everything meticulously. Keep all your COBRA election notices, payment confirmations, and bank statements organized. The IRS requires proper documentation for these arrangements, and having everything ready shows you're taking this seriously. Finally, consider the company's size and benefits sophistication when setting expectations. Larger companies with dedicated benefits teams can usually handle these arrangements more easily, while smaller firms might need more time and hand-holding but often have more flexibility to make quick decisions. The key is framing this as a legitimate health benefit transition rather than trying to avoid taxes on what would otherwise be compensation. When positioned correctly, most employers are surprisingly receptive to helping with healthcare continuity.

I went through this exact same situation with my husband's furniture restoration hobby! What we learned after consulting with a tax professional is that you're absolutely right to be collecting sales tax - in most states, it's required regardless of whether you're operating as a hobby or business. The key thing is that sales tax collection and income tax classification are completely separate issues. Just because you collect sales tax doesn't automatically make it a business for IRS purposes. The IRS looks at factors like profit motive, time invested, whether you depend on the income, and how businesslike your operations are. For your situation with $580 in sales, you'd likely still report this as hobby income on Schedule 1 of your tax return. The sales tax you collected gets reported separately - you'll show it as income when you collect it, then as a deduction when you remit it to the state, so it essentially washes out on your federal return. One tip: keep detailed records of all your sales, including the sales tax portion, because you'll need to show the state exactly what you collected and when. Most states require quarterly or annual filings even for small amounts. Your husband is doing the right thing by being proactive about compliance! Better to err on the side of caution with tax matters.

I went through almost this exact same situation last year with my ceramic pottery hobby! After doing a lot of research and talking to my state's tax office, here's what I learned: You're absolutely doing the right thing by collecting sales tax. In most states, sales tax is required on tangible goods regardless of whether it's a hobby or formal business - the state just wants their cut of the transaction. For the income reporting piece, you can still treat this as hobby income since $580 from occasional craft fair sales clearly falls into hobby territory. The fact that you're collecting sales tax doesn't change that classification - they're separate tax issues entirely. When you file your taxes, you'll report the total income (including the sales tax portion) on Schedule 1 as "Other Income." Then when you remit the sales tax to your state, you can deduct that payment, so the sales tax portion essentially washes out on your federal return. The key is keeping good records of what you collected versus what you remitted to the state. Most states have pretty simple filing requirements for small sellers - mine only requires annual filing since I'm under their quarterly threshold. Don't stress too much about crossing into "business" territory at your current level. The IRS looks at things like profit motive, time invested, and business-like operations. Occasional craft fair sales of $580 is clearly hobby activity!

been doing taxes for 15 years and this is facts. also pro tip: if u really need money fast, file early and pay prep fees upfront. waiting for RT processing can cost you more than just time - some places charge extra fees for this service too.

This is super helpful info! I had no idea about the refund transfer process. I always wondered why some people got their refunds so much faster than others even when filing around the same time. Definitely going to pay upfront next year to avoid the extra delays. Thanks for sharing this!

This is really helpful info! I'm in a similar boat with a PayPal 1099-K from sports betting. One thing I'm still confused about - if I had sessions where I won on some days and lost on others, do I need to report each winning session separately, or can I just report my total net winnings for the year? For example, let's say I had 10 betting sessions: won $500 in 4 sessions (total $2,000 in winnings) but lost $300 in 6 sessions (total $1,800 in losses). My net profit was $200. Do I report $2,000 as gambling winnings on Schedule 1 and then claim $200 worth of losses on Schedule A? Or do I just report the $200 net as gambling income? I've been going back and forth on this and want to make sure I handle it correctly with the PayPal 1099-K showing my total withdrawals.

Great question about the PayPal 1099-K situation! I dealt with something similar last year and wanted to share what I learned from my tax preparer. The key thing to understand is that the PayPal 1099-K is just a third-party payment processor reporting form - it's not actually determining your taxable income. PayPal has to send this form when they process over $600 in payments for you, but it doesn't mean that entire amount is taxable income. For your situation, you're absolutely correct about reporting the $8,200 in actual gambling winnings on Schedule 1, Line 8z. The fact that PayPal's 1099-K shows $12,200 doesn't change this - that's just the gross amount they processed in withdrawals. One tip that really helped me: create a simple spreadsheet showing your deposits, withdrawals, and net winnings by month. This makes it easy to reconcile your actual gambling income with what PayPal reported. If the IRS ever questions the difference between your reported income and the 1099-K amount, you'll have clear documentation showing that the 1099-K includes return of your original stake, not just winnings. Also double-check that you didn't receive any W-2G forms from DraftKings directly for individual large wins (usually $600+ and 300x your bet). Those would need to be reported separately from your Schedule 1 reporting.