I wanted to add my perspective as someone who works at a financial institution and sees these types of questions frequently. The advice you're getting here is absolutely correct - Roth IRA contributions can always be withdrawn penalty-free and tax-free regardless of your age or how long the account has been open. Given that your $2,000 has been sitting uninvested for 6 years, you're in an ideal situation for a penalty-free withdrawal. When money sits in a default settlement fund or money market account, it typically earns very minimal interest - often just a few dollars per year. Here's exactly what I'd recommend: Call E-trade and ask them to provide you with two specific numbers: (1) your total lifetime contributions to the account, and (2) your current total account balance. If the difference is small (likely under $50 for uninvested funds over 6 years), you can withdraw up to the contribution amount completely penalty-free. The 10% penalty the rep mentioned is real, but it only applies to earnings/growth withdrawn before age 59½. Since your money hasn't been invested and growing, this penalty almost certainly doesn't apply to your situation. Don't let generic penalty warnings prevent you from accessing your own contributions when you need them!

I just wanted to share my own experience since I was in almost exactly the same boat as you about 8 months ago. I had a Roth IRA with Schwab that my dad opened for me in 2018 with $2,500, and like yours, the money had just been sitting in their default cash position earning practically nothing. When I needed to access the funds for a medical emergency, I was initially panicked about penalties. But after calling Schwab and asking specifically for my "contribution basis" versus current account value (thanks to advice I found online similar to what you're getting here), I learned that my $2,500 had only grown to about $2,518 over 5+ years. I was able to withdraw the full $2,500 contribution amount with zero penalties and zero taxes. The $18 in earnings I left in the account to avoid any complications, though technically I could have withdrawn some of that too and just paid regular income tax on it (no penalty since there was a medical exception). The key insight that really helped me was understanding that with Roth IRAs, your contributions always come out first before any earnings. So even if there had been significant growth, I could still access my original $2,500 penalty-free. In your case, with uninvested funds, you're looking at an even simpler situation. Don't let the generic penalty warnings scare you - call E-trade tomorrow and ask for those two magic numbers everyone's mentioned. You'll almost certainly find that you can access most or all of your $2,000 without any penalties at all.

As someone who recently went through a similar inheritance situation, I completely agree with all the advice you've received here. The distinction between beneficial interest and actual legal ownership is crucial for tax reporting purposes. I inherited my uncle's rental property last year, and even though I knew it would eventually be mine, my estate attorney was adamant that all rental income needed to be reported on Form 1041 until the probate court officially transferred the deed to my name. Like you, I had no access to rental accounts, couldn't communicate with tenants, and couldn't make any property management decisions. What really helped me understand this was thinking about it from the IRS's perspective - they want to see income reported by whoever has legal control and responsibility for the property during that tax year. Since the estate (through your mother-in-law as executor) is currently handling all the property's affairs, that's where the income should be reported. I'd encourage you to have that conversation with your mother-in-law about switching to Form 1041 for the estate. In my experience, most tax preparers understand this distinction once it's explained, and she'll likely appreciate you helping ensure everything is filed correctly. The wait will be worth it when you do get that stepped-up basis benefit everyone mentioned - it made a significant difference in my depreciation calculations once the property was officially transferred to me.

This is such a valuable discussion for anyone dealing with inherited property during probate! As someone new to this community, I'm impressed by how clearly everyone has explained the distinction between beneficial interest and legal ownership. What strikes me most is how the practical realities align perfectly with the tax requirements - if you can't access accounts, make decisions, or even communicate with property managers, then you clearly don't have the legal control necessary to report income on your personal return. The consensus here is overwhelming: the estate should file Form 1041 and report the rental income there until probate closes and the property is legally transferred to you. Your mother-in-law, while well-intentioned, appears to be making a mistake that could create audit issues down the road. I'd definitely recommend having that conversation about switching to proper estate tax filing. The stepped-up basis benefit you'll eventually receive, combined with doing things correctly from the start, will be worth the wait. Better to be conservative and compliant than risk complications with the IRS later. Thanks to everyone who shared their experiences - this thread should be required reading for anyone inheriting rental property!

This is definitely a stressful situation, but you're handling it the right way by addressing it proactively! I went through something similar a few years ago where I had filing status inconsistencies. One thing that really helped me was creating a spreadsheet with all the key information for each tax year - income amounts, deductions claimed, taxes paid, etc. This made it much easier when I met with my new tax professional to quickly assess the situation. Also, don't beat yourself up too much about not catching this earlier. Tax forms are confusing, and it sounds like your accountant really dropped the ball here. The fact that your husband's returns showed "married filing separately" while yours showed "single" should have been a huge red flag that any competent tax preparer would catch. Since you mentioned you're getting a new accountant anyway, I'd recommend interviewing a few different tax professionals (CPAs or enrolled agents) and specifically asking about their experience with amended returns and filing status corrections. Some are much more experienced with these complex situations than others. The good news is that this is fixable, and as others mentioned, there's a decent chance you may have actually overpaid taxes by filing as single rather than married filing separately. Keep all your documentation organized and take it one step at a time!

I'm a tax professional and want to add some perspective that might help ease your anxiety. Filing status errors like this are more common than you'd think, especially when spouses use the same preparer but handle their taxes separately. The key thing to understand is that the IRS generally treats honest mistakes differently than intentional fraud. Your situation clearly falls into the "honest mistake" category, particularly since your husband's returns correctly showed "married filing separately" - this actually works in your favor as it demonstrates there was no intent to deceive. Here's what I'd recommend for your immediate next steps: 1. Gather all tax returns for both you and your husband from 2018-2023 2. Calculate your actual tax liability using "married filing separately" status for each year 3. Determine if you owe additional taxes or if you overpaid (single filers often pay more than MFS) 4. For the Roth IRA issue, calculate your modified adjusted gross income for each contribution year to see if you were actually eligible The statute of limitations works in your favor here - you can only be assessed additional taxes going back 3 years (2021-2023) unless there's substantial underreporting. And if you overpaid in any of those years, you can claim refunds. Don't panic about penalties either. First-time penalty abatement is available if you've been compliant otherwise, and reasonable cause provisions often apply to situations like yours where there was professional preparer error. The most important thing is getting a qualified tax professional (CPA or enrolled agent) who specializes in tax controversy and amended returns. This is definitely fixable!

I went through this exact same confusion last year! The key thing to understand is that "effectively connected with U.S. trade or business" has a very specific meaning - it's not just about having a bank account in the US while you're here temporarily. For your situation, Exception 1(a) is almost certainly the right choice. Since your bank gave you a letter stating the account is subject to IRS information reporting, and you're just keeping savings there (not running a business), this falls under passive income reporting. Exception 1(b) would only apply if you were actually operating a business in the US and the bank account was directly related to that business activity. Just being temporarily in the US with a savings account doesn't qualify. I'd recommend going with Exception 1(a) and including your bank's letter as supporting documentation. The IRS is pretty clear that any interest-bearing account subject to their reporting requirements qualifies under this exception, regardless of how much interest you're actually earning.

I just wanted to add my experience since I went through this exact same situation about 6 months ago. Like you, I was completely confused about which exception to choose, and I ended up making it more complicated than it needed to be. After reading through all the IRS instructions multiple times and calling my bank for clarification, I learned that the key question is really simple: Are you using this bank account for business purposes or personal savings? Since you mentioned you're just keeping savings there while temporarily in the US, Exception 1(a) is definitely the right choice. The "effectively connected with U.S. trade or business" language in Exception 1(b) is very specific - it means you're actually running a business or engaged in commercial activity in the US, not just maintaining a personal account. My bank's letter was similar to yours - it just stated that the account was subject to IRS information reporting. That's all you need for Exception 1(a). The IRS approved my application in about 8 weeks with no issues. One tip: Make sure to include a copy of your bank's letter with your W-7 application as supporting documentation. It directly supports your choice of Exception 1(a) and shows the IRS exactly why you need the ITIN. Good luck with your application! You're overthinking it - Exception 1(a) is the way to go for your situation.

I had this exact situation with my kid's college last year! The school's explanation is correct - it's about when the term OFFICIALLY begins according to the school's academic calendar, not when classes actually start. Our university does the same thing - the spring semester officially begins December 15th for financial and administrative purposes, even though classes don't start until mid-January. It's actually beneficial for tax purposes because it means you can claim the education credit in the earlier tax year. As long as the university can document that the term officially begins in December, the 1098-T is correct with Box 7 unchecked. Just keep the documentation from the school in case the IRS ever questions it.

This is a really helpful thread! I'm dealing with almost the exact same situation with my daughter's 1098-T. Her college also has the Spring term officially starting in December but classes beginning in January, and I was completely confused about why Box 7 wasn't checked. Reading through everyone's explanations, it's clear that this is actually more common than I thought. What really helped me understand is that the IRS follows the institution's official academic calendar, not the physical class schedule. So if the university documents that Spring 2025 officially began in December 2024, then Box 7 should remain unchecked. I think the key takeaway for anyone in this situation is to get written documentation from your school about when the term officially begins in their system. That way you have backup if there are ever any questions about how you claimed the education credits. Thanks especially to the bursar's office employee who confirmed this is normal practice - that really put my mind at ease!