You're absolutely making the right decision by not getting involved in this situation. As someone who's seen similar scenarios play out, I can tell you that "bank account issues" is often code for more serious financial problems that you definitely don't want to inherit. Beyond all the excellent points about tax complications and bank policies that others have raised, there's another angle to consider: if your sister's inheritance gets mixed up with your finances in any way, it could potentially complicate things for both of you down the line. Inheritance money sometimes gets scrutinized during divorces, bankruptcy proceedings, or other legal situations. The cleanest approach is always to keep financial transactions separate and transparent. Your sister received the inheritance, so she should be the one to deposit it. If her current bank won't work with her, literally any other bank will open an account for someone with a $25,000 deposit to make. You're being a good sister by wanting to help, but sometimes the best help is steering someone toward handling their financial affairs properly rather than taking shortcuts that could cause bigger problems later.

As someone who's been through estate administration, I want to echo what others have said about your sister handling this herself. There's really no legitimate reason she can't deposit or cash an inheritance check made out to her name. Most inheritance checks come from estate attorneys or financial institutions, and these can typically be cashed at the issuing bank even without an account. Yes, there will be fees, but that's much simpler than creating potential tax complications for both of you. The "bank account issues" explanation is concerning. Even if her account is overdrawn or frozen, she could open a new account at a different bank with proper ID and the inheritance documentation. Banks are generally very willing to work with people who have legitimate inheritance funds to deposit. I'd also suggest she contact the estate attorney or executor who issued the check if she's having trouble. They deal with these situations regularly and can provide guidance on the proper way to handle the funds. Don't put yourself at risk trying to solve her banking problems - this needs to be handled through proper channels.

I'm so sorry for your loss, Sunny. Dealing with taxes while grieving is incredibly difficult, and you're asking exactly the right questions. Yes, you can file as Head of Household for the year your wife passed away since she died before July 1st. The IRS considers you unmarried for the entire tax year in this situation, and since you're supporting your children who live with you, you meet the HOH requirements. A few additional things to keep in mind: - When filing your wife's final return, write "DECEASED" and the date of death across the top - You'll sign her return as "Filing as surviving spouse" - Make sure to claim any income she earned up to her date of death on her final return - Consider whether any of her medical expenses paid after death might be deductible on either return The separate filing approach you're considering is completely valid - her final return as married filing separately, and yours as HOH. This gives you flexibility with deduction choices too. Don't hesitate to consult a tax professional who has experience with widower situations if you need additional guidance. There are often overlooked deductions and credits that can help during this transition. Take care of yourself during this difficult time.

I'm deeply sorry for your loss, Sunny. Losing a spouse is incredibly difficult, and having to navigate tax complications during such a challenging time adds another layer of stress. Based on your situation, you're absolutely on the right track. Since your wife passed away in February (before July 1st), you are indeed considered unmarried for the entire tax year for Head of Household purposes. With two qualifying children living with you that you're supporting, you definitely meet the HOH requirements. Your approach of filing her final return as married filing separately while you file as HOH is completely valid and often makes sense when there are complicating factors that make joint filing difficult. A couple of important reminders for your wife's final return: - Include all income she received from January 1st through her date of death - You can claim any medical expenses you paid for her after death (within one year) on either her final return or yours, whichever is more beneficial - Don't forget to check if she had any estimated tax payments that need to be accounted for The HOH status will give you better tax rates and a higher standard deduction than filing single, which can provide some financial relief during this transition. And yes, you can absolutely choose different deduction methods - itemize on your return even if you take the standard deduction on hers. Take care of yourself and don't hesitate to seek professional help if the complexity becomes overwhelming. You're doing great navigating this difficult situation.

Has anyone here dealt with this situation where one of the partners is an S-Corp specifically? I'm concerned about the timing since S-Corps have different filing deadlines than partnerships.

One thing I'd add that hasn't been fully addressed - make sure you understand the potential for imputed underpayment assessments under BBA rules. Even though partnerships are pass-through entities, the IRS can assess and collect penalties at the partnership level for certain adjustments. When you file the 1065-X as your AAR, the IRS will review it and may propose an imputed underpayment based on the highest individual tax rate plus Net Investment Income Tax. The partnership can then make a "push out" election to have the adjustment flow through to the partners instead of being assessed at the partnership level. Given that you're dealing with an S-Corp partner, this could be particularly relevant since the ultimate shareholders might be in lower tax brackets than what the IRS would use for the imputed underpayment calculation. You'll want to consider whether to make the push-out election when filing the AAR or wait to see if the IRS proposes an assessment. Also, since you mentioned both partners agree on the correction, document that agreement well. It'll be helpful if the IRS has any questions about the adjustment during their review process.

I waited until February 15th last year before filing because my PayPal 1099K came super late despite the January 31 deadline. Some companies just don't meet the deadline and there's basically no consequence for them. So frustrating!

Based on everything discussed here, it sounds like you're in good shape to file now without waiting. Since you made $780 through PayPal, you're well under the $5,000 threshold for 2024, so PayPal isn't required to send you a 1099-K anyway. The fact that you've already included all your PayPal income on Schedule C is exactly what you should be doing. You're legally required to report all income regardless of whether you receive tax forms for it, and it sounds like you've got detailed records which is the most important thing. I'd recommend going ahead and filing rather than waiting. If by some chance you did receive a 1099-K later (which seems unlikely given the threshold), it wouldn't create a problem since you've already reported more income than what would be on the form. The IRS is looking at your total reported income, not trying to match every individual transaction to a form. Getting your refund processed sooner is definitely a nice bonus for being organized with your record-keeping!

Has anyone dealt with FIRPTA withholding for LLCs with foreign partners that own US real estate? We have the regular income withholding figured out, but now we're selling a property and I'm not sure how that interacts with all this.

I've been through this exact confusion with our LLC that has partners in the UK and Australia. The key insight that finally clicked for me is that these are different taxes on different things at different times. Section 1446 withholding (Form 8813) is on the foreign partner's SHARE of partnership income - you withhold this regardless of whether you actually distribute anything. Think of it as withholding on their "allocated" income. Section 1472 (FATCA) withholding is on actual PAYMENTS to foreign entities that haven't provided proper documentation. But here's the crucial part - if you're distributing profits that have already been subject to Section 1446 withholding, and your foreign partner has provided proper W-8 forms, you typically don't need to withhold again under FATCA. The double taxation concern you mentioned is valid - the IRS doesn't want to tax the same income twice. The confusion often comes from not distinguishing between "income allocation" (what triggers 1446) versus "actual distributions" (what might trigger 1472). For your Canadian and UK partners, make sure they provide W-8BEN or W-8BEN-E forms claiming treaty benefits. This documentation helps establish that distributions of previously taxed partnership income shouldn't be subject to additional withholding. I'd recommend documenting which distributions relate to income that's already been subject to 1446 withholding - this creates a clear paper trail showing you're not double-taxing.