Hey Zara! I went through something very similar with my disability discrimination settlement last year. You're right to be confused - the lack of tax forms doesn't mean you're off the hook for reporting it. Based on my experience and what my tax attorney told me, you'll need to report the full gross settlement amount ($20,250) as "Other Income" on your Form 1040. The good news is that you can deduct the attorney fees ($6,750) as an adjustment to income on Schedule 1, Line 24 under "Attorney fees and court costs for unlawful discrimination claims." The key thing is that employment discrimination settlements like yours still qualify for the attorney fee deduction even after the Tax Cuts and Jobs Act - this is specifically preserved under IRC Section 62(a)(20). I'd strongly recommend keeping detailed records of everything: the settlement agreement, any correspondence with your attorney about the fee arrangement, and documentation showing this was specifically for disability discrimination. The IRS may not have forms from your employer, but they could still ask questions later. One more tip - if any portion of your settlement was specifically allocated to physical injury or sickness caused by the discrimination (like medical expenses for stress-related symptoms), that portion might be excludable from income under Section 104(a)(2). Check your settlement agreement to see if there's any such allocation. Good luck with your return!

I've been following this thread with interest since I'm dealing with a similar situation. One thing I haven't seen mentioned yet is the timing aspect - Zara, when did you actually receive the settlement funds? The tax year for reporting is typically when you received the money, not when the case was resolved or the agreement was signed. Also, I'd recommend being very specific about the description when you report it as "Other Income." Something like "Employment Disability Discrimination Settlement" will be clearer for the IRS than just a generic description. This helps establish the nature of the income and supports your ability to deduct the attorney fees under Section 62(a)(20). One more consideration - if your settlement included any punitive damages, those are generally fully taxable regardless of the underlying discrimination claim. The settlement agreement should specify if any portion was punitive damages versus compensatory damages. The distinction can affect how different portions are taxed. Keep all your documentation organized and consider making copies for your records. Even though you didn't receive a 1099, having a clear paper trail will be invaluable if there are ever any questions about how you reported this income.

Don't overlook using a Dependent Care FSA if either you or your spouse has access to one through an employer! Even with high income, you can set aside $5,000 pre-tax for qualifying childcare expenses, which is separate from the Child and Dependent Care Credit. If you're paying $52k for childcare, you won't get to deduct all of it, but using an FSA in combination with the Child and Dependent Care Credit (which you can claim on expenses beyond what's covered by the FSA) can help reduce the sting a bit. One thing nobody's mentioned - make sure you're issuing a proper W-2 to your nanny and filing Schedule H with your taxes. The IRS pays special attention to household employment.

I was in your exact situation last year. Make sure you're documenting EVERYTHING about your family business! The distinction between a legitimate business that employs a nanny vs a tax shelter specifically created to deduct personal expenses is crucial. Some things that helped me: - Maintain separate bank accounts for business operations - Have formal employment contracts - Document specific business-related duties of the nanny (vs childcare duties) - Keep detailed timesheets separating business support vs childcare hours - Have a business with genuine income/clients beyond just you and your spouse The IRS scrutinizes these arrangements closely because so many people try to game the system. Better to be conservative with deductions than risk an audit.

Does anyone know if this happens with state tax returns too? My federal return was processed normally but my state return status disappeared completely from the tracker.

Same thing happened to me! Filed on 2/14 with the EV tax credit for my Tesla and my status bars disappeared on 2/20. I was panicking thinking something was wrong with my return. But after reading everyone's experiences here, I'm feeling much more confident this is just routine verification. It's frustrating that the IRS website doesn't explain what "still being processed" actually means - they could save people so much anxiety by just saying "your return is undergoing routine verification for claimed credits" instead of leaving us to guess what's happening. Thanks for sharing your timeline, it really helps to see I'm not alone in this!

Going through the same thing right now! Filed 2/28, accepted same day, bars disappeared 3/7. I claimed the Child and Dependent Care Credit for my daycare expenses and was convinced something was wrong. This post is really reassuring - sounds like it's just part of the normal process when you have credits that need verification. Thanks for sharing your timeline, it helps to know others have been through this too. Hopefully we'll both see some movement soon!

This is so helpful! I'm going through the exact same thing right now. Filed 2/15, accepted same day, and my bars disappeared on 2/24. I claimed both the Child Tax Credit and Additional Child Tax Credit for my two kids. I was completely panicked when I first saw the generic "still being processed" message, especially after reading all the horror stories online about people waiting months. But seeing everyone's timelines here makes me feel so much better - sounds like 2-4 weeks is pretty normal when you have credits that need verification. The hardest part is just not knowing what's happening behind the scenes. I keep checking every day hoping to see some kind of update, but at least now I know that's normal too and not slowing anything down. Thanks for creating this thread - it's exactly what I needed to read today!

I went through a very similar situation when I became trustee of my father's irrevocable trust that owned multiple rental property LLCs. One thing I learned the hard way is to also check your trust document for any specific provisions about inter-entity transactions or capital contributions. Our trust had a clause requiring written trustee resolutions for any transaction over $20,000 between trust-owned entities, which we almost missed. Even though I was the sole trustee, I still had to formally document the decision and keep it in the trust records for potential IRS audits. Also, if you go with the inter-company loan route (which I'd recommend based on Charlotte's advice), make sure to actually service the loan properly. The IRS has been known to recharacterize loans as distributions if payments aren't made consistently. Set up automatic transfers for the payments if possible to maintain the paper trail. The whole process was more complex than I expected, but documenting everything properly from the start saved us headaches later when we had to provide records to the IRS for an unrelated audit.

As someone who recently went through a similar situation with my grandmother's irrevocable trust, I'd strongly echo the advice about the inter-company loan approach. We ended up going that route after initially considering the trust account method. One additional consideration that our attorney pointed out: if you have multiple beneficiaries of the trust, cycling money through the trust account can sometimes create unexpected income tax consequences for them, depending on how the trust's distributable net income is calculated. The inter-company loan keeps everything at the entity level and avoids potential complications with K-1 distributions to beneficiaries. Also, since you mentioned this is across two states, make sure to check if there are any state-specific requirements for related party transactions. Some states have additional disclosure or approval requirements for transactions between entities owned by the same trust. The $45,000 repair sounds urgent - I'd recommend moving quickly once you get your documentation in place. Property issues tend to get more expensive the longer they sit, and having a formal loan structure will give you a clear path for similar situations in the future.