One more thing to consider - ask if your client moved states after retirement. My father-in-law moved from Illinois to Florida after retiring from the railroad, and we discovered that some states tax railroad retirement benefits differently than others. Florida doesn't tax them at all (no state income tax), but his preparer didn't file a part-year resident return for Illinois which caused headaches. Might not apply to your situation but worth checking!

Great question, Ethan! I've handled several railroad retirement cases and you've got most of the key items covered. A few additional things to ask your client: 1. **Survivor benefits**: If the client is receiving benefits as a surviving spouse rather than their own work record, the tax treatment can be different. 2. **Vested dual benefits**: Some railroad workers also qualify for Social Security benefits if they worked outside the railroad industry for 10+ years. They might be receiving both RRB and SSA benefits, which need separate treatment. 3. **Medicare premiums**: Ask if Medicare Part B or D premiums are being deducted from their railroad retirement benefits. These show up on the RRB-1099 and affect the taxable calculation. 4. **Occupational disability vs age retirement**: The tax treatment differs if they retired due to occupational disability versus regular age retirement. Also, double-check that your tax software can properly handle the Simplified Method worksheet for railroad retirement - not all programs do this correctly. You might need to manually calculate it using the IRS worksheets if your software doesn't have the specific railroad retirement module. The RRB-1099 should have all the key figures you need, but don't hesitate to have your client call the Railroad Retirement Board if any amounts seem unclear. Better to get it right the first time!

Make sure you check if any part of that severance was designated as a "supplemental wage" - things like severance are sometimes withheld at a flat 22% federal rate, which might not be enough depending on your tax bracket. I got hit with a surprise tax bill because of this! Also, did they give you any outplacement services or career counseling as part of the package? Those can be non-taxable benefits if structured properly.

One thing that might help put your mind at ease is to run a quick tax projection now rather than waiting until filing season. Since you have both W-2s already, you can estimate your total tax liability and see if you're on track or need to make adjustments. If you find out you're significantly under-withheld, you might want to consider making an estimated tax payment before the end of the year to avoid underpayment penalties. The IRS generally wants you to pay at least 90% of your current year tax liability or 100% of last year's (110% if your prior year AGI was over $150k). Also, since you got rehired at the same company, double-check that they didn't accidentally combine your severance with regular wages on your main W-2. Sometimes payroll systems can get confused when there's a termination followed by a rehire, and you want to make sure everything is reported correctly.

Before you drive yourself crazy trying to figure this out, do what I did and use taxr.ai to decode your transcript. I tried for weeks to understand why I suddenly had a balance due on my taxes and this tool explained it all in normal human language. Turns out I had a calculation error in my original filing and they actually explained what happened and what I needed to do. Worth every penny.

Hey Mei! I went through something very similar with my NY state taxes last year. That "balance due" definitely caught me off guard too, especially when I was expecting a refund. In my case, it turned out to be a combination of two issues: 1) NY didn't properly credit all my quarterly estimated payments I made, and 2) there was a small miscalculation on my return that I hadn't caught. My advice is to definitely NOT pay that $347 right away. First, log into your account and look for any section that shows "account activity" or "payment history" - you want to verify that all your withholding from your W-2 actually got applied to your account. Sometimes there are delays or processing errors. Also, compare the "taxes assessed" amount on your transcript to what you calculated when you filed. If there's a difference, that's your clue that either you made an error or they did. The good news is that even if you do owe the money, NY gives you time to pay without huge penalties as long as you address it reasonably quickly. But definitely verify first - their system makes mistakes more often than you'd think!

I think everyone's missing something here. While buying stocks/ETFs with company money doesn't create a deductible expense, there could be strategic reasons to do it anyway. My S-corp holds some investments as part of our cash management strategy. The key is understanding it won't reduce your current tax liability. Also, talk to your accountant about the Qualified Business Income deduction (Section 199A) - if your business qualifies, it can give you a deduction up to 20% of your qualified business income. Much more valuable than trying to hide money in investments.

This is a really common question for S-corp owners! As others have mentioned, investing company cash in stocks/ETFs won't reduce your current tax liability since it's just converting one asset to another, not creating a deductible expense. However, there are some legitimate year-end tax strategies worth considering with that $75k: 1. **Accelerate business expenses**: Purchase equipment, software, or supplies you'll need in 2026 before year-end 2. **Maximize retirement contributions**: Solo 401k or SEP-IRA contributions can be substantial for S-corp owners 3. **Consider bonus depreciation**: Qualifying business assets may be eligible for immediate depreciation 4. **Prepay deductible expenses**: Insurance, rent, or professional services for early 2026 The key is making sure any purchases are ordinary and necessary business expenses, not just trying to park money somewhere. The IRS looks at the substance of transactions, so everything needs to have a legitimate business purpose. I'd strongly recommend consulting with a tax professional who can review your specific situation - the savings from proper year-end planning often far exceed the consultation cost.

Has anyone mentioned penalties yet? IRS failure-to-file penalties can be substantial, even if no tax was owed. But there's good news - the IRS has a First Time Abatement policy that can waive penalties for one tax year if there was a clean compliance history before that.

I went through something very similar when my mother passed two years ago. She had 6 years of unfiled returns, and I was completely overwhelmed as the executor. Here's what I learned that might help: First, definitely get those IRS transcripts - they're your lifeline. But also check with your state's revenue department if your dad lived in a state with income tax. Some states maintain their own records that can fill in gaps. One thing that saved me time and stress was creating a simple spreadsheet for each tax year with columns for different income sources (W-2, 1099-MISC, 1099-NEC, etc.). As you go through the transcripts, you can categorize everything clearly. This made the actual filing much more manageable. Also, don't forget about potential deductions he might have been eligible for - standard deduction, any medical expenses if he was older, etc. Sometimes even with unfiled years, the person might actually be due refunds rather than owing money. The whole process took me about 3 months start to finish, but most of that was waiting for transcripts and correspondence with the IRS. The actual filing once I had everything organized was much faster than I expected.