Don't forget to look into the step-up in basis rules if these stocks were actually inherited rather than gifted to you from your grandparents! The language in your post makes it sound like maybe your grandparents passed away and you inherited these stocks? If they were inherited (not gifted while your grandparents were alive), you likely received a "step-up" in basis to the market value on the date of their death. This would be HUGELY beneficial for tax purposes because any gains that occurred during your grandparents' lifetime would never be taxed.

Just wanted to add another perspective on the transfer process itself - you might want to consider whether a direct stock transfer is actually the best approach here. Instead of transferring the actual stocks to your partner's account, you could potentially sell the stocks in your account, pay any capital gains tax (which might be minimal if your cost basis is relatively high), and then gift the cash proceeds. This would give your partner a "clean slate" to invest in whatever they think is best, rather than inheriting your grandparents' old stock picks and cost basis. The downside is you'd pay capital gains tax now instead of deferring it, but the upside is your partner gets full flexibility and a fresh cost basis at current market prices. Given that you mentioned they're really good at investing, they might prefer to start with cash and build their own portfolio rather than managing positions they didn't choose. Just something to consider - the "right" approach depends on your specific tax situation and investment goals!

I'm really sorry you're dealing with this situation - it's incredibly frustrating when you're the victim of theft and still have to navigate all these tax complications. Based on what others have shared here, it sounds like you'll need to take a multi-step approach: report the HSA distribution on Form 8889, file Form 4684 for the theft loss, and include detailed documentation with your return. The key thing seems to be having that police report and court documentation to prove it was actually theft. One thing I'd suggest is keeping meticulous records of all your legal expenses related to recovering this money too - some of those might be deductible as well. And definitely include a clear statement with your return explaining the situation so the IRS understands why you're claiming the theft loss. It's awful that the HSA company isn't being more helpful, but unfortunately that seems pretty common in domestic situations. At least you're taking all the right steps legally. Hang in there - hopefully the court proceedings will resolve in your favor soon.

This is such a complex situation, and I feel for you dealing with theft during what's already a stressful time with legal proceedings. One additional point that might help - if you end up having to pay any taxes this year despite the theft deduction limitations, you may want to consider filing Form 911 (Request for Taxpayer Advocate Service Assistance) with the IRS. The Taxpayer Advocate Service sometimes helps in cases where taxpayers are facing financial hardship due to circumstances beyond their control, like theft. Also, make sure when you file Form 4684 that you use the fair market value of what was stolen (the $2,700) and not try to calculate any depreciation - stolen cash/funds are reported at face value. And definitely keep copies of everything - the police report, court filings, HSA statements showing the unauthorized transactions, and any correspondence with the HSA provider about disputing the charges. The timing is unfortunate since you're filing before the legal case is resolved, but documenting everything properly now will make things much smoother if you need to file amended returns later based on the court outcome. Hang in there!

Just wanted to share another perspective on this - I've been using FreeTaxUSA for years and while the $7.99 Deluxe upgrade for amendments isn't ideal, it's still way cheaper than most alternatives. I compared it to H&R Block online last year and they wanted $50+ for amendment services. One thing I haven't seen mentioned here is that FreeTaxUSA's Deluxe also includes some other useful features like priority customer support and audit assistance, so you're not just paying for the amendment capability alone. If you're someone who files complex returns or might need help during tax season, the upgrade can actually provide good value beyond just the amendment feature. That said, definitely worth trying TaxAct's free option first if your situation is straightforward - just make sure to double-check everything before submitting since free services usually have less hand-holding through the process.

I've been following this thread with interest since I'm in a similar boat! Just wanted to add that I called FreeTaxUSA customer service yesterday to confirm the amendment situation, and they were pretty upfront about it - yes, you absolutely need the Deluxe upgrade for federal amendments, no exceptions for their free tier. However, the rep did mention something useful that I haven't seen discussed here: if you're within 3 business days of filing your original return, they can sometimes help you file a "superseding return" instead of an amendment, which replaces your original return completely and doesn't require the Deluxe upgrade. Obviously this won't help most people since we usually discover mistakes weeks or months later, but might be worth knowing for anyone catching errors quickly. For those considering the TaxAct route mentioned above - definitely worth a shot! I'm planning to explore that option myself before committing to any paid upgrades. The worst that happens is I spend an hour checking it out and then fall back to paying the $7.99 FreeTaxUSA fee if needed.

Another important thing about lottery timing - if you take the annuity option (payments over 30 years), you'll pay taxes on each payment as you receive it. This can sometimes be better than taking the lump sum because: 1) You might stay in lower tax brackets across multiple years 2) You protect yourself from spending it all at once 3) The total payout is actually significantly higher

Great question! I've been wondering about this too. One thing I'd add is that you should definitely consider making quarterly estimated tax payments once you claim, especially for large winnings. The IRS expects payment throughout the year, not just at filing time. If you win big and don't make estimated payments, you could face underpayment penalties even if you pay the full amount when you file your return. The standard withholding might not be enough to cover your actual tax liability, especially if the winnings push you into higher brackets. Also, don't forget about the "kiddie tax" if you're planning to gift any winnings to children - there are special rules that might apply. Definitely worth consulting a tax professional for the big wins!

Has anyone successfully received a refund using Form 843 for a penalty? I submitted mine about 6 weeks ago (with my SSN, not my employer's EIN lol) and haven't heard anything. Is there a way to check the status online or do I have to call?

I went through this exact same confusion last year! You definitely should NOT use your employer's EIN on Form 843 - that field is for YOUR identification number. Since you're filing as an individual, you need to use your Social Security Number (SSN). I made the same mistake initially and had to resubmit the form, which delayed my refund by about 2 months. The IRS sent me a letter asking for clarification, but it would have been much faster to just get it right the first time. For the explanation section, be as detailed as possible. Include specific dates, reference any IRS publications or regulations that support your case, and clearly explain why you believe the fee was charged in error. Attach copies of all supporting documentation - bank statements, correspondence, whatever proves your point. The more evidence you provide upfront, the less likely they'll need to request additional information later. Good luck with your refund request! The process can be slow but if you have a valid case and complete documentation, you should get your money back.