Does anyone know if changing from GP to LP mid-year requires any special filing or can you just indicate the change on your annual partnership return? My spouse was very active in our LLC initially but stopped participating in management around July.

Just to add another perspective - I went through this exact same situation with my spouse last year. We're both active in our LLC, but I was overthinking the GP/LP designation because of all the confusing information online about LLCs vs partnerships. What finally cleared it up for me was realizing that the IRS essentially treats active LLC members as general partners for tax purposes, regardless of what your operating agreement calls you. Since you and your wife are both involved in running the business, you should both be classified as general partners on the tax organizer. The key test is whether you materially participate in the business operations. If you both make management decisions, handle day-to-day operations, or are otherwise actively involved (rather than just passive investors), then GP is the correct designation for both of you. Your accountant will use this information to properly prepare your K-1s and ensure the correct self-employment tax treatment. Don't stress too much about the terminology - focus on accurately describing your actual roles in the business.

Based on everyone's advice here, I'd strongly recommend getting this sorted out sooner rather than later. Your current approach of having one brother report 100% of the income while all three of you are legal owners is definitely problematic from a tax perspective. Since you're planning to start distributing profits in 2025 anyway, this is the perfect time to restructure everything properly. Here's what I'd suggest: 1. Work with a tax professional to file Form 1065 partnership returns for 2021-2024 and issue corrected K-1s showing each brother's 33.3% share 2. Have each brother file amended personal returns (Form 1040X) to report their proper share on Schedule E 3. Starting in 2025, continue filing as a partnership with proper K-1 distributions The fact that you've kept all the money in a shared account and only used it for property expenses actually works in your favor - it shows you weren't trying to hide income, just filing incorrectly. Document everything about your ownership structure, the inheritance, and how you've been managing the property. Don't let fear of penalties keep you from fixing this. The IRS is generally more lenient when taxpayers voluntarily correct mistakes, especially when the total income was still being reported (just by the wrong people). The longer you wait, the more complicated it becomes.

I'm dealing with a very similar situation right now! My brother and I co-own a rental property that we inherited, but only he's been reporting the income. After reading through all these responses, I'm convinced we need to get this fixed ASAP. The point about the IRS treating co-owned rental properties as partnerships by default is something I didn't know. I always thought you had to formally register a partnership, but apparently just owning property together for profit automatically creates one for tax purposes. I'm particularly interested in the experiences shared about amended returns. It sounds like as long as you're proactive about fixing it and can show the total income was being reported (just incorrectly), the IRS is generally reasonable. The strategy of filing all amendments simultaneously to show it's a correction rather than tax avoidance makes perfect sense. One thing I'm still unclear on - when you file as a partnership with Form 1065, does the property itself need an EIN (Employer Identification Number)? Or can you file the partnership return using one of the owner's SSNs? This might be a basic question, but I want to make sure I understand all the steps involved before I start this process.

Pro tip: if you have a lot of deductions or credits you expect to claim (like mortgage interest, charitable donations, child tax credits, etc.), you might be overwithholding with that FED MWT EE amount. You can adjust your W-4 to account for these so you get more money in each paycheck instead of waiting for a refund.

I went through the same confusion when I started my first job! One thing that really helped me was keeping track of my year-to-date withholding from each paystub and comparing it to what I actually owed when I filed my taxes. This gave me a good sense of whether my FED MWT EE withholding was on track. Also, don't forget that if you get a second job or significant raise during the year, you'll want to update your W-4 again. The withholding calculations assume that income level for the full year, so if your circumstances change, your withholding might need adjusting too. I learned this the hard way when I got a promotion mid-year and ended up owing taxes because my withholding didn't account for the higher income bracket.

Random question - has anyone tried filing as Married Filing Separately to get around the education credit income limits? My wife and I are in a similar situation and wondering if that would help.

I went through this exact same situation two years ago! The marriage penalty on education credits is so frustrating, especially when no one warns you about it beforehand. Since you're at $84,000 AGI, you should still qualify for a partial American Opportunity Credit - it doesn't completely phase out until $180,000 for married filing jointly. Make sure you're calculating this correctly in TurboTax because even a partial credit is better than nothing. A few things that helped me maximize what we could get back: 1. Max out any pre-tax retirement contributions (401k, traditional IRA) to lower your AGI 2. If either of you is eligible for an HSA, that also reduces AGI 3. Double-check that you're including ALL qualified expenses - required textbooks, lab fees, technology fees required by the school Also, don't overlook the Lifetime Learning Credit as a backup. While it's generally less generous than AOTC, it might work better for your specific situation depending on how your expenses break down. The income limits are really poorly designed for married couples, but there are still ways to work within the system to get some benefit!

Not sure if you're aware, but this is actually a classic dark pattern that TurboTax has been doing for YEARS. They've even been sued over it. They intentionally advertise free filing but design the system to force almost everyone into paid upgrades. Simple things like student loan interest (which is super common) trigger their "you need to upgrade" messages.

This is exactly why I switched to doing my own taxes with the IRS Free File Fillable Forms a couple years ago. Yes, it's more work and you need to be comfortable reading tax instructions, but at least there are no surprise upgrade fees or dark patterns. For your situation with just a W-2, student loan interest, and basic savings interest, you'd probably only need Form 1040 and maybe Form 8917 for the student loan interest deduction. The IRS provides all the forms and instructions for free, and you can e-file directly through their system. I get that it's intimidating at first, but honestly once you do it once, simple tax situations like yours are pretty straightforward. Plus you learn way more about your taxes than you would clicking through TurboTax's guided questions. Just another option to consider if you want to avoid the upgrade trap entirely!