OP, I'm in a similar situation (W2 income married to sole prop business) and we found that filing jointly saved us about $4,800 compared to filing separately. The biggest factors were: - Higher income thresholds for child tax credit - Being able to offset business losses against W2 income - Lower overall tax brackets - Full retirement account options My wife's business actually had a rough year and showed a small loss, which directly reduced our taxable W2 income. That wouldn't have helped if we filed separately.

Congratulations on your new baby girl! As a tax professional, I can tell you that filing jointly is almost certainly your best option given your situation. Here's why: With $145k combined income and a new baby, you'll benefit significantly from the Child Tax Credit ($2,000), which has much higher income phase-out limits for joint filers ($400k vs $200k for separate). Your wife's photography business income will also work better on a joint return because: - Any business losses can offset your W2 income directly - She may qualify for the 20% Qualified Business Income deduction, which phases out at higher income levels for separate filers - Self-employment tax stays the same regardless of filing status The main scenarios where separate filing helps are: - Large medical expenses (3% AGI threshold is easier to meet with lower individual income) - Student loan income-based repayments - One spouse has significant miscellaneous deductions Given your income levels and new child, I'd estimate joint filing will save you $2,000-4,000 compared to separate filing. The standard advice is always to calculate both ways, but joint filing has significant advantages for most married couples with children. Make sure your wife is tracking all business expenses and considering quarterly estimated payments for 2025!

I can definitely relate to this confusion! I went through something very similar when I returned my company Volkswagen earlier this year. The tax code changes seemed to make no sense at first. What really helped me understand was realizing that HMRC doesn't just calculate your tax on what's happening right now - they're trying to make sure your total tax for the entire year is correct. So when you return the car mid-year, they have to do some complex calculations to balance everything out. In my case, the remaining reduction in my tax code after returning the car was due to: - Private medical insurance (which I'd forgotten was a taxable benefit) - A small amount of underpaid tax from the previous year - Dental insurance through work I'd definitely recommend checking your Personal Tax Account online first - it's much quicker than calling HMRC and gives you a good overview. If you need more detail, you can always call them later with specific questions. The good news is that even if the monthly amounts seem confusing now, it should all balance out correctly by the end of the tax year. HMRC's system is actually quite good at ensuring you pay exactly the right amount of tax overall, even if the month-to-month calculations aren't immediately obvious.

I've been dealing with a very similar situation! Just went through this exact scenario when I returned my company car in February. The tax code confusion is absolutely maddening when you're trying to figure out where your money is going. What really helped me was understanding that HMRC operates on a "cumulative" basis throughout the tax year. So when you return the car mid-year, they don't just adjust going forward - they recalculate your entire tax position from April 6th onwards to make sure you end up paying exactly the right amount for the full year. In your case, that £80 monthly reduction is likely a combination of: - Remaining taxable benefits (health insurance, life insurance, etc.) - Any previous year tax adjustments being collected - Possibly some year-to-date catch-up calculations I'd definitely recommend logging into your Personal Tax Account on GOV.UK first - it gives you a much clearer breakdown than trying to reverse-engineer the numbers from your payslip. You can see exactly what adjustments are being made and why. If you're still confused after checking online, calling HMRC directly is worth it. I know their phone lines are terrible, but once you get through, they can explain your specific tax code calculation line by line. In my case, they spotted that my employer had failed to notify them that my fuel benefit had ended with the car, so I was being overtaxed by about £30 per month. The good news is that even if there are timing issues or small errors, it all gets reconciled by the end of the tax year. You'll either get a refund or further adjustments to make sure you've paid exactly what you owe - no more, no less.

I switched from sole proprietor to S Corp last year and was confused when my 1099s suddenly dried up! I asked one client about it and they basically laughed and said "that's one of the perks of having a corporation - we don't have to send you forms anymore." Their accounting department explained it saves them a ton of work at year end. But it definitely threw me off at first when trying to do my taxes.

This is a great question that confused me too when I first incorporated! The key thing to understand is that companies can still claim the full business deduction for payments made to your S Corp without issuing a 1099 - they just need to maintain proper internal records like invoices, contracts, and proof of payment. From their perspective, not having to issue 1099s to corporations (including S Corps) is purely an administrative benefit. It reduces their year-end paperwork burden, eliminates potential filing errors, and saves time on tax compliance. The IRS created this exemption specifically because corporations have more structured reporting requirements than sole proprietors. Just make sure you're keeping detailed records of all income on your end since you won't have those 1099s as backup documentation. Your bank statements, invoices, and contracts become even more important for proving income to the IRS if you're ever audited.

Does anyone know if there's a specific form or worksheet where this health insurance treatment is documented? I've been using a homemade spreadsheet for tracking S Corp basis but would love something more official.

I've been dealing with this same issue and want to share what I learned from my research. The confusion often comes from mixing up the accounting treatment vs. the tax treatment. From an S corp perspective: The health insurance premium is deductible as compensation expense on Form 1120S, which reduces the ordinary business income that flows through to shareholders on Schedule K-1. From the shareholder perspective: The premium amount gets added to W-2 wages (subject to income tax but not employment taxes), and then the shareholder can claim the self-employed health insurance deduction on their personal return. The basis impact is indirect - since the S corp deduction reduces the K-1 ordinary income, there's less income flowing through to increase the shareholder's stock basis. So while the premium itself doesn't directly reduce basis like a distribution would, the corporate deduction does result in a smaller basis increase than would otherwise occur. This is why your tax software shows it affecting basis - it's capturing that indirect effect through the reduced pass-through income. Your manager might be thinking of it as a direct basis reduction (which it's not), but the indirect impact through reduced K-1 income is real and should be reflected in basis calculations.

This is an excellent thread on PTP complexities! One additional consideration that hasn't been fully addressed is the potential for audit risk when dealing with PTPs across multiple account types and partial sales. The IRS has been increasingly scrutinizing PTP reporting, especially UBTI calculations in IRAs. When you have transactions spanning both taxable and tax-advantaged accounts in the same year, it's crucial to maintain detailed documentation showing your allocation methodology. I've found that creating a spreadsheet tracking unit-days for each account type (as Sophie mentioned) is essential, but also documenting the specific allocation method used by each partnership. Some partnerships use the "interim closing of books" method, while others use daily proration - and this can significantly impact how you should allocate income between accounts. For those dealing with Form 990-T filings, remember that you can also claim deductions related to the UBTI-generating activity. This might include management fees or other expenses directly attributable to the PTP holdings in your IRA, which could help reduce the taxable UBTI below the $1,000 threshold. The death benefit question is also worth revisiting - while taxable accounts get step-up in basis, inherited IRAs with PTP holdings continue to generate UBTI for the beneficiary, which is often overlooked in estate planning.

This thread has been incredibly educational! As someone new to PTP investments, I'm realizing there's a lot more complexity here than my financial advisor mentioned when recommending these investments for diversification. One thing I'm still unclear on from all the discussion - if I'm just starting out with PTPs and want to avoid the most complicated tax situations, would it be better to hold them only in taxable accounts to avoid the UBTI/Form 990-T complications? Or are there specific types of PTPs that tend to generate less UBTI that might be more suitable for IRA holdings? Also, for someone who hasn't dealt with K-1s before, are there any red flags I should watch for on my first K-1 that might indicate reporting issues or unusually complex allocations? I want to make sure I'm prepared before tax season hits. The documentation requirements everyone's mentioned sound extensive - is there a minimum level of record-keeping that would satisfy IRS requirements, or should I assume I need to track everything down to the daily unit counts like some of you have described?