You're in good shape! Since you only work with independent contractors and have no W-2 employees, you don't need to file Form 940 or 941. These forms are exclusively for reporting employment taxes on actual employees. Your approach of issuing 1099-NECs is exactly right for contractor payments. The key is maintaining proper documentation to support the independent contractor classification - signed agreements, evidence they control their work methods and schedule, proof they use their own tools/equipment, and records showing they work for multiple clients. I'd recommend doing an annual review of each contractor relationship using the IRS's three-factor test (behavioral control, financial control, and relationship type). This helps catch any situations that might be drifting toward an employment relationship before they become problematic. Keep doing what you're doing with the 1099s, document your contractor relationships well, and you should be all set. Your tax software asks about 940/941 because most businesses eventually have employees, but you can safely skip those sections for now.

I've been running my small tech consulting business for about 2 years now and had this exact same question when I started! You're absolutely correct - since you only work with independent contractors (1099 workers) and have no W-2 employees, you don't need to file Form 940 or Form 941. These forms are specifically designed for businesses that have employees and need to report payroll taxes, unemployment taxes, and withholdings. What you're doing with the 1099-NECs is perfect and covers your main tax reporting obligation for contractor payments. Your tax software keeps asking about these forms because most businesses do eventually hire employees, but you can confidently skip those sections for now. One piece of advice from my experience - make sure you're keeping good documentation of why your contractors are truly independent. I learned this lesson when I had a close call during a business expense review. Keep contracts that clearly outline project scope rather than daily tasks, document that they use their own equipment and set their own schedules, and if possible, maintain records showing they work for other clients too. The IRS can be pretty strict about worker classification, so having that paper trail really helps if any questions come up. But as long as your working relationships genuinely meet the independence criteria, you're in great shape continuing with just the 1099s!

As someone who's been through the K-1 maze multiple times, here's my practical advice: Start with TurboTax Premier or similar software first - it can handle most K-1 situations just fine. The software will walk you through each box and schedule. However, given that you got "crushed" on taxes last year and this is new territory, I'd strongly recommend at least a consultation with a CPA for this first year. They can review your K-1 when it arrives, ensure those monthly deposits are adequate, and most importantly - set up a tax strategy going forward so you don't get surprised again. One thing to watch: K-1s often arrive late (sometimes as late as mid-March), which can delay your filing. Also, make sure you understand whether your partnership income is subject to self-employment tax - this varies depending on your role and the type of partnership. The monthly deposits are a good sign that your employer is thinking ahead, but definitely verify they're being made correctly under your SSN and covering both federal and state obligations if applicable.

One thing I'd add to the excellent advice already given - make sure you keep detailed records of those monthly $750 deposits your employer is making. You'll need to track these as estimated tax payments when you file. Also, ask your employer for documentation showing exactly how they calculated that $750 amount. They should be able to show you the math based on your expected K-1 income. This will help you (or a CPA) verify whether it's adequate coverage. I learned the hard way that some employers are overly conservative with these deposits, while others underestimate. Getting the calculation details upfront can save you from either overpaying throughout the year or facing a big surprise bill in April. And definitely get that K-1 reviewed by a professional this first year - the learning curve is worth the investment, especially since you mentioned getting hit hard on taxes before. A CPA can also help you plan for next year so you're not flying blind again.

Don't forget you need to keep records showing you actually PAID those amounts too! I got audited in 2021 and they wanted to see both the EOB AND proof I paid the amount (bank statement, credit card statement, etc). The EOB just shows what you OWED, not necessarily what you PAID.

Great question! EOBs are definitely acceptable documentation for HSA reimbursements. I've been managing my HSA for years and have used EOBs successfully during IRS correspondence audits. The key thing to remember is that your EOB needs to clearly show: - Date of service - Type of service (prescription drug, medical service, etc.) - Provider information - Amount you were responsible for paying Most insurance EOBs include all this information. Just make sure you're only reimbursing the patient responsibility amount (what you actually paid out-of-pocket), not the total billed amount. One tip: if your EOBs don't clearly show the medication names, you might want to supplement with a brief note in your records about what the prescription was for, just in case. While not strictly required, it can help if questions arise later. Keep those EOBs for at least 7 years - electronic copies are fine. The IRS doesn't require paper documentation, so PDFs from your insurance portal work perfectly.

This is exactly the kind of situation where having a good relationship with your CPA becomes crucial. I went through something similar last year and learned that most experienced tax professionals have templates and procedures specifically for trust short-year returns. One approach that worked well for me was to schedule a planning meeting with the CPA about 60 days before the intended termination date. We created a detailed timeline that included: requesting preliminary statements from all financial institutions, identifying any potential late-arriving income sources (like partnership K-1s), and calculating estimated tax reserves. The key insight my CPA shared was that the IRS is generally reasonable about good-faith estimates on short-year returns, especially for trusts. As long as you document your methodology and show that you made reasonable efforts to capture all income, minor discrepancies usually aren't problematic. Also consider the timing of your termination date strategically - if you terminate right before a major dividend payment date, you might avoid having to estimate that income entirely. My CPA helped me identify the optimal termination timing based on the trust's specific investment holdings.

As someone who recently went through this exact process, I can't stress enough how important it is to start gathering your preliminary financial statements early. I made the mistake of waiting until the last minute and discovered that one of our brokerage firms needed 10 business days to generate the year-to-date report. Here's what I wish I had known earlier: create a comprehensive asset inventory first, then systematically contact each institution about 6-8 weeks before your planned termination date. For investment accounts, ask specifically for "income and realized gains/losses through [termination date]" rather than just a general statement - this ensures you get the tax-relevant information. Also, don't forget about any automatic reinvestment plans (DRIPs) that might generate small amounts of additional income right up until termination. These often get overlooked but can affect your final tax calculations. One last tip - if your trust has any money market accounts or CDs that will mature after your planned termination date, factor in that accrued interest when calculating your reserves. The preliminary statements often don't capture interest that's earned but not yet paid, which can create surprises later.

I dealt with a similar situation after Hurricane Laura damaged my roof and garage. One thing that really helped my case was getting a "scope of loss" document from a public adjuster who reviewed what my insurance company missed or undervalued. Even though I had to pay the adjuster, it was worth it because they found an additional $12k in damages that insurance initially overlooked. For your chimney situation, you might want to consider getting a structural engineer's assessment showing that removing the chimney versus rebuilding it creates a permanent decrease in your home's structural integrity and value. This could strengthen your FMV decrease argument beyond just the aesthetic/functional loss. Also, don't forget that you can deduct the cost of temporary protective measures you took immediately after the hurricane (like tarping, boarding up windows, etc.) as part of your casualty loss. These often get overlooked but they're legitimate disaster-related expenses. Just make sure everything was within a reasonable timeframe after the federally declared disaster.

I went through a very similar situation after Hurricane Michael hit our area. One crucial detail that hasn't been mentioned yet - make sure you understand the timing rules for casualty loss claims. Since yours was a federally declared disaster, you actually have the option to claim the loss on either your 2024 return (the year it happened) OR amend your 2023 return to claim it there, which could get you a refund faster. The key documentation you'll need beyond what others have mentioned is a detailed timeline showing when the damage occurred, when you received the insurance settlement, and when you made the decision to go with the wall replacement instead of full chimney rebuild. The IRS wants to see that you made reasonable efforts to restore the property but were financially unable to do so. For your specific situation with the chimney-to-wall conversion, I'd strongly recommend getting an appraisal or real estate professional's written opinion on how this impacts your home's resale value. A missing chimney can affect both the aesthetic appeal and functionality (no fireplace option for future buyers), which supports your FMV decrease calculation. One last tip - if you're planning to sell your home within the next few years, keep all this casualty loss documentation. It could affect your capital gains calculation since the casualty loss reduces your home's adjusted basis.