Just wanted to add my experience as someone who's been dealing with K-1s for several years now. The advice about Schedule E is spot-on - the investment interest expense from your K-1 will indeed offset the interest income directly on Schedule E, completely separate from your standard deduction decision. One additional tip: make sure you keep good records of any investment interest expense that exceeds the investment income in a given year. While your situation shows a net positive income, if you ever have a year where the investment interest expense exceeds the investment income from the partnership, the excess can be carried forward to future years. This carryforward happens automatically on Form 4952 (Investment Interest Expense Deduction), which gets filed along with your return when you have investment interest expense. Also, since this is your first K-1, be prepared for it to arrive much later than your other tax documents. Partnerships often don't send out K-1s until mid-March or even later, which can delay your tax filing. The mid-year estimate you received is helpful for planning, but the final K-1 numbers might be different.

I've been through this exact situation with my first K-1 investment, and I want to emphasize something that might not be obvious - even though the investment interest expense from your K-1 flows through Schedule E (as correctly explained above), you should still keep detailed records of all the investment interest expenses reported on your K-1. The reason is that there are annual limitations on how much investment interest expense you can deduct, and these limitations are calculated on Form 4952. While your current situation shows net positive income, if you make additional investments or if market conditions change, you might hit scenarios where your total investment interest expense across all investments exceeds your investment income. Also, since you mentioned this is totally new territory, I'd recommend reviewing the partnership agreement or offering documents to understand what type of investment this is. Some partnerships are structured as publicly traded partnerships (PTPs), which have special tax rules, while others might be private placements with different implications for things like passive activity rules. The good news is that your tax software should handle most of this automatically once you enter the K-1 data, but understanding the underlying mechanics will help you make better investment decisions going forward.

For what it's worth, my cousin used Optima and had a positive experience, but he owed over $65,000 and had some complicated issues with unfiled returns for several years. They got his penalties removed and negotiated his total debt down significantly. So maybe they're better for more complex cases? The simpler your situation, the less value they probably provide.

Based on everyone's experiences here, it sounds like the key is figuring out if your situation is complex enough to justify the fees. I'm dealing with about $12,000 in back taxes from 2021-2022, but it's pretty straightforward - just didn't have enough withheld due to some freelance work. After reading through all these responses, I think I'm going to try the DIY approach first. Going to check out that taxr.ai tool to see what options I actually qualify for, and if I need to talk to the IRS directly, I'll use the Claimyr service to avoid sitting on hold all day. Really appreciate everyone sharing their real experiences - both good and bad. It's exactly what I needed to hear before potentially spending thousands on something I might be able to handle myself. Will update if I learn anything useful along the way!

Just to throw in another wrinkle - if you're over 55, don't forget about the catch-up contribution! The regular HSA limit for 2024 was $4,150 for individual coverage, but if you're 55 or older, you can contribute an extra $1,000, making your limit $5,150. Before stressing about excess contributions, make sure you're using the correct limit for your age.

This is exactly the kind of HSA nightmare that makes tax season so stressful! I went through something similar last year and here's what I learned: The key is to get documentation from both sources. Call your HSA provider and ask for a detailed breakdown of that $4,350.08 - specifically ask them to identify any administrative fees, investment fees, or other charges that might be included in their total. Most providers can give you a month-by-month breakdown that shows actual contributions versus fees. Since you've already withdrawn the $200.08, I'd recommend reporting the full amount as excess contribution on Form 8889-S rather than trying to split it. Yes, you might pay slightly more tax than absolutely necessary, but it ensures you're covered if the IRS cross-references your return with the 5498-SA form from your HSA provider. The peace of mind of knowing you're fully compliant is worth the few extra dollars in taxes. Plus, if you later get documentation from your HSA provider showing that $50 was fees (not contributions), you could potentially amend your return to get that money back. Your plan to aim for $4,000 in 2025 contributions is smart - building in that buffer eliminates these headaches entirely!

This is really helpful info! I'm dealing with a similar situation where my parents want to help me buy my first home. Reading through all these responses, it sounds like the key things are: 1) proper documentation with a promissory note, 2) interest rate at or above the AFR, 3) actually securing the loan against the property with a recorded lien, and 4) making sure both parties report correctly on taxes. One question I have - when you record the mortgage/deed of trust with the county, do you need a lawyer for that or can you do it yourself? And does it cost much? I'm trying to keep closing costs reasonable since we're already saving money by going through family instead of a traditional lender.

One thing I haven't seen mentioned yet is the importance of establishing a regular payment schedule and sticking to it. The IRS looks for evidence that this is a legitimate loan arrangement, not a gift disguised as a loan. Make sure you're making consistent monthly payments (or whatever schedule you agree on) and that both you and your uncle keep detailed records. I'd also recommend getting title insurance that covers the family member's lien position, just like you would with a traditional mortgage. This adds another layer of legitimacy to the arrangement and protects everyone involved. Also, consider what happens if something goes wrong - job loss, disability, death, etc. Having clear terms in your promissory note about default, foreclosure procedures, and what happens to the loan if either party passes away will help demonstrate to the IRS that this was structured as a real mortgage, not just a family favor.

Just a suggestion - for small partnerships like your barbershop quartet, have you considered using FreeTaxUSA? It handles K-1s with various codes in their free version, including Box 20 codes. I used it for my small LLC this year and it didn't charge extra for any of the "complex" forms that other software wants to upcharge for.

As someone who's dealt with numerous K-1 forms over the years, I can confirm what others have said - Code AG in Box 20 is purely informational and doesn't require any action on your personal return. It's just the partnership reporting gross receipts for Section 448(c) purposes. The frustrating part is how tax software companies exploit these "complex-looking" codes to push expensive upgrades when most small partnerships don't actually need them. For a band with minimal income, you're likely only dealing with the basic income/loss items from Box 1. If you're set on using TurboTax, try continuing without entering the Code AG information - the software should allow you to skip it since it's not a required entry for your personal return. Alternatively, consider switching to a different software that doesn't nickel-and-dime you for standard partnership forms. Also, given that your band barely made money last year, you might want to discuss with your bandmates whether the partnership structure is worth the annual hassle of K-1s and partnership returns. Sometimes simpler is better for small creative ventures.