One thing to consider is whether your fund manager is charging the performance fee at the entity level or the investor level. If it's at the entity level (like in a partnership structure), those fees reduce the partnership's income before it flows to you on a K-1, which effectively means you're not taxed on those amounts. But if you're getting the full gain reported to you and then paying the manager separately, that's where you run into the double taxation issue. Worth checking how your specific arrangement is structured.

Just to add another perspective - I work in wealth management (not giving professional advice here), and one approach we've seen clients use successfully is establishing an LLC or other business entity that holds their investments. In some cases, this can allow investment management fees to be treated as business expenses rather than miscellaneous itemized deductions.

Has anyone used both TurboTax and H&R Block software to check how they handle this specific situation? I tried calculating this in TurboTax and it seemed to reduce my SEP contribution limit by my K1 losses, which sounds wrong based on what everyone is saying here.

Just wanted to add some real-world validation to this thread. I'm a CPA and see this exact situation frequently with clients who have multiple business entities. The advice given here is correct - your K1 partnership loss does NOT reduce your Schedule C income for SEP IRA contribution purposes. The key distinction is that SEP IRAs are employer-sponsored retirement plans, even when you're self-employed. Your sole proprietorship acts as both employer and employee, allowing you to make contributions based on that specific business's net earnings. The partnership is a separate legal entity that would need its own retirement plan structure. I always tell clients to think of each business entity as having its own "retirement bucket." Your Schedule C business has one bucket, your partnership has another (which typically can't contribute to your individual SEP anyway), and any W-2 employment would have yet another bucket. So yes, use the full $12,400 from your sole proprietorship as your SEP contribution basis. Just remember the actual contribution limit is slightly less than 20% due to the self-employment tax adjustment - closer to 18.587% of your net Schedule C profit.

You're absolutely right to question this! I had the same confusion when I first looked at married filing jointly vs separately. The standard deduction doubling isn't really a "benefit" per se - it's just accounting for two people instead of one. The real advantages of filing jointly come from other factors: **Tax Bracket Differences**: This is the big one. For 2025, the 22% tax bracket starts at $47,150 for single filers but doesn't kick in until $94,300 for joint filers. So if you're making $75k and your fiancée makes $40k, more of your combined income gets taxed at lower rates. **Access to Credits**: Many tax credits are either unavailable or have lower income limits when filing separately. The Child Tax Credit, education credits, and even the student loan interest deduction can be lost or reduced. **Income Averaging Effect**: When one spouse earns significantly more, filing jointly can push the higher earner's income into lower brackets by "averaging" it with the lower earner's income. With your income levels ($75k and $40k), you'll likely save money filing jointly because you're avoiding the higher tax brackets that would hit if you filed separately. It's not about the standard deduction - it's about how your income gets taxed overall. The marriage "bonus" is real for couples with different income levels, but you're right that the standard deduction itself isn't the reason why.

You're definitely not missing anything obvious - this is actually a really common source of confusion! The way the standard deduction is marketed does make it sound like some magical married benefit when it's really just proportional. The key insight you're missing is that the real advantage isn't in the standard deduction itself, but in how your combined income gets taxed. Think of it this way: when you file separately, each person's income gets pushed through the tax brackets independently. When you file jointly, your combined income gets spread across much wider tax brackets. Here's a concrete example with your situation ($75k + $40k): **Filing Separately**: Your $75k income would push you well into the 22% bracket, while your fiancée's $40k stays mostly in the 12% bracket. **Filing Jointly**: Your combined $115k gets treated as one unit, and much more of it stays in the lower brackets because the joint brackets are wider (not just doubled). Plus, you'll likely qualify for credits and deductions that get phased out at lower income levels when filing separately. The standard deduction equality is just the government's way of not penalizing married couples - the real benefits come from everything else in the tax code that favors joint filers. Run your numbers both ways before you get married - I bet you'll find joint filing saves you money despite the "same" standard deduction per person.

That's a great point about the age 62 conversion that I hadn't considered! I'm currently 57, so I've got about 5 years before that kicks in. It's definitely something to factor into our business planning timeline. Speaking of timeline, we're not in a rush to launch immediately, so maybe we could structure things to start small and gradually ramp up as I get closer to 62. That way we could test the waters with minimal risk to my benefits, then expand once the earning limitations are lifted. Does anyone know if there are any other major changes or considerations when your FERS disability converts to regular retirement at 62? I assume the benefit amount stays the same, but are there other differences I should be aware of?

This is exactly the kind of complex situation where getting professional guidance upfront can save you a lot of headaches later. I went through something similar when I was considering freelance work while on FERS disability - the rules around what constitutes "earned income" and how business structures affect your benefits are really nuanced. One thing I learned is that OPM doesn't just look at the paperwork structure, but also at the substance of your involvement. Even if your wife is the sole LLC owner, if you're actively working in the business (building websites, customer service, etc.), they could potentially view that as evidence of restored earning capacity regardless of who officially receives the income. The safest approach might be to start with your wife as sole owner and you having absolutely minimal involvement - maybe just occasional informal advice. Then as you get closer to 62 and the earning restrictions lift, you could gradually increase your involvement or even become an official co-owner. Also, definitely document everything clearly from the beginning. Keep records of who does what work, how decisions are made, and how any startup funds are contributed. If OPM ever reviews your case, having clean documentation will be crucial. The age 62 conversion is definitely a game-changer for your planning timeline. Five years isn't that long to wait for full earning freedom, especially if it means protecting your current benefits in the meantime.

Something nobody's mentioned yet - if you've already filed your 2024 taxes using FIFO, you could potentially file an amended return (Form 1040-X) if it would be significantly better for you. You'd need to do this within 3 years of your original filing date. HOWEVER, just know that changing accounting methods on an amended return might raise flags for the IRS. You'd need to include a detailed explanation and might want to consult with a tax professional first to see if it's worth it in your situation.

Just wanted to add some perspective as someone who went through a similar situation last year. The good news is that you're not stuck with FIFO forever - you can absolutely switch to specific identification for your future sales in 2025. One thing to keep in mind is that the IRS Publication 550 specifically addresses this scenario. You can change your accounting method for future transactions, but you need to be consistent within each tax year. So for all your 2025 crypto sales, you'd need to use the same method throughout that year. I'd strongly recommend starting to track your cost basis now before you make any 2025 sales. Create a detailed spreadsheet with purchase dates, amounts, and prices for all your remaining holdings. When you're ready to sell in August, you'll be able to strategically choose which lots to sell to optimize for long-term capital gains. Also consider consulting with a tax professional who specializes in crypto before making your major sales. The potential tax savings from proper planning could easily justify the consultation fee, especially if you're dealing with significant amounts.