Something important that hasn't been mentioned yet - make sure you're tracking your "at-risk" amount separately from both your basis and your passive activity amounts. It's a third limitation that can affect how losses are treated. I learned this the hard way with my LLC. Even though I had sufficient basis and wasn't limited by passive activity rules (because I was active), I still couldn't take some losses because of the at-risk rules. The tax software didn't explain this clearly. For your spouse who is active, their "at-risk" amount might become the limiting factor rather than the passive activity rules. For you as the passive investor, you'll likely hit the passive activity limitations before the at-risk limitations come into play.

This is a great discussion that really highlights how complex LLC taxation can get when you have mixed active/passive ownership. I've been dealing with similar issues in my practice. One thing I'd add for future reference - it's worth having your LLC operating agreement clearly define each member's level of participation upfront. This can help avoid confusion later when determining who qualifies as active vs passive for tax purposes. Also, @Mary Bates, since you mentioned this is an ongoing issue, you might want to consider whether it makes sense to elect S-corp taxation for your LLC (Form 2553). While it won't eliminate the passive loss limitations for you as a passive member, it could simplify some of the QBI calculations and potentially provide other benefits depending on your specific situation. The key takeaway from all these comments is that LLC losses involve multiple layers of limitations (basis, at-risk, and passive activity) that work in sequence. Each one needs to be tracked separately, and most good tax software will handle this automatically - but it's always worth verifying the forms are being generated correctly.

Has anyone compared Flyfin to TaxSlayer? I'm in the same boat with a day job and side gig, but I've always used TaxSlayer and wonder if it's worth switching.

I'm in a very similar situation - W-2 from my main job plus around $8,500 from freelance graphic design work last year. I ended up using TurboTax Self-Employed and it worked well, but I'm curious about Flyfin too after reading these responses. One thing I'd recommend regardless of which software you choose is to make sure you have good records of all your photography business expenses. Things like equipment depreciation, travel to shoots, editing software subscriptions, and even a portion of your phone bill if you use it for business can all be deductible. The better organized your records are, the more any of these tax programs can help you. Have you been tracking your business expenses throughout the year, or are you going to have to dig through bank statements? That might influence which platform would work best for you.

This is exactly the kind of situation that trips up so many PTP investors! I've been dealing with multiple energy partnerships for years and can confirm what others have said - the K-1 is your primary tax document, not the 1099. Here's what's likely happening: Your broker's 1099 is showing the total cash distributions you received throughout the year. But the K-1 breaks down the actual tax character of those distributions - typically a mix of return of capital (non-taxable but reduces your basis), ordinary income, and maybe some capital gains. In TurboTax, when you get to the K-1 section, make sure you select "Publicly Traded Partnership" when it asks about the partnership type. This is crucial because PTPs have different passive activity rules than regular partnerships. You should NOT enter the distribution amounts from your 1099 as additional dividend income - that would absolutely double-count your income. One thing I always tell people: keep a spreadsheet tracking your basis adjustments from the return of capital distributions. You'll need this when you sell, and it can save you from overpaying taxes down the road. The partnership should provide basis tracking on their website, but it's good to have your own records too.

I actually just went through this exact situation with my Magellan Midstream units! The confusion is totally understandable because it really does look like you're getting duplicate reporting. Here's what I learned after consulting with a CPA who specializes in energy investments: The 1099 from your brokerage is essentially just a cash flow statement - it shows money that moved into your account. But for tax purposes, what matters is the K-1, which tells you the actual tax character of those distributions. Most PTP distributions are largely "return of capital" which isn't immediately taxable - instead it reduces your cost basis in the investment. The K-1 will show this in Box 19A. Only the portions reported in other boxes (like Box 1 for ordinary income) are immediately taxable. When you enter your K-1 in TurboTax, make sure you select "Publicly Traded Partnership" when prompted - this is crucial because PTPs get different treatment than regular partnerships. The software should automatically handle the passive activity rules correctly for PTPs. Whatever you do, don't enter the distribution amounts from your 1099 as additional dividend income on top of the K-1 data - that would definitely double-count your income and result in overpaying taxes. Pro tip: Start a simple spreadsheet now to track your basis adjustments from the return of capital distributions. You'll thank yourself later when you sell!

For anyone facing a Section 1341 situation, make sure you're keeping ALL documentation related to both the original payment and the repayment. I got audited on my claim of right deduction and the IRS wanted to see: 1) Original pay stubs/documentation showing I received the income 2) Evidence I included it in my prior year taxable income 3) Documentation proving I repaid it 4) Calculation worksheets showing how I determined which method was better Also worth noting that the repayment has to be involuntary or due to legal obligation - you can't just voluntarily return money and claim Section 1341.

This is such a helpful thread! I'm dealing with a similar situation where I have to repay $18,500 in commission income that was incorrectly calculated by my employer in 2023. One thing I wanted to add that might help others - when you're doing the calculations for both methods, make sure you consider any state tax implications too. In my case (I'm in Oregon), the state follows federal Section 1341 treatment, but I had to dig into their specific guidance to confirm this. Also, @Evelyn Martinez - since your repayment is $28,000 (well over the $3,000 threshold), you definitely qualify for the Section 1341 calculations. Based on what others have shared here, it sounds like you'll want to calculate both methods and see which gives you the better result. If your tax situation changed significantly between 2023 and 2024 (different income levels, filing status, etc.), one method could save you substantially more than the other. Has your employer provided you with any documentation about the repayment? You'll need that for your records as @Vanessa Chang mentioned.

Thank you for this detailed explanation! I've been struggling with similar transcript codes on my 2023 return. Just to clarify - when you mention that Code 150 shows the "posting date" rather than the received date, does this mean there could be a significant gap between when the IRS actually received my return and when it appears with Code 150 on my transcript? I filed electronically on January 28th but my transcript shows Code 150 with a date of 2/15. Also, regarding the cycle code interpretation - if 0605 means 6th week, Thursday, would that correspond to February 8th, 2024? I'm trying to understand if this aligns with typical processing timeframes or if there might be additional review happening with my return.

Based on my experience reviewing IRS transcripts, your Code 150 with the 2/24 date indicates your return was successfully processed and posted to the Master File on February 24th - this is the official recording date, not when they first received your return. The Cycle 0605 confirms processing occurred during the 6th week of 2024 on Thursday (February 8th). This timeline is completely normal for returns filed during peak season. What you should watch for next is Code 846, which indicates your refund has been approved and scheduled for direct deposit. Keep checking your transcript weekly as additional codes will appear to show the progression through the refund process. The good news is that Code 150 means your return passed initial processing without any obvious red flags that would trigger additional review holds.