I'm confused about one thing - does the military exemption just apply to the 2-year ownership rule or does it also extend the capital gains exclusion amount? My friend told me military gets a higher exclusion than $500k but that seems too good to be true??

Just wanted to jump in here as someone who went through this exact scenario! Your buddy is definitely mixing up the old rules - there's no 6-month requirement to buy another house to avoid capital gains tax. Since you owned and lived in your home as your primary residence for over 2 years and you're married filing jointly, you qualify for the full $500,000 capital gains exclusion. Your $125k profit is well under that threshold, so you won't owe any capital gains tax regardless of when (or if) you buy your next home. The military connection actually works in your favor here too. If you hadn't quite hit the 2-year mark due to PCS moves, there are special provisions that could still help you qualify. But since you're already over 2 years, you're in great shape. One thing to keep in mind - while your home sale profit won't be taxed, any interest you earn on that $125k in your high-yield savings account will be taxable as regular income. So just factor that into your planning when you're setting money aside for next year's taxes. You can breathe easy on this one - no surprise tax bill coming your way from the home sale!

Does anyone know if forming the holding company in a different state than where you live would make sense from a tax perspective? I've heard Wyoming and Nevada mentioned a lot for holding companies because they have no state income tax.

I went through a similar situation about 18 months ago with roughly the same income level as you. Here's what I learned that might help: First, don't get too caught up in the complexity right away. With $150K in business income plus rental properties, you're definitely at a level where this could make sense, but the structure needs to match your specific goals. One thing I wish someone had told me earlier: the "tax savings" from holding companies often come more from better expense management and strategic timing rather than just the entity structure itself. For example, being able to reimburse yourself for health insurance, home office expenses, and business travel through the holding company can add up to significant deductions. For your rental properties specifically, having them in separate LLCs under a holding company does create nice liability separation, but make sure you understand the ongoing costs. Each LLC typically needs its own tax return (even if it's a simple one), and depending on your state, there might be annual fees for each entity. My accountant had me run the numbers on three scenarios: staying as sole proprietor, setting up just the business as an S-Corp, and doing the full holding company structure. The holding company only made sense once we factored in my plans to acquire more properties over the next few years. The income flow question you asked is key - with an S-Corp holding company, everything flows through to your personal return, so you're not dealing with corporate-level taxation plus personal taxation. Much cleaner than I initially expected.

Great to see you taking a proactive approach with this situation! One additional thing to consider - if your employer does classify you as a contractor but you believe you should be an employee, you can file Form SS-8 with the IRS to request an official determination of your worker status. This form asks detailed questions about your work relationship and the IRS will make a binding determination. It takes several months to get a response, but it gives you official documentation if there's ever a dispute. You can also file Form 8919 when you file your taxes to pay only the employee portion of Social Security and Medicare taxes if you believe you were misclassified. Just be aware that filing these forms essentially reports your employer to the IRS, so it could strain your working relationship. Most people try to resolve it directly with the employer first, but it's good to know these options exist as a backup plan. Also, document everything from your conversations with your boss about this arrangement. If the IRS ever investigates, having written records of how the classification decision was made can be very helpful for your case.

This is such a common situation and I'm glad you're getting good advice here! I went through something similar with a tech startup about two years ago. They kept pushing the "flexibility" angle of contractor status, but what they really wanted was to avoid paying their share of employment taxes. Here's what I learned the hard way: even if you negotiate a higher rate to offset the self-employment taxes, you're still losing out on other employee protections. No unemployment insurance eligibility, no workers' comp coverage, and in many states you lose certain labor law protections. The "business expense deduction" argument they're making is often oversold too. Unless you're actually incurring significant expenses that are directly related to the work (separate from your side business), those deductions won't be as valuable as they make it sound. I'd strongly recommend pushing for proper W-2 classification. If they're a legitimate business, setting up payroll isn't actually that complicated - there are plenty of services like Gusto or ADP that make it pretty straightforward for small companies. The fact that they're calling it a "hassle" makes me think they're more interested in saving money than doing right by their employees. Trust your instincts on this one - if it feels sketchy, it probably is.

PSA: Make sure your Cash App is verified/activated for direct deposit before the refund hits! Learned that one the hard way last year smh

Been using Cash App for my refunds for 3 years now. From my experience, it's usually 1-2 days early but not always the full 2 days they advertise. Last year I got mine on a Wednesday when my DDD was Friday. The year before it was just 1 day early. Honestly depends on when the IRS actually processes your batch and sends it out. Don't stress too much about the exact timing - you'll get it soon either way!

Is anyone else confused about why the OP received $1000 in distributions when their 1% share of the partnership showed a $5100 loss? How can the partnership distribute cash if it's operating at a loss?

This is a great example of how confusing K-1s can be for new partners! The key thing to remember is that partnership accounting follows the "conduit" theory - the partnership doesn't pay taxes, it just passes through its income and losses to the partners. Your $1,000 in distributions should be reported in Box 19 (code A) of your K-1, and these reduce your basis in the partnership rather than creating taxable income. The $5,100 loss you're seeing is your 1% share of the partnership's total loss, which likely includes depreciation on the rental property. Since you mentioned you're completely passive in this investment, your losses are subject to the passive activity loss rules under Section 469. This means you can only use these losses to offset passive income from other sources. If you don't have other passive income, the losses get suspended and carry forward until you either generate passive income or dispose of your entire interest in the partnership. Make sure to keep good records of your basis and any suspended losses - you'll need this information for future tax years and eventually when you sell or dispose of your partnership interest.