Welcome to partnership rental real estate! As someone who went through this exact learning curve last year, I can definitely relate to the complexity you're facing. Your understanding is correct - the partnership will file Form 1065 and issue you a Schedule K-1 showing your share of income/losses. With your $110,000 income, you should qualify for at least a partial $25,000 passive loss allowance, assuming you can demonstrate "active participation" in management decisions. A few key things I wish I'd known starting out: First, start documenting your participation immediately - phone calls about tenant issues, approval of repairs, lease reviews, etc. The IRS scrutinizes these deductions, so good records are essential. Second, understand that your ability to claim losses depends not just on passive activity rules, but also on your "basis" and "at-risk" amounts in the partnership. With significant mortgage debt, this gets complicated fast. Third, prepare for potential filing delays. Our partnership needed an extension to properly calculate depreciation allocations, which pushed our K-1s to late summer. Plan accordingly for estimated tax payments. The tax benefits can be substantial when done right, but definitely invest in a CPA who specializes in partnership taxation. The interaction between federal rules, state requirements, and partnership-specific issues is too complex for general tax preparers to handle effectively. Feel free to ask if you have specific questions as you navigate your first year!

Welcome to the partnership rental real estate world! As someone who's been navigating this for about two years now, I can definitely relate to the initial overwhelm you're experiencing. One aspect that hasn't been fully covered yet is the importance of understanding how Section 754 elections might affect your partnership. If any partner sells their interest or if the partnership makes certain distributions, a Section 754 election can allow the partnership to adjust the basis of partnership assets, which can significantly impact future depreciation deductions and your overall tax picture. Also, given that your partnership generates $175,000 in rental income, you'll want to pay close attention to whether any of the properties might qualify for bonus depreciation or Section 179 deductions on property improvements. The Tax Cuts and Jobs Act expanded these opportunities for rental properties, and with active management involvement, you might be able to accelerate some deductions that would otherwise be spread over many years. Another practical tip: consider setting up quarterly partnership meetings where you review not just the financials, but also discuss each partner's level of involvement and any changes in personal tax situations. This helps ensure everyone maximizes their available deductions and stays compliant with the various participation requirements. The learning curve is steep, but the tax advantages of properly managed rental real estate partnerships can be substantial. Just make sure you're working with a tax professional who truly understands partnership taxation - it's worth every penny!

Great question! As others have confirmed, you can absolutely contribute to both a SEP IRA and Roth IRA in the same tax year - they have completely separate contribution limits and eligibility rules. For 2025, you can contribute up to 25% of your net self-employment income to your SEP IRA (maximum $69,000) AND up to $7,000 to your Roth IRA since you're under the $153,000 income threshold. With your $109k income, you're in a perfect position to take advantage of both. Your accountant might have been thinking of the rule that prevents contributing to both traditional and Roth IRAs beyond the combined $7,000 limit, but SEP IRAs operate under completely different rules as employer-sponsored plans. One thing to keep in mind: make sure you're calculating your SEP contribution correctly using the actual formula (it works out to about 20% of net self-employment income, not a straight 25%). And consider prioritizing the Roth while you're eligible, since tax-free growth is hard to beat!

I went through this exact same situation last year! Your accountant was probably mixing up the rules - it's a pretty common confusion. You can absolutely contribute to both a SEP IRA and Roth IRA in the same year since they operate under completely different sets of rules. With your $109k income, you're eligible for the full $7,000 Roth IRA contribution (under the $153k threshold), and you can also contribute up to about 20% of your net self-employment income to your SEP IRA. Just remember that the SEP calculation isn't a straight 25% - it works out to closer to 20% due to how the math works. I'd definitely prioritize maxing out that Roth IRA while you're eligible again. Tax-free growth is incredibly valuable, and once your business bounces back and your income increases, you might lose that opportunity. The SEP IRA will always be there as long as you have self-employment income. Sounds like you might want to find a new accountant who's more familiar with self-employment retirement planning! This is pretty basic stuff for someone working with freelancers.

Does anyone know if this credit phases out completely at certain income levels? My wife and I both contribute to Roth IRAs but our combined income is around $70k.

Just want to add that you should also make sure you have your Form 5498 from Vanguard when you file. This form shows your IRA contributions for the year and the IRS uses it to verify your eligibility for the Saver's Credit. Vanguard usually mails these out by May 31st for the previous tax year, but you don't need to wait for it to file your return since you know how much you contributed. Also, keep in mind that only the contributions you made during the 2024 tax year count toward the 2024 credit. So if you contributed $5,700 in 2024, that's what you'd use for Form 8880. The $3,100 you contributed back in 2022 would have been eligible for the 2022 credit if your income qualified that year. It's really great that FreeTaxUSA caught this for you - a lot of people miss out on this credit simply because they don't know it exists!

Has anyone had issues with property taxes being reported incorrectly on these 1098 forms after a loan transfer? My new servicer didn't report any of the property taxes paid through escrow, but the old one did. Trying to figure out if I need to get a corrected form.

This is exactly the situation I found myself in last year! The stress of trying to figure out which numbers to use was keeping me up at night. What really helped me was creating a simple spreadsheet where I listed every mortgage payment I made throughout the year with the dates and amounts, then compared that to what each 1098 form was reporting. I discovered that my original lender was including some fees in their interest calculation that weren't actually deductible interest, while my new servicer had the cleaner numbers. The key is to focus on what you actually paid in mortgage interest, not necessarily what the forms say if there are discrepancies. Also, don't stress too much about triggering an audit - mortgage interest reporting issues are super common and the IRS sees this all the time. As long as you're being honest about what you actually paid and can document it, you'll be fine. Keep copies of all your payment records and mortgage statements just in case you need them later!

Just a heads-up based on personal experience: be VERY careful with your record keeping if you're doing Roth corrections or backdoor contributions. I messed up my basis tracking over multiple years and got hit with a CP2000 notice claiming I owed taxes on conversions that should have been tax-free. It took me months to untangle everything because I didn't have proper documentation for which contributions had been withdrawn as excess vs. which ones were converted properly. Make sure you keep ALL your 5498 and 1099-R forms indefinitely!

Based on your description, it sounds like you handled the excess contribution removal correctly by withdrawing before the filing deadline, which should have avoided the 6% penalty. However, there are a couple of areas that need attention: Your basis calculation is indeed incorrect. Since you withdrew the entire 2023 contribution of $1,500, that amount should NOT be included in your ongoing basis. Your basis should only reflect contributions that remain in the account - so for 2024, it should just be $7,000 (assuming you're eligible for the 2024 contribution). You should have received a 1099-R for the 2024 withdrawal showing the $1,530 distribution. The $1,500 principal portion isn't taxable since it was a return of excess contributions, but the $30 in earnings should be reported as taxable income on your 2024 return. If you're under 59½, those earnings are also subject to the 10% early withdrawal penalty. Make sure your IRA provider coded the 1099-R correctly - it should show code P or JP in box 7 to indicate "return of excess contributions." This helps the IRS understand the nature of the distribution. For 2024, double-check that your income still qualifies you for the $7,000 Roth contribution. If you're over the limit again, you'll want to address this before the filing deadline to avoid repeating the same issue. You likely don't need to amend your 2023 return if you properly reported the excess on Form 5329, but you should verify that your 2024 return correctly reports the earnings portion of the withdrawal as taxable income.