Just a heads up that the mortgage insurance premium deduction is one of those "below-the-line" itemized deductions, so you only benefit if your total itemized deductions exceed the standard deduction. For 2025, the standard deduction is projected to be $13,850 for single filers and $27,700 for married filing jointly. For many people with smaller mortgages or who live in lower-cost areas, the standard deduction might still be better even with the PMI deduction added back. Do the math before getting too excited!

This is fantastic news! I've been following the legislative updates closely and was really hoping this would get restored. I'm in a similar situation - bought my first home 18 months ago with 8% down and have been paying about $180/month in PMI. One thing I'd add for anyone reading this - make sure you keep good records of all your PMI payments throughout the year. Your mortgage servicer should send you a Form 1098 that breaks down your mortgage interest and PMI payments, but it's worth double-checking those numbers against your monthly statements. I learned the hard way last year that sometimes the 1098 doesn't capture mid-year changes correctly. Also, if you're close to the income limits that others mentioned, remember that certain pre-tax contributions (like 401k, HSA, etc.) can help lower your AGI and potentially keep you eligible for this deduction. Every little bit helps when you're trying to maximize your tax savings as a new homeowner!

I'm going through almost the exact same timeline as you! Filed January 25th, got my CP05 on March 2nd, and just received my second letter yesterday. The stress is so real when you're counting on that refund for essential expenses. After reading through all these experiences, I feel much more prepared for what's likely coming in that second letter (probably a CP05A requesting wage verification docs). The consistent advice here about the 15 calendar day deadline, dual fax/certified mail submission, and including hardship documentation has given me a solid action plan. Your military situation should definitely work in your favor - several people mentioned that deployment orders can help prioritize processing. Make sure to include those with your response along with Form 911 if you're facing financial hardship from the delay. The part that's been most reassuring is seeing how many people eventually got their refunds within 30-45 days after providing the requested documentation. The waiting is brutal when you need that money for urgent repairs, but at least there's light at the end of the tunnel. One thing I learned from this thread - definitely call your local Taxpayer Assistance Center if you can. They can confirm exactly which documents are needed and provide the direct fax number for the verification department, which saves a lot of guesswork. Hang in there! This community has been incredible for sharing strategies and support through this frustrating process.

I'm currently dealing with a very similar situation and wanted to share what I've learned that might help with your timeline anxiety. Filed in late January, received my CP05 in early March, and just got my second letter (CP05A) yesterday - the pattern matches exactly what you're describing. The good news is that your military spouse deployment situation should definitely qualify you for expedited processing once you respond. When I called the Taxpayer Assistance Center (highly recommend this step!), they confirmed that military families with deployed spouses get priority handling under IRM 21.5.6.4.7. Here's my action plan based on everyone's advice here: • Respond within 15 calendar days with all requested wage verification documents • Include deployment orders and Form 911 for financial hardship due to urgent home repairs • Use both fax (for speed) and certified mail (for proof) - get the direct verification dept fax number from your local TAC • Write a brief cover letter explaining deployment timeline and repair urgency The 30-45 day processing window after document submission that others have mentioned gives me hope we'll both have our refunds in time for those essential repairs. The static transcript dates are frustrating but apparently normal due to backlogs - once they assign a reviewer, things move much faster. Hang in there! This community has been invaluable for turning what felt like bureaucratic chaos into a manageable step-by-step process.

As a newcomer to this community, I'm amazed by how thoroughly this thread has addressed what seems to be a really common issue in partnership taxation! Reading through everyone's experiences has been incredibly educational. What really stands out to me is the disconnect between what's actually legal (dual W-2/K-1 compensation) and what some tax preparers believe to be true. The fact that so many experienced professionals have encountered identical resistance from preparers suggests there's a real knowledge gap in the industry when it comes to partnership structures. The resources everyone has shared here are invaluable - Revenue Ruling 69-184, Publication 541, Form 1065 Instructions, and Treasury Regulation 1.707-1(c). Having all these IRS citations compiled in one place is going to be incredibly helpful for anyone facing similar preparer pushback. What I find most encouraging is how many different approaches people have used successfully: showing IRS publications, having preparers call other CPAs for peer confirmation, getting attorney letters, and even recording calls with IRS agents. It's clear that with the right documentation and persistence, this issue is very resolvable. For Mateo's original question - your arrangement is absolutely legitimate and your preparer needs better education on partnership taxation. The fact that your partnership agreement clearly separates employment duties from ownership interests puts you in a strong position. Don't let uninformed resistance force you into a suboptimal tax structure when you have a perfectly legal and advantageous arrangement!

As a newcomer to this community, I want to thank everyone for such an incredibly detailed and helpful discussion! Reading through all the responses has been like getting a masterclass in partnership taxation. What really resonates with me is how many experienced professionals have faced the exact same pushback from tax preparers who seem to be operating on outdated information. The consistency of everyone's advice - particularly around Revenue Ruling 69-184 and Publication 541 - gives me confidence that this dual W-2/K-1 structure is not only legitimate but actually quite standard in the partnership world. I'm especially impressed by the variety of approaches people have used to educate resistant preparers: IRS publications, peer consultations, attorney letters, and even direct IRS confirmation. The "preparer education packet" idea mentioned earlier seems like such a proactive way to handle these situations. For anyone else new to partnership structures, this thread demonstrates the importance of having clear documentation in your partnership agreement that separates employee duties from ownership interests. It also highlights why working with tax professionals who stay current on complex areas like partnership law is so crucial. Mateo, your arrangement sounds completely legitimate and well-structured. If your current preparer continues to resist after being shown the actual IRS guidance, it might indeed be time to find someone with more partnership taxation experience. You shouldn't have to compromise on a perfectly legal and advantageous tax structure because of uninformed resistance. Thanks again to everyone who shared their expertise - this community's knowledge base is truly impressive!

Great point about the W-4 form! I think I might still be using the old terminology. I filled out my W-4 when I started this job in 2023 and checked the box for "Single or Married filing separately" with no additional amounts entered anywhere else. Should I be filling out a new W-4 with the current form to make sure my withholdings are calculated correctly? And would that help with the commission withholding issue, or is the 22% supplemental wage rate going to apply regardless of how I fill out the form?

This is exactly what happened to me when I switched to a commission-based role! The key thing to understand is that your employer's payroll system is required to withhold at the supplemental wage rate for commissions, which is currently 22% for amounts up to $1 million. This happens regardless of your W-4 settings. However, you can definitely optimize your overall withholding strategy. I'd recommend using the IRS withholding calculator (or one of the tools others mentioned) to figure out your total expected tax liability for the year, then adjust your regular salary W-4 to account for the overwithholding on commissions. You might be able to reduce withholding on your twice-monthly salary checks to balance things out. Also, make sure you're using the current W-4 form from 2020 or later - the old allowances system doesn't exist anymore. The good news is that any overwithholding will come back to you as a refund, but I understand wanting to keep more of your money throughout the year instead of giving the government an interest-free loan!

This is such a common dilemma for new LLCs! From what I've seen in similar situations, the $2k monthly guaranteed payment route might actually work better for you given your income level and the QBI considerations mentioned earlier. Here's why: with $27k in net income and you being the active partner, a $24k guaranteed payment would be reasonable compensation for your services. This leaves only $3k to be split as distributions, which means your silent partner gets their fair share ($1.5k) without you having to pay self-employment tax on income that really reflects your labor. The key insight others touched on is that you'll pay self-employment tax on your distributive share of partnership income regardless of whether it's distributed. So structuring it as guaranteed payments might actually be cleaner from a tax perspective, even though you lose some QBI deduction benefits. Have you run the numbers both ways including self-employment tax, regular income tax, and the QBI deduction impact? That comparison should give you a clearer picture of which approach saves more money overall.

As someone who just went through this exact decision process with my LLC partnership, I wanted to share what ultimately worked for us. We ended up going with a hybrid approach that balanced the tax benefits of both structures. After consulting with our CPA and running detailed projections, we settled on a $18k guaranteed payment for the active partner (me) plus unequal distributions of the remaining $9k split 70/30 in favor of the active partner. This gave us the benefits of reasonable compensation for services while still maximizing QBI deduction eligibility on the distributed income. The key insight was that the guaranteed payment amount should reflect fair market value for the services provided - not just what's left over after distributions. We documented this by researching comparable salaries for similar roles in our industry and including that analysis in our partnership agreement amendments. One thing that really helped was creating a detailed operating agreement that spelled out exactly how we determined the guaranteed payment amount and distribution percentages. This documentation will be crucial if the IRS ever questions our allocation methods. The tax savings compared to either pure guaranteed payments or pure distributions was significant - about $2,400 in our case when factoring in SE tax differences and QBI benefits. Definitely worth the extra complexity in our partnership paperwork!