Just wanted to chime in as someone who went through this exact same situation last year with my small electrical contracting LLC. The confusion around Line 14 is totally understandable - the IRS instructions really are written like they're trying to confuse people! Based on what you've described, it sounds like you're on the right track with the advice you've gotten here. For our construction business, we had the same basic setup - ordinary business income that needed to be reported on Line 14a for self-employment tax purposes. One thing I learned the hard way is to make sure you're consistent between your Schedule K and each partner's individual K-1s. The totals on all the individual K-1s should add up to what's on the Schedule K. I made some math errors my first year and had to file amended returns. Also, since you mentioned you're trying to save money by doing this yourself, just be extra careful with the math and double-check everything. A small mistake on the partnership return affects both of your personal returns, so it can create twice the headache if you have to fix it later. Sometimes paying a CPA for a review (even if you do most of the work yourself) can be worth the peace of mind. Good luck with your first 1065 - you've got this!

As a tax professional who's helped dozens of small construction LLCs with their first partnership returns, I want to emphasize something that hasn't been mentioned yet - make sure you understand the difference between your distributive share and actual distributions when completing Line 14. Line 14a should reflect your share of the partnership's self-employment income regardless of how much cash you actually took out of the business. So even if you and your brother-in-law only withdrew $30,000 each but your share of business income was $53,000 each (after removing rental income), you'd still report the full $53,000 on Line 14a. This is a common source of confusion for new partnership filers. The self-employment tax is based on your allocated share of income, not your actual cash distributions. Any money you left in the business for equipment, working capital, etc. is still subject to self-employment tax in the year it was earned. Also, since you mentioned revenue of $135,000 for two partners, make sure you're properly tracking and deducting all your legitimate business expenses. Construction businesses often have significant deductible expenses (tools, vehicle expenses, materials, etc.) that can substantially reduce your taxable income if properly documented. The difference between gross revenue and net income after expenses is what determines your Line 14 amounts. Keep excellent records going forward - the IRS pays extra attention to cash-heavy businesses like construction, so having solid documentation will serve you well in the long run.

dont forget to check if your state has its own supplemental subsidy too! i live in california and we get extra help on top of the federal subsidies, but you have to pay those back separately. its confusing because some states have different rules for repayment than the federal system

Great question about ACA subsidy reconciliation! I went through something similar last year as a self-employed consultant. One key thing to remember is that you should definitely update your income estimate on the Marketplace as soon as you realize it's going to be higher - don't wait until tax time. This will reduce your monthly subsidy going forward and minimize the repayment shock at tax time. Also, keep in mind that the self-employed health insurance deduction (which goes on Schedule 1) is actually more valuable than just writing off premiums as a business expense, because it reduces your adjusted gross income. This can help lower your overall tax bracket and potentially affect other income-based calculations. If you're close to the 400% Federal Poverty Line threshold that Kyle mentioned, you might want to consider some year-end tax planning strategies to keep your income under that cap if possible - like maxing out retirement contributions or other deductible expenses.

Question for anyone who might know - I have a similar situation but with a 1099-K for online selling. Is that treated the same way as OP's 1099-MISC? And do we get to deduct expenses against that income?

This is a classic example of how additional income can create a much bigger tax impact than people expect. Your $5,000 grant isn't just taxed in isolation - it's stacked on top of your W-2 income, which means it's taxed at your highest marginal rate. With $72K in W-2 income, you're likely in the 22% tax bracket for 2024, so that $5,000 grant gets hit with 22% federal tax (about $1,100) plus any state taxes. Since nothing was withheld from the grant, you're paying that full amount at filing time. The real kicker is that this additional income also reduced the refund you would have gotten from your W-2 overwithholding. So you're seeing both the tax on the new income AND the loss of your expected refund. For next year, definitely consider making quarterly estimated payments if you receive similar grants, or increase your W-4 withholding to cover the extra tax liability. The IRS expects you to pay taxes throughout the year, not just at filing time.

Carmen, I completely understand your confusion - I was in almost the exact same position when my father passed two years ago and left me as executor. The Form 1041 requirements can be really overwhelming when you're already dealing with everything else that comes with losing a family member. Based on what you've described with $230k in assets, you're definitely not dealing with federal estate taxes (that's Form 706 and only kicks in over $12+ million). The Form 1041 is just about income taxes on any money the estate earns after your uncle's death. Here's what I learned the hard way: start by getting that EIN for the estate immediately if you haven't already - you'll need it for everything. Then track every penny of income the estate receives after the date of death. Even small amounts like $50 in bank interest can add up and push you over that $600 filing threshold. The retirement accounts you mentioned will likely pass directly to beneficiaries without creating estate income, but if those accounts earned anything between death and distribution, that might be taxable to the estate. Get "date of death" statements from all financial institutions - they know exactly how to break this down. Honestly, for your first time as executor, I'd strongly recommend finding a CPA who specializes in estate taxes. Yes, it costs around $1000, but the peace of mind and avoiding costly mistakes is worth it. The IRS doesn't care that you're new to this - penalties are the same regardless. You're going to get through this! It feels impossible at first but becomes much more manageable once you start organizing everything systematically.

Carmen, I can absolutely relate to feeling overwhelmed by the Form 1041 requirements - I was thrown into the executor role for my mother's estate three years ago with zero preparation and felt completely lost at first. Looking at your situation with $230k in assets, you're dealing with a manageable estate size that's well below any federal estate tax thresholds. The key thing to focus on is whether the estate generated more than $600 in income after your uncle's death - this includes any interest from bank accounts, dividends from investments, or gains from asset sales. Here's my practical advice based on what I learned: First, get that EIN for the estate immediately through the IRS website if you haven't already. Second, contact every financial institution holding your uncle's assets and request "date of death" valuations and income statements. They'll break down exactly what income was earned before vs. after death, which determines what goes on his final Form 1040 versus the estate's Form 1041. Don't feel pressured to do this alone - estate tax returns have complexities that even experienced tax preparers sometimes struggle with. The $900-1200 CPA fees others mentioned are reasonable considering the potential penalties for errors or missed deadlines. I tried to save money by doing it myself initially and ended up paying a professional anyway after getting confused about beneficiary distributions and K-1 forms. One often-overlooked detail: if any of those retirement accounts had required minimum distributions your uncle hadn't taken before passing, those might need special handling. A qualified estate tax professional will catch these nuances that could save you from IRS headaches later. You've got this! The process feels impossible at first but becomes much more manageable once you start organizing the financial information systematically.

Great discussion here! I'm dealing with a similar ISO situation and wanted to add one more consideration that's been crucial for my planning - the impact of state taxes. I live in California, which doesn't conform to federal ISO treatment. CA treats ISOs like NQSOs for state tax purposes, meaning I owe state income tax immediately upon exercise on the bargain element, even if I don't sell any shares. This significantly changes the cash flow calculations for exercise-and-hold strategies. For anyone in high-tax states like CA, NY, or NJ, make sure you're factoring in the immediate state tax liability when planning your ISO exercises. It can be a substantial cash requirement that's easy to overlook when focusing on the federal AMT implications. I ended up having to sell more shares than I originally planned just to cover the unexpected state tax bill. Would definitely recommend running the numbers for both federal and state before executing any ISO strategy.

This is exactly the kind of detailed ISO discussion I needed to see! I'm facing a similar decision and have been researching the tax implications extensively. One additional consideration that might be helpful - timing your ISO exercises strategically around other income events. For example, if you're expecting a bonus or RSU vesting that will push you into a higher tax bracket, exercising ISOs in a different tax year could help manage your AMT exposure. The AMT exemption phases out at higher income levels, so spreading the bargain element across multiple years can sometimes reduce your overall tax burden. Also, for those dealing with multiple ISO grants with different vesting schedules, consider exercising older grants first if you're doing a partial exercise strategy. This helps you start the holding period clock earlier for qualifying dispositions (which require both 1 year from exercise AND 2 years from grant date). The state tax conformity issue that @Daniel Washington mentioned is crucial - I'm in Texas so I don't have that concern, but it really highlights how location-specific these strategies can be. Definitely recommend running scenarios for your specific tax situation before making any moves.