Filed my taxes but just received an unexpected K-1 showing investment losses - what now?

Thank you for the information! I'm relieved to hear we have some time to figure this out. Do we need to pay the full fee to our tax preparer again for an amended return? Also, is there any chance this could trigger an audit since we're changing information after already receiving our refund?

The cost for preparing an amended return varies by tax preparer, but it's typically less than a full return since you're only updating specific portions. Many preparers offer reduced rates for amendments, especially if they did your original return. It's worth calling to ask about their amendment fees. As for audit concerns, filing an amendment doesn't automatically trigger an audit. The IRS understands that amendments happen for legitimate reasons like receiving late forms. In fact, voluntarily correcting your return by reporting an overlooked K-1 is viewed more favorably than not reporting it at all. Since this K-1 shows a loss that likely reduces your tax liability rather than increasing it, it's even less likely to raise any red flags.

How does this service work with more complicated situations? I received 4 K-1s after filing this year (my brother keeps dragging me into his business ventures) and I'm wondering if it can handle multiple forms.

Sounds interesting but can it handle something like UVXY which is an ETF partnership? Those can be tricky with how the losses are treated. Those volatility ETFs have weird tax treatment sometimes.

The service handles multiple K-1s without a problem. You can upload all four forms at once, and it will analyze how they interact with each other and your overall tax situation. It's actually more valuable with complicated situations since it catches things human preparers sometimes miss when dealing with multiple forms. Yes, it specifically handles ETF partnerships like UVXY. The system is built to recognize the special tax treatment for volatility ETFs and similar investments. It breaks down how the losses are categorized (whether they're passive, at-risk, or have other limitations) and explains how they should be reported on your specific tax forms. This is actually one of its strengths compared to general tax software.

How does this actually work? The IRS phone system is notorious for disconnecting people after hours on hold. Does this service somehow prevent that from happening?

This sounds like BS honestly. I've tried everything to get through to the IRS and nothing works. They keep you on hold forever and then hang up. I don't see how any service could magically fix the broken IRS phone system.

It works by using an automated system that navigates through the IRS phone menus and then holds your place in line. The service monitors the hold and when it detects that an agent is about to pick up, it connects the call to your phone. This way you don't have to personally sit through the hours of hold time. I was skeptical too before trying it. The difference is they have technology specifically designed to stay on hold without getting disconnected, which is what happens to most of us. Their system can detect the subtle changes in the hold music or message that indicates an agent is about to pick up. I understand the skepticism - I felt the same way until I tried it and had an IRS agent on the line within minutes of getting the callback.

How can you tell if the loss on the K-1 is ordinary or capital? I'm looking at box 11 on my form and it's confusing the heck out of me.

Look at the codes next to the amounts on your K-1. For capital losses, you'll typically see an amount in Box 8 or 9 with codes A through F. Code A is short-term transactions reported on Form 8949 with box A checked. Code B is short-term with box B checked, and so on. For ordinary losses related to the business, you'll typically see amounts in Box 1 (ordinary business income/loss). If you see amounts in Box 11 (other income/loss), check the code - if it's F, that's Section 1256 contracts which get that special 60/40 treatment I mentioned. The partnership should provide additional statements explaining any amounts in Box 11, which will help clarify what type of income or loss it represents.

Yes, you can now e-file Form 1040-X (amended returns) for tax years 2019 and later. Not all tax situations qualify for e-filing amendments, but most K-1 adjustments do. The major tax software providers like TurboTax, H&R Block, and TaxAct support this feature. E-filing is definitely the way to go if your situation qualifies. When I amended electronically last year, the IRS processed it in about 3 weeks compared to the 16+ weeks it was taking for paper amendments. You'll need to make sure you're using the most current version of whatever tax software you're using, as older versions might not support electronic amendments.

Thanks for sharing your experience! It's reassuring to hear from someone going through the same thing right now. I'm definitely feeling less panicked after reading everyone's responses here. You're absolutely right about gathering all the original documents - I hadn't thought about that but it makes total sense that I'll need to recreate the whole return to see how the K-1 affects everything. Good point about keeping records of when I received the K-1 too. I took a photo of the envelope with the postmark just in case. Did you end up using any of the services mentioned here like taxr.ai, or are you handling it through your regular tax preparer? I'm trying to decide between paying my accountant again or trying one of these automated tools that people seem to have good luck with.