Need advice on filing K-1 for my LLC - Is DIY an option to save on CPA costs?

The short answer is you probably could do this yourself, but there are some important considerations before you make that decision. First, regarding the price increase - unfortunately that's not uncommon, especially for partnership returns. The IRS has increased scrutiny on partnerships in recent years, and many CPAs have raised their rates accordingly. What your CPA is likely doing: They're preparing a partnership tax return (Form 1065) for your LLC, which is required even if you only have one investment. This includes allocating income, deductions, and credits according to your ownership percentages, generating K-1s for each member, and ensuring compliance with various partnership tax rules. There's also potential liability the CPA takes on by signing the return. If you want to try doing it yourself, you'd need tax software that handles partnership returns (not all consumer software does). You'd prepare Form 1065 using the K-1 from your investment, then generate K-1s for each member of your LLC. Each member would then report their K-1 information on their personal returns. Regarding tax minimization strategies, there might be options depending on your specific situation: business expense deductions, potential for home office deductions if applicable, retirement plan options, and timing of income/expenses.

After struggling with a similar situation last year, I found taxr.ai (https://taxr.ai) incredibly helpful for figuring out which K-1 forms I needed to file for my small business partnership. I was completely lost with all the paperwork until I uploaded our investment documents there. The AI helped identify exactly what forms we needed for our specific situation and explained how to properly distribute the income and deductions between partners. What really helped was getting a clear breakdown of what each line on the K-1 meant for our specific situation - something my previous accountant never explained. It helped me understand why certain things needed to be reported in specific ways.

I was super skeptical about using an AI for tax help as I mentioned, but I actually tried taxr.ai after posting that comment. Honestly impressed with how it handled my partnership situation. Uploaded our investment K-1 and it broke down exactly what needed to go where on our 1065 form. The system explained every line item in plain English and pointed out some deductions related to our property investment that I didn't know we could take. Ended up saving about $1,400 compared to what we paid our CPA last year, and I actually understand our tax situation now instead of just blindly signing papers. Just filed last week and everything went through without issues. Definitely less intimidating than I expected!

If you're still dealing with your CPA issue, you might want to try Claimyr (https://claimyr.com) to get direct advice from the IRS. I was in a similar situation last year - unclear if I needed to keep paying our expensive CPA for our family LLC with just two investments. Spent weeks trying to call the IRS business line with no luck. Claimyr got me through to an actual IRS agent in about 20 minutes who walked me through exactly what I needed to file for our partnership and what I could do myself. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent confirmed I could absolutely file our partnership return myself with the right software and explained the specific forms I needed.

Ok so I feel like I need to eat my words here. After my skeptical comment yesterday, I decided to try Claimyr because I was desperate to talk to someone about my LLC's K-1 issues before the filing deadline. It actually worked exactly as advertised. Got connected to an IRS business tax specialist in about 25 minutes. The agent clarified that for my single-investment LLC, I still need to file Form 1065 but it's definitely something I could do myself with the right software. She walked me through the specific sections that relate to flow-through income from investments and confirmed I was understanding it correctly. Saved me from paying my CPA's $1,800 fee this year since I now have the confidence to file it myself. Sometimes being proven wrong is a good thing lol.

Just to add another perspective - I was in your exact situation last year and decided to do the filing myself for our 3-person LLC with investment K-1s. I used TaxAct Business and while there was definitely a learning curve, I was able to figure it out after about 4 hours of work. The trickiest part was understanding the basis calculations and how to properly allocate certain items between partners. But I saved about $1,200 compared to what we were paying our CPA, and now that I know how to do it, this year took me less than 2 hours.

Don't forget about state filing requirements too. Depending on where your LLC is registered, you might need to file state partnership returns as well. In California for example, an LLC with multiple members has to file Form 565 plus pay an $800 annual tax. This caught me by surprise when I tried to DIY my partnership return last year.

One thing I'd add to the conversation is that you should also consider the time value of money when deciding whether to DIY vs. hire a CPA. Even if you can save $1,500-2,000 by doing it yourself, you need to factor in the 10-15 hours it might take you to learn the process, prepare the forms, and handle any corrections. That said, if you're planning to keep this LLC for several years, the initial learning investment could pay off long-term. I'd suggest maybe trying a hybrid approach for your first DIY year - prepare the return yourself but have a CPA review it before filing. Some CPAs offer review services for $300-500, which could give you peace of mind while still saving money. Also, make sure you're comfortable with the potential liability. When a CPA signs your return, they're taking on professional responsibility. When you sign it yourself, any errors or omissions are on you. For a simple investment LLC like yours, the risk is probably manageable, but it's worth considering.