This thread has been incredibly helpful! I'm dealing with a similar situation where I have hedge fund losses but also some rental property passive losses. From what I'm understanding here, I need to keep these completely separate - the hedge fund losses go on Schedule D as capital losses, while my rental losses stay on Form 8582 as passive losses. The key insight about hedge funds generating "portfolio income" rather than passive activity income really clarifies things. I was trying to group all my limited partnership interests together, but apparently the nature of the underlying activity (trading securities vs operating a business) determines the tax treatment, not just the partnership structure. One follow-up question - if a hedge fund also invests in some operating businesses (like private equity style investments), would those portions potentially be treated as passive activities while the securities trading remains portfolio activity? Or does the fund's primary activity as securities trading control the classification of everything?

This is exactly the kind of situation where getting proper guidance upfront can save you from costly mistakes down the road. I made the error of classifying my hedge fund losses as passive losses for two years running before finally getting it sorted out. The IRS ended up sending me a CP2000 notice questioning my passive loss carryforwards, and it took months to resolve. What really helped me understand the distinction was realizing that the tax code views investment activities (like what hedge funds primarily do - trading securities) fundamentally differently from business operations. Even though you're a limited partner with zero control or participation, the underlying activity of the partnership matters more than your level of involvement. Since hedge funds are essentially professional investment managers trading securities, those activities generate portfolio income and losses, not business income that would be subject to passive activity rules. Make sure to keep good records of your K-1s and any supplemental statements the fund provides. If you ever get questioned by the IRS, having clear documentation showing the fund's primary activity is securities trading will support the portfolio loss classification.

Hey Javier! I totally understand the confusion - I had the exact same worry when I filed my first return a couple years ago. That negative number on Line 37 had me second-guessing everything! Here's what's happening: Line 37 shows "Amount you owe" and when it's negative, it literally means you owe negative money - which is just a fancy way of saying the IRS owes YOU money instead. It's like when you return something to a store and your receipt shows a negative total because they're giving you money back. The key thing to remember is that Line 34 (your refund amount) and Line 37 (amount owed) are showing two sides of the same coin. If Line 34 is positive (you're getting a refund) then Line 37 should be negative (you don't owe anything). They're mathematically connected! You're being really smart by taking your time and double-checking everything. The fact that you're being so careful means you're probably doing it right. And honestly, the IRS instructions really are terrible for explaining this stuff to first-time filers - you're not alone in finding them confusing! Keep up the thorough work, and don't stress too much about that negative number - it's actually good news! 😊

Don't worry Javier, you're absolutely doing everything right! A negative number on Line 37 is completely correct when you're getting a refund. I went through this exact same confusion when I first started filing my own taxes. Line 37 is labeled "Amount you owe" - so when it shows a negative number, it's essentially saying you owe negative money, which means the IRS owes YOU money instead. It's their way of showing that you overpaid during the year through withholding or estimated payments. The math works like this: if your total tax liability is less than what was withheld from your paychecks, the difference becomes your refund (Line 34) and also makes Line 37 negative. They're showing the same information from different angles. I know it feels counterintuitive at first - you expect to see either zero (if you break even) or a positive number (if you owe money). But that negative number is actually great news! It confirms you're getting money back. You're being super responsible by going slowly and double-checking everything. That careful approach will serve you well. The IRS forms really could be more beginner-friendly, but you're navigating them perfectly. Keep up the good work! 🎯

Don't forget about state taxes! I sold some collectible comic books last year and was shocked that my state wanted a piece too. Depending on where you live, you might owe state income tax on the gains. Some states also have weird exceptions or special rates for collectibles.

One thing I haven't seen mentioned yet is timing considerations. If you're planning to sell multiple pieces, you might want to spread the sales across different tax years to manage your tax bracket, especially since collectibles are taxed at that higher 28% rate. Also, if any of the pieces have appreciated significantly since you inherited them, consider getting a current appraisal before selling. This can help establish fair market value for insurance purposes during the selling process, and it gives you documentation to support your sale price if the IRS ever questions it. For the $3,800-4,500 piece you mentioned, definitely keep detailed records of comparable sales you find online - screenshot them with dates. This kind of documentation can be really valuable if you need to justify your basis calculation later.

Honestly, instead of trying to opt out of Social Security (which is nearly impossible), you might want to focus on maximizing your retirement accounts like 401k, IRA, HSA etc. These give you tax advantages now while letting you control your own investments. The tax benefits can offset some of what you're paying into Social Security.

I understand your frustration with Social Security taxes - I felt the same way when I was starting my career. After researching this extensively, I can confirm what others have said: legitimate opt-outs are extremely limited and strictly regulated. The reality is that Social Security isn't just a retirement program - it also provides disability and survivor benefits that protect you and your family right now. Even if you're skeptical about future solvency, the program has never missed a payment in its 90-year history, and even worst-case projections show reduced benefits, not zero benefits. Rather than focusing on opting out (which likely isn't possible for your situation), consider this approach: maximize your tax-advantaged accounts first. If you're not already maxing out your 401(k), IRA, and HSA (if eligible), you're missing out on immediate tax savings that could be much more significant than your Social Security contributions. These accounts give you the investment control you're looking for while providing real tax benefits today. The 6.2% you pay into Social Security also comes with an employer match of 6.2%, so you're actually getting more value than it appears on your paycheck stub.

You're absolutely right to be excited about discovering QBI - it can make a real difference! Since you mentioned being comfortable with tax forms, I'd suggest starting with the 2021-2023 amendments yourself first. The QBI calculation is straightforward at your income level, and Form 8995 really does walk you through it step by step. One thing to double-check: if you were filing as a partnership with K-1s during some of those years, make sure you understand how QBI flows through on those returns versus your sole proprietor years. The deduction might be calculated differently depending on your filing structure for each year. Also, consider batching your amendments strategically. File one year first to get familiar with the process, then do the others. This way if the IRS has any questions about your first amendment, you can apply those lessons to the remaining years. And definitely keep detailed records of everything you send - make copies and use certified mail if filing paper returns. The potential refunds plus interest could really help with your financial situation, so it's worth the effort to get these filed properly!

One thing I haven't seen mentioned yet is that you should double-check whether your business activities actually qualify for QBI. The deduction applies to qualified trade or business income, but there are some exceptions. Most sole proprietorship activities qualify, but things like performing services as an employee or certain investment activities might not. Also, since you mentioned your income has been around $17,500 annually, you're well below the taxable income thresholds where QBI gets limited by W-2 wages or basis of property, so the calculation should indeed be straightforward - just 20% of your qualified business income. For the partnership years, the QBI would have flowed through to your personal return via the K-1, so you'd still claim it on your individual 1040 using Form 8995. The partnership itself doesn't claim the QBI deduction. Given the amounts involved and your comfort level with taxes, I'd definitely try doing the amendments yourself first. At your income level, you're looking at roughly $3,500 per year in QBI deductions (20% of $17,500), which could mean significant refunds especially if you were in the 12% or 22% tax brackets. That's potentially over $1,000 in refunds for the three years you can still amend, plus interest!