Has anyone dealt with a situation where the LLC has both rental real estate and an operating business? I'm wondering how that affects the passive vs. non-passive treatment for a partial disposition.

For an LLC with both rental real estate and an operating business, the passive vs. non-passive treatment gets more complex. The key is that your level of material participation determines the classification, not the underlying assets. If you materially participate in the operating business portion (generally 500+ hours annually or meeting other IRS tests), then your share of income/loss from that portion is non-passive. The rental real estate portion is typically passive unless you qualify as a real estate professional. When you sell part of your interest, the gain allocation follows the same rules. The portion attributable to the operating business would be non-passive if you materially participated, while the rental portion would generally be passive. This affects how the gains can offset other income on your return. You'll also need to consider if the operating business has any Section 751 hot assets (like inventory or receivables) which would be treated as ordinary income rather than capital gains, regardless of the passive/non-passive classification. I'd strongly recommend having a tax professional analyze your specific situation since mixed-use LLCs can create some tricky scenarios for partial dispositions.

Just wanted to add my experience here - I was in the exact same boat last year with my blended rate being way lower than my marginal bracket. What really helped me understand it was thinking of it like this: imagine your income is water filling up different sized buckets stacked on top of each other. Each bucket has a different tax rate label. The first bucket (10% rate) fills up completely before any water goes to the second bucket (12% rate), and so on. Your marginal rate of 35% is just the tax rate on the "top bucket" that your income reached. But your blended/effective rate is the average across ALL the buckets that got filled. So if you made $300,000 married filing jointly, you're not paying 35% on all $300,000. You're paying 10% on the first ~$22,000, 12% on the next chunk, 22% on the next chunk, etc. Only the dollars above ~$364,000 would actually get hit with that 35% rate. This is why tax software like TurboTax shows such different numbers - one is your "top rate" and the other is your "average rate" across all your income. Hope this mental picture helps!

This is such a common confusion! I went through the exact same thing when I first encountered the difference between marginal and effective tax rates. Your 23.6% blended rate is actually your "effective tax rate" - it's the actual percentage of your total income that goes to taxes after accounting for our progressive tax system. The 35% is your "marginal tax rate" - the rate that applies only to your last dollars of income. Think of it this way: if your taxable income puts you in the 35% bracket, that doesn't mean all your income is taxed at 35%. The first portion is taxed at 10%, then 12%, then 22%, then 24%, then 32%, and only the income above the 35% bracket threshold gets hit with that 35% rate. To verify TurboTax is calculating correctly, you can manually check by taking your total tax owed (from line 24 of Form 1040) and dividing it by your taxable income (line 15). That should give you roughly your 23.6% effective rate. The good news is that having a lower effective rate than your marginal rate is completely normal and expected! It means the progressive tax system is working as designed.

Anyone else notice TurboTax keeps pushing their "live expert" add-on now? I tried it last year and it was... meh. The "expert" seemed to just be reading from the same help screens I could access myself.

I made the jump from TurboTax to a CPA when my income hit around $160k, and honestly wish I'd done it sooner. The biggest eye-opener wasn't just finding more deductions, but learning about tax strategies I never even knew existed. My CPA showed me how to optimize my 401k contributions, set up a backdoor Roth IRA (which TurboTax never suggested), and restructure some investments to be more tax-efficient. The first year alone, these strategies saved me more than double what I paid in CPA fees. At your income level, you're probably hitting some phase-out thresholds for certain deductions and credits that TurboTax might not explain clearly. A good tax pro can walk you through these and help you plan ahead for next year too. Even if you decide to go back to software later, having a professional review your situation once during this big income change could be really valuable.

Welcome to the community! As someone who's been through multiple job transitions over the years, I can definitely relate to the W4 confusion. Everyone here has given you excellent guidance, and I want to reinforce the key points that have emerged from this discussion. The bottom line is simple: since you're only working one job right now at Company B, you should NOT check the "multiple jobs" box on your W4. That section is specifically designed for people who are simultaneously working multiple jobs, not for tracking your employment history throughout the year. Your withholding from Company A (January-March) won't disappear - it will automatically be credited to your tax account when you file your return next year, since the IRS will receive W-2s from both employers showing all taxes withheld on your behalf. However, since your total income for the year will come from two different salary levels, I'd strongly recommend using the IRS Tax Withholding Estimator (it's free on their website) to determine if you need any additional withholding. This tool will account for what you've already had withheld and calculate whether your current job's withholding will be sufficient for your total tax liability. Many people in this thread have shared success stories using this approach, with additional withholding amounts typically ranging from $25-50 per paycheck. Better to be slightly over-withheld than face a surprise tax bill next April!

As someone new to this community who just went through a very similar situation, I wanted to share my experience! I switched jobs in March after a brief period of unemployment, and I was equally confused about the W4 form. After reading through all the excellent advice here, I can confirm what everyone has been saying - don't check the "multiple jobs" box since you're only working one job currently. That checkbox is specifically for people working multiple jobs at the same time, not for sequential employment throughout the year. I ended up using the IRS Tax Withholding Estimator that so many people recommended, and it was incredibly helpful! I input my income and withholding from my previous job (January-March) plus my expected income from my new position, and it calculated exactly how much additional withholding I needed. The tool recommended an extra $35 per paycheck on line 4(c) of my W4, which gave me peace of mind knowing I wouldn't face any surprises at tax time. It's so much better than guessing or overthinking the situation. Thanks to everyone who contributed to this discussion - this community is amazing for breaking down these complex tax scenarios in such an accessible way!

I think everyone's overlooking that the student loan forgiveness is only 2 years away. If I were in your shoes, I'd probly just focus on that short term goal. 2 years of missing Roth contributions isnt gonna destroy your retirement. Have you ran the actual numbers? $1100/month savings on student loans for 24 months = $26,400 saved. That's WAY more than 2 years of max Roth contributions ($6k x 2 = $12k). Just sayin, might be worth taking the hit on retirement contributions to get that sweet loan forgiveness.

This is such a common dilemma for married couples with student loans! I went through the exact same situation a few years ago. Here's what I learned from my research and experience: The $10k income limit for Roth IRA contributions when married filing separately is brutal, but there are definitely workarounds worth considering: 1. **Backdoor Roth IRA** - As mentioned by others, this is probably your best bet. You contribute to a traditional IRA (non-deductible) and immediately convert to Roth. No income limits on conversions. 2. **Maximize your employer 401k** - This isn't affected by filing status, and many plans now offer Roth 401k options too. 3. **HSA if available** - Triple tax advantage and can be used as retirement account after age 65. For the student loan piece - definitely run the numbers on the total savings vs. opportunity cost. But honestly, with only 2 years left until forgiveness and $1,100/month savings, that's probably the financially smart move short-term. One thing to consider: can you and your wife adjust withholdings or estimated payments to get closer to that $10k threshold for next year? Sometimes small tweaks to pre-tax contributions can help you stay under limits while still optimizing the overall strategy. The Solo 401k suggestion is brilliant if you have any 1099 income!