Yes, a K-1 is in the making for 2020. I have concluded the taxpayer meets the test for material participation and therefore is not subject to NIIT on the LLC income. However, I am anticipating the K-1 will report the income in Box 14. If that is the case, can you envision any circumstances that would support not reporting SE income?
Any thoughts you have would be appreciated.
With both of you age 38, and the progress you have made, and the interest you have, and the detail you articulate, I would say you can ease down to idle if you like. Just remember not to get stuck there and the sooner you can accelerate the earlier that retirement date will come.
If you are able to afford it, it is much better to pay all QME out of pocket. Let your HSA grow like a Roth account. You are always permitted to withdraw the QME in the future, just keep records of all amounts paid out of pocket.