File as Parnership or 2 Schedule C's

Forum|Forum|3 years ago
March 7, 2023
2 replies
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My wife and I own and LLC travel business and filed as a parnership the last 2 years with a 1065 and K-1. TurboTax is recommending we file 2 Schedule C's and report as seperate businesses instead. It says to split income and expenses 50/50 and to make sure my wife's business description is different than mine.

What does it mean to make sure my wife's business description is different than mine? We own the same business (LLC) and have one Employer ID.

How do I also bypass filing 2 Schedule Cs and complete a 1065 and K-1 to see the dirrence in the 2 returns?

TurboTax Home & Biz Windows

Best answer by Anonymous_

@usfacs wrote:
How do I also bypass filing 2 Schedule Cs and complete a 1065 and K-1 to see the dirrence in the 2 returns?

You cannot file two separate schedules, rather than a 1065 with associated K-1s, unless you hold your interests in the LLC as community property in a community property state.

See https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

Anonymous_Answer

Employee

@usfacs wrote:
How do I also bypass filing 2 Schedule Cs and complete a 1065 and K-1 to see the dirrence in the 2 returns?

You cannot file two separate schedules, rather than a 1065 with associated K-1s, unless you hold your interests in the LLC as community property in a community property state.

See https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

usfacsAuthor

Turbotax is forcing me to use the 2 Schedule C's. Based on your answer, I do not believe FL is a community property state and we need tio file the a 1065 and K-1. Now I just need to figure out how to do it with TurboTax. Thank you

Anonymous_

Employee

You need to use TurboTax Business to prepare a 1065 and associated K-1s for your LLC.

However, you might have answered one of the questions in the interview wrong (or mistakenly checked a box that should not have been checked).

Vanessa A

Which state are you in?

Under IRS rules, generally, if you were a joint venture and not a registered LLC, then you would file as TurboTax is recommending with 2 Schedule C's. However, since you are an LLC, you will still need to file the 1065 and then enter the K-1 on your returns.

In order to file 2 separate Schedule C's instead of the 1065, all of the following would need to apply:

"the only members of the joint venture are a married couple who file a joint tax return,
both spouses materially participate in the trade or business,
both spouses elect to have the provision apply,
the business is co-owned by both spouses and
isn't held in the name of a state law entity such as a partnership or limited liability company (LLC)." Married couples in business

To get rid of the Schedule C's and the errors you are getting you can delete the Schedule C's.

If you are using TurboTax Online, then you can go back and delete the Schedule C's and do not enter any business information. To do this select Tax Tools>>Tools>>Delete a Form, then delete next to both your Schedule C's

If you are using the desktop version, you will need to go to forms mode in the upper right hand corner and then click on the Schedule C on the left for both of you then click Delete in the lower left corner.

You will need to use TurboTax Business NOT Home and Business to file the 1065 which will generate the K-1 to enter on your personal return.

If you are in a community property state and want to change from the 1065 to Schedule C, you would need to file a 1065 to close the business. Then file the Schedule C.

(Edited 3/7/23 @9:19AM PST) @usfacs

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