How do you properly split business income and expenses in a husband-wife 50/50 sole proprietorship.

Forum|Forum|6 years ago
June 1, 2019
4 replies
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TurboTax says that I have to do two separate schedule C forms. One for me. one for her. However, all of our business income and expenses are on one credit card and our tax ledger does not show who paid for what. Do we just divide everything 50/50 or can I list all expenses under one person? This would be a lot easier than splitting everything single bill/receipt 50/50.

TurboTax Self Employed Online

DanielV01

Employee

It depends. If you are looking to file as a qualified joint venture (I have an additional answer with more information on this), you can choose the percentage you wish. You are correct, however, in that you do need to prepare two Schedules C and divide everything by the same percentage if you wish to claim the joint venture as a business for each of you. If you have never done a joint venture, you can choose to file just one Schedule C, but only one will get credit for the work (and pay in Social Security and Medicare taxes). Your other option is to do a partnership return (which for most is even more complicated).

Here is some additional information on this subject: https://ttlc.intuit.com/replies/5717482

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Shelly-pfeifle

Will you have to pay more Self Employment tax if you split 50%/50% (let say 200K net taxable income) or are you better off keeping all the income under one SSN?

RugbyDad

I have an add on question. My wife and I have a husband-wife 50/50 business as described in the original post and we have been submitting two schedule C's with revenue and expenses split evenly for the past 5 years. We also live in King County within the State of Washington. As such we had to buy our healthcare insurance through the Healthcare Exchange. We paid full price four our premiums and received a 1095A form. The issue we are having is that in Turbo Tax Home & Business the software is only allowing us to apply the premiums we paid against one schedule C (ie. half of the business). So we are in effect only getting half the credit and not realizing the full tax benefit. This seems to be an issue with Turbo Tax. Does anyone have a suggestion as to how to get around this issue?

MAK70

The Self-Employed Health Insurance (SEHI) deduction is an adjustment to income so it should be applied to the total net business income on the return. If you entered the 1095-A information, it is possible that you received the Premium Tax Credit for part of the amount that is not showing as the SEHI. I suggest you compare Schedule 1 Line 16 and Schedule 3 Line 9 to see if they add up to your total premiums paid. If this is not the case, please follow up here and we can look for something else.

@RugbyDad

RugbyDad

@MAK70 Thank you for your response. I compared Schedule 1 and Schedule 3 and the numbers don't come close to the total premiums paid. It's important to note that we do not qualify for the PTC. We only use the WA Health Plan Finder because we live in King County and apparently its a requirement if you don't have group insurance. It's a real pain and every year they screw up our insurance.

Per my original note, we have a business that is husband-wife owned 50-50 so we submit two schedule C's per TurboTax instruction, but when we apply the 1095A it only allows us to use one of the schedule C's thus effectively reducing our potential credit by 50%.