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December 8, 2022
Question

I am adding my daughter as a partner to my business. Since we both will be part of the business, do we have to file a separate return?

  • December 8, 2022
  • 2 replies
  • 0 views
Last year I just filed a joint return with my husband and it was included in that. How is it handled when there are now two people as part of a business?

2 replies

Employee
December 8, 2022

You have not provided any information about your daughter.   However, your daughter's income does not go on your tax return.  If your daughter needs to file a return, she has to file her own tax return.   You have not mentioned her age, etc. so we do not know if she is  a dependent on your tax return.   If she is a dependent then she has to say in My Info that she can be claimed as a dependent on someone else's tax return.

 

You may need further advice regarding the business partnership, however, and may need to seek local paid tax help.   If you have a multi-member LLC, for instance, you have to file a return for that partnership using TurboTax Business, which can only be used on a Windows computer.

 

Provide more details so someone here can share their thoughts.

 

@Critter-3    @VolvoGirl 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
December 8, 2022

Never mind. I found my answer on the IRS website. 

Employee
December 8, 2022

If two or more people operate a business together, they are a partnership, whether or not they form an LLC.  The partnership must file a form 1065 partnership tax return.  This is due March 15 (not April 15) and the late penalty is $200 per month per partner.  The partnership return will issue a K-1 statement to each partner, that is included on the partner's tax return along with any other income, deductions, credits and dependents.  The K-1 passes through the partner's share of income and expenses to their personal tax return.  To prepare a 1065 with turbotax, you need Turbotax Business, which is a separate program only available as a CD or download to install on your own PC.  There is no Mac or online version.

 

(Alternatively, your daughter could be a W-2 employee of your business, or she could be a 1099-NEC subcontractor.  That would be two other ways of recognizing her participation without making her an equity partner.  If she is a partner, you have to go the route of the 1065.)

December 8, 2022

Very helpful. Thank you.