Question

Splitting income on Husband and Wife LLC

Forum|Forum|6 years ago
March 14, 2020
1 reply
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We opened our LLC to manage a rental unit. Then I got some computer consulting work and that is where all the income comes from. I do all the work.

I am 68 and can make as much money as I like. My wife turned 65 and can only make a limited about without impacting her Social Security.

How do we divide the income on the K-1's so that I do not get hit with really high Self employment and she does not get hit with too much income for Social Security?

TurboTax Business Windows

D

DianeC958

The partnership is regulated by the Partnership Operating Agreement. The percentage split between the partners depends on what the Operating Agreement says. Your Partnership Operating Agreement should contain items such as

Partnership agreement

Date the partnership started
List of partners
The amount of money each partner initially put into the partnership, and current ownership percentages
Details about any specific income or expense items that are NOT allocated based on profit, loss or ownership percentages
The method you use for tracking your business finances (cash or accrual)
If the profits are going to be allocated differently than the percentage of ownership in the partnership.

It is important to have this Operating Agreement to substantiate how you file your return.

You can limit the amount of profit assigned to your wife until she reaches her full retirement age.

Edited [03/15/2020 10:11 am PST]

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