Community property self-employment income reduction?

Forum|Forum|2 years ago
December 27, 2023
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I have to subtract income from my self-employment income because of community property I had to award my ex from our divorce. However, turbotax will not allow me to enter a negative number under Uncommon Income. I don't want to report this as negative W2 income since it would not reduce my business net income. How do I report this negative self-employment income on Turborax?? As a business expense perhaps?

TurboTax Self Employed Online

edrcpa

I don't understand what you mean by:

"I have to subtract income from my self-employment income because of community property I had to award my ex from our divorce."

Was your ex was awarded an ownership interest in your business? If so, the business would have two owners and would be a partnership, not a sole proprietorship.

If married taxpayers in a community property state file married joint, the self-employment tax is paid by the spouse who earned it and 50% of the community net income is reported as a negative amount on Form 1040, Schedule 1, Line z as, for example, "Spouse's Community Interest in Schedule C Net Income."

separate899Author

We’re divorced and I’m filing as HoH. He got money from me that is income I earned as a sole proprietor, not as a W2 salaried employee. He is responsible for his portion of taxes on this income per our settlement agreement. How do I report a subtraction on my Schedule C?

edrcpa

Was the payment for services rendered to your business by your former spouse? Did you issue a Form 1099-MISC to your former spouse for those services? Why do you believe the cash paid under a divorce decree is a business expense deductible on your Schedule C? A payment pursuant to a divorce decree is not necessarily tax-deductible under tax law.