W2 plus Side Business for Married Couple

Forum|Forum|2 years ago
February 18, 2024
1 reply
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Hello Tax experts

I am looking to verify that I am filling my taxes correctly. I have two questions

I am married filling jointly. We have done this for 28 years.

Some years ago my husband retired and we started an online business.
I kept my job,

So I have a w2 and we both are partners in the business.
I added the w2 and I am adding two Self-employment income and expenses forms. One for each splitting everything 50% 50%

Is this correct?

Next Dec we plan to open an LLC partnership and continue to split the business 50% 50%.

Will we be able to do the same under the same Turbotax Premium Account if we have an LLC?
Or will we have to file business taxes separately and get K1's

Best answer by AmyC

Will it be wrong? Technically, yes, since you are both owners of the business. Reporting it all on one form leaves you out of the loop.

This means income earned from the business would be credited solely to your spouse, which adds to his Social Security Earnings table. You can increase your benefits as they take the top 35 years of income. If you plan on claiming half of his, it won't effect your table and could effect his.
You would also lose the $400 exemption from Social Security and Medicare tax that you each get. Which is worth $61- since you don't see a difference, you may not have income for the business. The SE tax should be showing a difference if you did have income.
You would be reporting all income and paying all federal tax either way

It is up to you how you file your taxes but I tend to err on the side of caution and complete accuracy.

PatriciaV

Employee

Yes, you are reporting your employment and shared business properly this year. Note that filing two Schedules C tells the IRS you are electing to be treated as a Qualified Joint Venture. For more information, see IRS Election for Husband and Wife Unincorporated Businesses.

If you create an LLC next year, you will need to file a business return for that entity, available using TurboTax Business. The business return will include a Schedule K-1 for each partner to be reported on your individual tax return.

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watergirl2Author

Hi Patricia

An expert inside turbo tax asked to me delete my form and leave jims' explaining that since I have a w2 i didn't need another form. So I deleted mine and added the full totals under Jim's.

If I don't add a form for my part and add the total under Jim's will that be wrong?
Is the join venture election optional? We don't take salaries and there is no social security or benefits. I am curious why file as joint venture?

The only reason I see would be to be clear and transparent since we both worked on the business and shared expenses. Otherwise it appears as is Jim was the only one working. But the taxes don't change. So would the IRS care? The difference for me now is to go back and re do the second form and change all the numbers so they are 50% / 50%. If there is no difference I would be done and ready to file as is.

AmyCAnswer

Employee

Will it be wrong? Technically, yes, since you are both owners of the business. Reporting it all on one form leaves you out of the loop.

This means income earned from the business would be credited solely to your spouse, which adds to his Social Security Earnings table. You can increase your benefits as they take the top 35 years of income. If you plan on claiming half of his, it won't effect your table and could effect his.
You would also lose the $400 exemption from Social Security and Medicare tax that you each get. Which is worth $61- since you don't see a difference, you may not have income for the business. The SE tax should be showing a difference if you did have income.
You would be reporting all income and paying all federal tax either way

It is up to you how you file your taxes but I tend to err on the side of caution and complete accuracy.

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