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I have a question concerning my wife as the second partner…

I have a question concerning...
I have a question concerning my wife as the second partner in a newly formed LLC. After entering her K-1, there is an optional method for determining self employment tax using the non farm method. Using either the regular method or the non farm method changes the amount of tax owed but if I use the non-farm method then as I understand it, she can get social security credits if we choose the latter. How does that work and how do we know if she gets the credits. I think for the $800 dollars or so of extra tax it is worth getting credits in her history as right now she does not have enough.I am uncertain of this as I have never come across this issue.Thanks,
Bill
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3/11/2018
PDtax
PDtax, Certified Public Accountant (CPA)
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She should get social security credits either way. It's based on the self employment income allocated to her last year.She will need 40 credits, ten years worth, to have a benefit in her name.I would check her history with social security to confirm her work record. Easy to do on sea.gov. Set up a my social security access to see their records to make adjustments to yours.Thanks for asking at just answer. Positive feedback is appreciated, five stars is best. I'm PDtax.I like to set wages for small partnerships, with a w2, to fix this issue in future years.
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Customer reply replied 1 month ago
ok does social security just get part of the info on the tax return to know this or is there a form to send in? This is a new LLC for 2017 - will she get credits this year without a basis of self employment from the prior year?

SSA does not get an additional form. IRS will process your 1040 that will have a schedule SE with your wife's social security number. This will assure credit is received for future social security benefits.

This is a great question. Many married couples report the business results under one social security number, typically the husband's. This filing can cause problems for spousal benefits for work done but no paycheck issued or k-1 reported. Stories of surviving spouses who don't have enough spousal credits who don't get benefits are among the worst paperwork errors people make.

The steps you are taking will insure credit to both of you for a benefit that you should both have.

Thanks again for asking at just answer. Positive feedback is appreciated. I'm PDtax.

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