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Re: Husband and Wife Own an LLC for a H & W filing a Joint…

Re: Husband and Wife Own...
Re: Husband and Wife Own an LLCHello, for a H & W filing a Joint return but spliting 50/50 income/expenses for the sole business of either of them I have a question.Can they both use the same EIN #? How does that work? They want to split income 50/50 so they both get some social security credits. Total business income only $47K for 2017 so split they both make $23,500. The two business employees have wages reported using the only EIN associated with the business.
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Answered in 6 minutes by:
3/24/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,685
Experience: Taxes, Immigration, Labor Relations
Verified

We need to be clear how that LLC is treated for tax purposes?

That is two member LLC with only spouses as owners.
If that LLC is classified as a partnership - it will file form 1065 and will issue separate K1 forms to each spouse.

If that is S-corporation - then we will need to file form 1120S and issue W2 to each employee and K1 to each shareholder.

If that LLC is in a community property state - spouses may choose it to be classified as a joint venture - and report all income directly on their tax return.

Please verify what situation we have?

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Customer reply replied 28 days ago
It's an LLC in Nevada, a community property state. Great question thanks for clarifying.

So far - in Nevada - spouses may simply choose to treat that LLC as a qualified joint venture.

In this case - NO separate income filing for the LLC,

but spouses will file two separate schedule C's - and may divide all income and deductible expenses as they agreed.

https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorporated-businesses

If the LLC has employees - there will be separate employment tax return and EIN will be used for these returns.

Spouses may not be paid wages by the LLC - that is not correct.

Instead - on schedule C's will have each spouse SSN and the same EIN

each spouse will have separate self-employment income.

They may choose to divide equally or in any proportion they agreed.

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Customer reply replied 25 days ago
Hi. I'm still confused regarding this topic. So it sounds like you're saying a company setup as an LLC can NOT be a joint venture even in a community property state? Under the Nevada secretary of state website the company is type: Domestic Limited-Liability Company. Per website I only see ONE managing member - the wife. However, per spouses they agree to split 50-50 all income & expenses.

So it sounds like you're saying a company setup as an LLC can NOT be a joint venture even in a community property state?

Not exactly.

The LLC owned by spouses only - MAY be treated as a joint venture when in a community property state - but may NOT in all other states.

So far - in Nevada - spouses may simply choose to treat that LLC as a qualified joint venture.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,685
Experience: Taxes, Immigration, Labor Relations
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