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g1rlw-3-
New Member

Does Turbo tax allow self employment income to be split between spouses? If so, how?

In the past we have each had a schedule SE and schedule C.
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3 Replies

Does Turbo tax allow self employment income to be split between spouses? If so, how?

Not sure what you mean by "split between spouses."   If you file a joint return all of the combined income from any source goes on the same return.   But if you each have self-employment income then each of you needs your own schedule C for your own business expenses.  Was each of you self-employed?   If so, then you need to prepare a Schedule C for each spouse, and each of you must pay self-employment tax for Social Security  and Medicare.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
BarbL
Employee Tax Expert

Does Turbo tax allow self employment income to be split between spouses? If so, how?

If you and your spouse are the only owners of the same business, if you file a joint return, and if you both elect to not be treated as a partnership, you are considered a Qualified Joint Venture.  Under the QJV rules, you and your spouse will split the business income and expenses and prepare a Schedule C for each of you.  You can split those items in accordance with each spouse's interest in the business.

 

By filing separate Schedule C forms, you will each pay self employment tax on your portion (as xmasbaby mentioned), which will be credited to your separate SSA account for Social Security purposes.  

See this IRS article for more information.

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Does Turbo tax allow self employment income to be split between spouses? If so, how?

If you own a business together and both materially participate, and it is not organized as a corporation or LLC, you have 3 options.

1. Spouse A is sole proprietor and files schedule C, and spouse B is an employee, is paid wages for their participation, gets a W-2, and all the other stuff that goes along with being an employee.

2. Spouse A is sole proprietor and files schedule C, and spouse B is an independent subcontractor, gets paid for their participation, spouse A issues a 1099-NEC, and spouse B files a schedule C as a subcontractor.

3. The spouses elect to file as a "qualified joint venture."  Each spouse files a schedule C for their share of income and expenses.

 

I don't think Turbotax has an automatic selection for "qualified joint venture", just set up one spouse's schedule C and then go back and set up the other schedule C.

 

If the business is organized as an LLC, then the spouses must file a partnership return form 1065, which uses a different tax program.  Each spouse gets a K-1 statement from the LLC that goes on their personal tax return.

 

However, if the business is an LLC, and the only members are the spouses, and they live in a community property state, they do not file a 1065 partnership return and instead use option 3 above. 

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