Schedule K-1 Self Employment Tax (14A & 14C)

Forum|Forum|11 months ago
September 8, 2025
1 reply
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I have an LLC with two members that files form 1065. One member is active and manages the business. The other member is passive and does not participate. In TurboTax business I had answered the question "When this partnership was set up how did [name] choose to be involved in the business?" as "As a managing LLC member" instead of "As another LLC member". By doing so TurboTax business has been populating fields 14A & 14C (Self-employment earnings) on their Schedule K-1. This has been causing them to pay self employment taxes unnecessarily for the the past few years. Is it okay to correct this mistake in my next business tax return? Will it raise questions as to why the member is no longer paying self employment tax?

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Best answer by Mike9241

the active member is subject to SE tax. the passive member is not. to correct this situation the LLC should file amended k-1s so the passive member can amend their returns for open years to get a refund of the SE tax they paid. This could also affect other items. for example the active member should qualify for the 199A deduction but not the passive one.