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Stella1
New Member

Are husband-wife LLC eligible to file in our joint tax return schedule C instead of 1065?

We formed Husband-Wife co-owners LLC in TX in 2017 and received the notice from IRS to report 1065. Do we need to file 1065 since we didn't have any income in 2017?(We did have some expenses.)

Are we eligible to change to disregarded entity and file the income on our joint tax return as schedule C? If eligible, how to change it?

1 Reply
AmandaR1
New Member

Are husband-wife LLC eligible to file in our joint tax return schedule C instead of 1065?

Yes, you need to file a partnership for 2017, if you have expenses to deduct. To stop having to file a partnership return, you need to dissolve your LLC entity with the state of Texas. I can't provide instructions on this because it's a legal matter, but you can ask your state: https://www.sos.state.tx.us/corp/termreinfaqs.shtml#term1

Without a LLC entity, you qualify for the Qualified Joint Venture, which allows married couples who work together to split their activity on their schedule Cs. Learn more about this at the IRS here: https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorpo...

Note, all LLCs are disregarded entities. The IRS doesn't have a tax form for LLCs. Instead, if you have 1 member, you default to be taxed as self-employed (schedule C with personal return), but if you have 2+ members then you default to be taxed as a partnership (form 1065 with schedule K-1s for each partner/member). 

So, if you form a single member LLC, then the default is to be taxed as self-employed on a schedule C (because there's only 1 member ). 

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