Can I file W4 (personal returns) and self-employment (business returns) taxes using TurboTax for 2020? If yes, how would I go about that?

You will be able to use TurboTax to file both your business and personal tax returns, but which version of TurboTax you will use depends on any elections you have made on how to treat your LLC.  

 

An LLC is a state designation, which in the eyes of the IRS is called a "disregarded entity".  If your business is a sole-member LLC, and you have not made any election for your LLC to be treated as either an S or C Corporation for tax purposes, then you do not need a separate return for your business taxes.  Your business income will use Schedule C to report business income and expenses, which is attached to your Form 1040.  This return may be filed using TurboTax Self-Employed.  (TurboTax Self-Employed Live is an enhanced version; you pay a premium to have TurboTax experts guide you through the filing process; they can even verify your work for you).  It is more likely than not that you will file your taxes with this method.

 

However, there are three possibilities that would require you to use TurboTax Business (downloadable software), to prepare the business return first.  They are as follows:

 

Multi-member LLC.  If your LLC is composed of more than just you, then the default treatment of the IRS for this disregarded entity is a partnership.  A Partnership must make a separate business return first using Form 1065.  The income generated by the business is "passed through" to the individual partners and reported on Schedules K-1, which are then used to report the Partnership income on the personal return.  

 

Election to be treated as a Chapter "S" Corporation.  Either a sole or multi-member LLC may make an election (Form 2553) to be treated as an S Corporation for business taxation.  If you have made this election, you should have also been paying yourself reasonable compensation (wages and salary) throughout the year from your business income.  To have made this election, you would have needed to file Form 2553 previously and have received an acceptance letter from the IRS.  Similar to a partnership, the business income of an S Corp is reported on Form 1120S, and each "shareholder" receives a Schedule K-1 to report their passed-through share of the corporate income.

 

Election to be treated as a "C" Corporation.  Either a sole or multi-member LLC may make an election on Form 8832 to be treated as a C Corporation for business taxation.  Like an S Corporation, a C Corporation will file its business taxes using its own form, Form 1120 (not 1120S).  Unlike an S-Corp or Partnership, the income is not passed through to the shareholders or partners via Schedule K-1.  Rather, the corporation itself is taxed, and from there can issue dividends which are reported and taxed (a second time) on the individual tax return.

 

A Partnership, S Corp or C Corp return would need to use TurboTax Business first before preparing the personal return.  But your situation sounds like it is likely a Sole-member LLC that has not made an election.  If so, you will be able to use a version of TurboTax Self-Employed to complete your entire return.

Dear DanielV01,

 

Thank you for taking the time to answer my initial question!

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My business is a sole-member LLC with no S or C election. So Schedule C will be my choice based on your explanation to report business income and expenses.

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However, my use-case is for 2020 taxes and the TurboTax past year's landing page (https://turbotax.intuit.com/personal-taxes/[product key removed]cts/) offers 4 options. Would you be able to recommend the equivalent version based on my sole-member LLC with no S or C election?

 

Thanks!

The version TurboTax Home and Business (this is a downloadable software) is probably the best choice for you.  You can also use the installable versions of TurboTax Deluxe and TurboTax Premier to file your 2020 personal and business income, but Home and Business is a more powerful tool to do so.  All online versions of TurboTax can only file the current year's taxes (2021).

 

Also note that for filing a previous tax year it will be necessary to print out and mail in that return.  To obtain a prior-year version of TurboTax downloadable software, visit this site:  Prior Year TurboTax Software

Dear DanielV01,

 

Thanks again for your help and time in answering my follow-up questions.

 

I will try the TurboTax Home and Business as recommended for my 2020 tax preparations and have noted the print and mail requirement as well.

 

All the best!

FYI ... although the H&B version is recommended it is NOT required ... ALL the downloaded versions can handle all the same forms & situations  so you can save yourself a few $$ and just get the Deluxe version.  

 

2018-2020 software can be purchased here:
https://turbotax.intuit.com/personal-taxes/past-years-products/

 

You can also purchase the CD/download from various retailers such as Costco, Amazon, Walmart, Best Buy, Staples, Sam’s Club, etc. etc. etc.

 

This link Where can I obtain authentic TurboTax software? has a list of authorized TurboTax resellers.

 

If you are getting a refund, there is no penalty for filing late.  If you owe tax due, then file and pay the amount due as shown on the Form 1040, but expect a bill later from the IRS for the penalty and interest you will owe.  Only the IRS will calculate this—TurboTax will not calculate it.

 

 

When you mail a tax return, you need to attach any documents showing tax withheld, such as your W-2’s or any 1099’s.  Use a mailing service that will track it, such as UPS or certified mail so you will know the IRS/state received the return.

 

Federal and state returns must be in separate envelopes and they are mailed to different addresses.  Read the mailing instructions that print with your tax return carefully so you mail them to the right addresses.

 

Thank you, Critter-3 for adding your input. I appreciate it. I will keep it in mind for sure.

By the way, a W4 is the form you filled out to tell your employer how much withholding to take out.   Then at the end of the year  you receive a W2 to report your annual wages and withholding.

You file the W2 and all your Self employment and Single Member LLC income on the same 1040 personal tax return.   

Have you made any quarterly estimated payments to cover the tax on your Schedule C LLC income?   Do you need more info on filing Schedule C and paying estimates?

Hi VolvoGirl,

 

Thanks for the reply and W4 info.

 

I have not made any quarterly estimated payments.

 

I'd be open to more info on filing Schedule C and paying estimates.

 

Thanks

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  Here's a Schedule C  https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

 

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version or use any of the Desktop CD/Download programs.

 

How to enter self employment income

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/26653

 

For the future, you should use a program like Quicken or QuickBooks to track your income and expenses.  There is a QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....

http://quickbooks.intuit.com/self-employed

 

You will need to keep good records.  You may get a 1099NEC at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small and if you don't get the 1099NEC.

 

You use your own records.  You are considered self employed and have to fill out a schedule C for business income.   You use your own name, address and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all income is At Risk.   

 

After it asks if you received any 1099Misc or 1099NEC it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.

 

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

 

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15.  The SE tax is in addition to your regular income tax on the net profit.  You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a.  Turbo Tax automatically calculates the SE Tax and Adjustment.

 

Here is some IRS reading material……

 

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

 

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

 

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

 

Publication 463 for Travel, Gift & Car expenses

https://www.irs.gov/pub/irs-pdf/p463.pdf

 

 

QUARTERLY ESTIMATES

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

 

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

 

The 1040ES quarterly estimates are due April 15, 2021, June 15, Sept 15 and Jan 18, 2022.   Your state will also have their own estimate forms.

 

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

 

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2021 Estimate

Thank you, VolvoGirl for the level of detail shared!

I'm not able to find the address to mail in my 2020 1040 federal and New York state tax return I completed from the input from everyone in this thread.

 

Will someone who knows share the link to where to mail out these important items? I've searched the Intuit community using the search feature and the TurboTax desktop app with no success as of yet.

 

Thanks!!!

Where to mail federal paper returns

https://www.irs.gov/uac/where-to-file-paper-tax-returns-with-or-without-a-payment

 

Contact your state to find the mailing address

https://ttlc.intuit.com/community/state-taxes/help/how-do-i-contact-my-state-department-of-revenue/00/25573

 

When you mail a tax return, you need to attach any documents showing tax withheld, such as your W-2’s or any 1099’s.  Use a mailing service that will track it, such as UPS or certified mail so you will know the IRS received the return.