Do I have to pay Self-Employment Tax under Business Taxes for Husband-Wife LLC (Partnership) on Turbo Tax Home & Business if already filed through Turbo Tax Business?

[Lucky33]

We have a husband-wife LLC (listed as Partnership by IRS) and live in Oregon. I've already filed the business taxes through Turbo Tax Business (with Form 1065). I am in the process of entering my taxes into Turbo Tax Home and Business. It is my understanding that I do not need to file a Schedule C since we are an LLC Partnership. In the Business portion of the Home & Business software, there is a section about Self-Employment Tax and it says: "This topic only applies if you must pay self-employment tax on business, farm, Schedule K-1 income, or other earnings considered self-employment income."

I receive a Schedule K-1 since it's our business but thought that since I already filed the Business portion through Turbo Tax Business, I no longer need to pay the self-employment tax through the Turbo Tax Home and Business, Business section. I also thought I only need to enter the Schedule K-1 under our Personal Income. Is this correct?

Thanks for any help

[Anonymous_]

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@Lucky33 wrote:

...I also thought I only need to enter the Schedule K-1 under our Personal Income. Is this correct?

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That is correct in your particular case. You simply enter the information from your K-1; self-employment earnings appear on Line 14A and the program generates the requisite schedule (Schedule SE).

[Lucky33]

I'm running into a problem now. I entered my boxes from my K-1. Since I don't owe self employment tax but Turbo Tax wants me to fill in line 18 on the Schedule SE. It is my understanding that I don't qualify for the Non-Farm Optional method as we've only been in business since 9/2019. I don't own a farm or have farm income. I'm not sure why Turbo Tax is making me fill in line 18. Please Help

[Anonymous_]

See the instructions at the link below.

https://www.irs.gov/instructions/i1040sse#idm140387295349632

[DawnC]

It is asking you about the amount of your earnings from 03/27/20 through the end of the year because self-employed taxpayers can defer some of these self-employment taxes.   But if you don't owe taxes, you don't have anything to defer, so it really won't matter what you put in Box 18.   It works out to be about 75% of your self-employment earnings (Line 14A from your K-1).  

This amount will be used to figure the amount you can actually elect to defer on Schedule 3 (Form 1040), line 12e.   Which if you don't owe taxes, should be left blank.  If you get an error because of a 0 there, delete it and leave it blank.   If you already paid your self-employment taxes or you have a refund coming, you are not allowed to defer these taxes.  

Under the CARES Act, one of the relief provisions was the possible deferral of SE tax.  If you have employees, you can defer the 6.2% employer portion of Social Security tax for March 27, 2020 through December 31, 2020. Self-employed taxpayers can also postpone the payment of 50% of the Social Security portion of their self-employment tax for the same period.

For more info on this deferral, see the TurboTax Blog.