How do you properly split business income and expenses in a husband-wife 50/50 sole proprietorship.

[MaryK4]

Unfortunately, I am still looking and agree the issue is the way TurboTax makes you indicate which business to apply the 1095-A to, when it can be allocated among more than one.  You can work around the issue by deleting the 1095-A entry (since you know you do no qualify for the credit) then adding the portion as a Health Insurance Business expenses in each Schedule C.

@RugbyDad

[RugbyDad]

@MaryK4 Thank you.  We are aligned.  I had just decided to do what you recommended since in 2019 we don't need the 1095A form anymore and we are not taking any credits. It did the trick.  Thanks for your help on this issue, but I still think for others that "do take a credit" and have a "husband & wife" business that TurboTax needs to fix this issue.

[Lujaju]

We are a similar boat, in a Qualified joint venture, with two schedule Cs and all, divied up. However when it comes to the 1095-A, we are only allowed to select one of the Schedule Cs to allocate the 1095-A to. 

Would it be possible to "split" the values on the 1095-A similarly to how we do with the schedule Cs for our business? Of so, would we merely divide everything in half- with half premium amounts on each line, and half credits on each line? What about the SLCSP? How is this calculated?

And what if we arent a 50/50 this year but instead a 70/30?

[RobertG]

If you split the 1095-A you will get correspondence from the IRS because what you enter will not match their records.

You should assign it to one Schedule C or the other.

@Lujaju

[Beachcomber]

@LeonardS You say, "You will each need to create two separate sole proprietorships on your return."  Do you really mean each creates 2, a total of 4?

I'm unclear (since TurboTax doesn't ever do a very good job of explaining what it will do with your inputs and what the outputs will be) if we are filing as a qualified joint venture 50/50 sole proprietorships (in WA state) if I enter each expense in TT once and TT splits expenses 50/50 between the two Schedule Cs it creates or if I actually have to split and enter each single expense twice, once for each Schedule C (which seems like a waste of time since the program could easily split it and create the 2 forms)?

Thanks.

[KrisD15]

Since Washington is a Community Property State, I assume you are filing a Qualified Joint Venture in order to fund both Social Security Accounts. 

You file two Schedule C's as if you had two businesses. 

You must split the income and expenses to each Schedule C as it relates to the individual participation.  

[Beachcomber]

@KrisD15 I'm a first-time business filer and on a steep learning curve and was steered toward the QJV SP by TurboTax and exploring it's benefits, so I guess one of them is funding both SS accounts, but, as I'm retired and my wife is soon to be (but neither planning to take SS until age 70), I'm not sure if there's any SS benefit for us.

[DawnC]

You pay SS and Medicare tax (SE employment tax) on the businesses net income.   Having 2 Schedule Cs is the way to credit the tax payments to each of your accounts.   If you don't divide the income and expenses, all of the SE tax payments will go to one person.   One Schedule C should reference your SSN and the other should reference your spouse's SSN.   @Beachcomber 

[Beachcomber]

@DawnC Thanks for the additional info.  I'm seeing other instructions for the QJV to use the one (the same) EIN on both Schedule Cs.  If we do that, do we lose the benefit of getting credits for both of us?

[DianeW777]

Yes.  Each spouse must report their share of net profit so the social security account is increased for each of you. One Schedule C for yourself and One Schedule C for your spouse.

Here is the link and an excerpt of the key portion.

• Married Couples In Business

All items of income, gain, loss, deduction and credit are divided between the spouses following in accordance with their respective interests in the venture. Each spouse considers his or her respective share of these items as a sole proprietor. Thus, it is anticipated that each spouse would account for his or her respective share on the appropriate form, such as Schedule C. For purposes of figuring out net earnings from self-employment, each spouse’s share of income or loss from a qualified joint venture is taken into account just as it is for Federal income tax purposes under the provision (for example, in accordance with their respective interests in the venture).

@Beachcomber 

[Beachcomber]

@DianeW777 I guess I'm still not clear of what would be gained or lost from using a single EIN on both Schedule Cs vs using each person's SS# and if the EIN can go on the Schedule Cs and the SS#s on the Schedule SEs for self-employment tax (or if I should even care about the SS credits since we're moving into retirement and each already qualifies from previously reaching the 40 credits and these earnings won't be the highest years used by SS to calculate benefits)? 

Thanks for all your help.

[DianeW777]

You do seem quite clear.  If you don't care about adding to your social security accounts, you can use one Schedule C and complete your return.  Use the EIN or the SSN, whichever you prefer and the end results from a tax perspective will be the same. Whatever method you choose is the right one in your situation.

@Beachcomber 

[Beachcomber]

@DianeW777 I'm thinking TurboTax may offer the option of QJV SP so you can claim more deductions without exceeding limits?

[DianeW777]

It's not about the income and deductions as much as it would be about material participation for limitations come into play. When you are self employed it is assumed for the most part that you and your spouse would materially participate in the actions, decision making and overall business activity. In this scenario there is no limitations with the exception of a net operating loss (NOL) or a net loss that produces a below zero income on your tax return.

[Beachcomber]

@DianeW777 Diane A related question I have is can one use the de Minimis Safe Harbor Election on Schedule C or only on Schedule E?