How to efile Form 568 for a husband/wife LLC treated as disregarded entity?

[AmandaR1]

You enter your business income and expenses by creating two separate self-employed businesses in the software for the federal tax information. This is reported as two schedule C self-employed businesses for federal taxes and will transfer over to the related CA form 568, when you update the state, under the State Taxes tab. 

You can e-file normally as this "election" is made by simply filing in this manner by the due date of your return. Self-employed business information is reported with your personal federal and state income tax returns and cannot be filed separately. If you filed your personal returns, without the business info, you'd need to amend your returns to include your businesses.

Note, TurboTax is not a state stand-alone product, so you must update your federal taxes in order to populate your state forms. You also do not enter information on the forms directly and instead use the "interview" experience the software provides.

Let me know if you have follow up questions.

[switchin2glide]

So should we end up having two Form 568, one for each schedule C?  Or should we have only one Form 568 for the LLC?

[KrisD15]

The program will generate it for you. There will only be one, you split the Federal into 2 Schedule C's so that you each get a contribution into your social security funds. 

[switchin2glide]

Thank you KrisD15.  We (my wife and I) greatly appreciate you taking the time to help us.  We are using TT Home & Business.  Yes, we split the Federal into 2 Schedule Cs as you mentioned, and split up the income and costs according to the percent ownership in the LLC (in our case 51% my wife and 49% me).   When we moved on to our State return, the program generated 2 Form 568s, one for each Schedule C.  I think this happened because we answered that each business (each Schedule C) was an LLC.  Is there a work around to bring the info from both Schedule Cs back onto only one Form 568?

[ColeenD3]

Please see if there is anything in LINK that can help you.

[switchin2glide]

Thank you ColeenD3.  I followed the link you provided and it took me to a Khoros login page that said "Hello, TurboTax!" and had an email entry field and password entry field.  This Khoros site is new to me, what credentials do I use to log in, or how do I register for a login for site access? 

[ColeenD3]

Here is an excerpt from Terry A.

You said you "marked" a business as SMLLC, but be sure by Editing your TT/Calif business and there is a screen Is <name> owned by a single member LLC?. Click Yes. That activates the Form 568 and populates it with as much information from the Calif Sch C Worksheet as it can.

That's in TT/Calif - Edit your business - you have to "go" to your business in TT/Calif. The screen is down that Step-by-Step path.

From TonyG

#3626491

Here is what I found about form 568.

 1. to enable TT to create a form 568 for you, go to (instructions for Desktop on Mac, they are similar for the online version).
  > state taxes > california  edit > income and adjustment  edit > business profit and loss adjustment  revisit > principal business  edit > yes

 2. the state of california requires to e-file, yet TT does not efile 568. Therefore you need to request a waiver at  https://www.ftb.ca.gov/professionals/busefile/Business_eFile_Waiver_Request.asp">https://www.ftb.ca....> and enter  technical limitations

 3. print and mail 568.

[CbcbRika]

I’m in the same situation. Did you figure out a resolve to have both your schedule C’s transferred to 1 Form 568? Thanks

[MaryK4]

When you go to the California section, you will only add ONE Form 568 to consolidate both Schedule Cs/

@CbcbRika

[Taxable]

The instructions provided here don't work properly.  The generated CA form 568 will only have half of the reported values.  For example: if your total business income is $1000, you create two husband/wife LLCs for Federal Taxes each with $500 income.  This works fine.  But then Turbo Tax will generate only one CA 568 form with a business income of $500.   You CAN generate two form 568s but then you will be paying double the $800 LLC fee.  I don't believe the form 568 is intended to be split this way.

If you are not careful you will be reporting bad values to the state.  Personally I consider this a bug in the software.  It has been like this for at least several years.  I think it is easier to just ignore Turbo Tax advice and do NOT split the LLC in half.   Otherwise Turbo Tax cannot work properly.

[grantlam]

> it is easier to just ignore Turbo Tax advice and do NOT split the LLC in half. 

In order to not split the LLC, there seem two ways to go: 1) file the LLC as a partnership (in 1655) or 2) assume one member e.g. husband, is the only member of the LLC.  1) seems more paperwork, and Turbotax also warned the impact on social security.  Don't know 2) is allowed in CA, which is a community property state.

[DavidS127]

If your "both spouses" business is "unincorporated" (not than an LLC is included in the definition of incorporated) you have the the option to be treated as a Qualified Joint Venture and each of you will file a separate Schedule C on your personal tax return.  See this link to the IRS website explaining how a Qualified Joint Venture works.

If you and your spouse are partners in a business that is incorporated or is an LLC, the business is supposed to file a separate Form 1065 partnership tax return.

This IRS website is good place to start to understand the tax filing requirements for different kind....

See the information at this IRS website for more information about entities for married couples.

[grantlam]

Thanks for the info.   We sure can split the LLC income.  However, doing so would come back to the original question: if each files a separate Schedule C on your personal tax return, two CA568 will be generated during CA state filing.  Will appreciate suggestions to avoid that.

[DawnC]

Splitting the income is the only way for each of you to get your social security credits for retirement.  If you split them, you can indicate that one of them is owned by a SMLLC and answer no to the SMLLC question on the 2nd one.  That question is only for the California 568 Form and won't affect the amounts on your personal tax California Form 540NR.   The voucher will print for $800 - and you should only get one.