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cjawillard
New Member

I am the sole member of SMLLC--can I deduct, on Schedule C, the wages the LLC paid me by guaranteed payments?

Guaranteed payments here defined as paid regardless of profit or loss and in an amount considered reasonable compensation for work.  I have accounted for these payments/wages on Schedule SE, but I'm unsure about whether paying myself is a deductible expense as a single member LLC--answers I am finding seem to say that guaranteed payments are only deductible on Form 1065, which I can't file as a SMLLC, only as a partnership.  If that's the case, I am liable for much more than I planned for!  This should be reasonably considered COGS, but not sure.   

Please, TurboTax, you're my only hope!
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Accepted Solutions
MinhT
Expert Alumni

I am the sole member of SMLLC--can I deduct, on Schedule C, the wages the LLC paid me by guaranteed payments?

For a single-member LLC which is a disregarded entity and for which the income/expenses are reported on Schedule C of the tax return of its owner, you cannot deduct any payments made to yourself (as guaranteed payments or otherwise).

The rationale is that if you deduct these payments to yourself, then you would have to report these payments as income, which will give exactly the same tax result.

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4 Replies
MinhT
Expert Alumni

I am the sole member of SMLLC--can I deduct, on Schedule C, the wages the LLC paid me by guaranteed payments?

For a single-member LLC which is a disregarded entity and for which the income/expenses are reported on Schedule C of the tax return of its owner, you cannot deduct any payments made to yourself (as guaranteed payments or otherwise).

The rationale is that if you deduct these payments to yourself, then you would have to report these payments as income, which will give exactly the same tax result.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

cjawillard
New Member

I am the sole member of SMLLC--can I deduct, on Schedule C, the wages the LLC paid me by guaranteed payments?

Thank you for your response--but I am still not clear.  I am reporting my guaranteed payments as income--in Schedule SE.  Is that incorrect?  My read of your answer makes it seem like I should not be reporting my guaranteed payments at all.
MinhT
Expert Alumni

I am the sole member of SMLLC--can I deduct, on Schedule C, the wages the LLC paid me by guaranteed payments?

If you do not deduct the guaranteed payments on Schedule C, you do not report them as income.
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cjawillard
New Member

I am the sole member of SMLLC--can I deduct, on Schedule C, the wages the LLC paid me by guaranteed payments?

That's wonderful.  Thank you.
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