NC is not a community property state. So you have a choice.
- You can file a separate Partnership Return, Form 1065 to report all your business income/expenses, and the income for each of you as individuals is reported to you on a K-1 for each one of you. Then you will use the K-1 issued to each of you by the partnership, to complete your personal joint tax return. This is the method I would recommend, only because I think it's simpler and easier. Especially if issues arise in the future, between the two owners that could impact their filing a joint personal return in the future.
- The second option is to file a SCH C as a part of your personal joint tax return. But that would require you to split all income, business assets, and expenses between the two of you, and a separate SCH C has to be completed for each owner. The split does not have to be 50/50 either, as it's perfectly possible for one married owner to own say, 40% of the business while the other married owner owns 60% of the business. The important things is, two SCH C's are required with your joint tax return. This is the only way to ensure that each owner's social security and Medicare accounts get credited based on the taxable business earnings attributed to each owner.
TO file the separate partnership return form 1065 requires a completely separate program, called TurboTax Business. This is not the same as Home & Business. TurboTax Business is not available as an online product, or for MACS. It's for Windows only. You can purchase TurboTax Business at <a rel="nofollow" target="_blank" href="
https://turbotax.intuit.com/small-business-taxes/">https://turbotax.intuit.com/small-business-taxes/...>
Regardless of the method of reporting you chose, since you were open for business in 2016, you will report your business income/expenses on a tax return for 2016. The fact your deductible expenses may exceed your business income doesn't matter. You still report and claim those expenses. Once your deductible business expenses get's your taxable business income to zero, additional business deductions are still "claimed", but not "allowed". Those unallowed losses will be carried over to next year and deducted from next year's income - provided of course you have the business income to deduct them from.
But if you don't "claim" those deductions on your 2016 return, then you can not carry them over to your 2017 return.
