Is it better for my wife and I to each file a schedule c for a business we own together, splitting income and expenses in half?

[caseyjmc]

In other words, last year we filed Married Filing Jointly, and simply filled out the rental income section. This year Turbo Tax says we should still file Jointly, but split the business into 2 schedule C's.

[DawnC0 · Accepted solution]

Yes.  If you don't split up the income and expenses, then one of you will get all of the social security credits and the other one won't get anything.  

The only reason to file two schedule C's is so that both spouses earn Social Security credits. Doing this is called a Qualified Joint Venture. You only receive Social Security credits with earned income. Schedule C profits are earned income. If both spouses work the same business, a QJV fits the application best.  The spouses must share the items of income, gain, loss, deduction, and credit in accordance with each spouse's interest in the business.

[Critter]

You can only do this if you live in a community property state ... otherwise you will need to file a partnership return or one of you would be the owner and the other an employee of the business.