I and my partner have a multi-member LLC. Can I issue 1099 to my kids from my business? If so, use 1099-NEC?

[intuse2001]

I and my partner have a multi-member LLC. Before we file tax returns for the business, I want to issue 1099 to my kids for the work they've done for the business. Is it allowed/doable? If so, shall I use 1099-NEC or 1099-Misc for 2020 tax? Does Turbotax Business support this?

[Mike9241]

The determination whether someone working for your partnership should be classified as an independent contractor or an employer normally would be unrelated to the family relationship that the worker may have to the owners. However, you cannot just arbitrarily decide how any worker is to be treated, but must classify them according to a number of factors set forth in IRS rules and regulations. Since this is an area often subjected to careful scrutiny, I would strongly recommend that you speak to your CPA or tax attorney concerning how to classify the children, so that neither they nor your partnership have problems with the government.

you can use form SS-8 to ask the IRS how to classify them

https://www.irs.gov/pub/irs-pdf/fss8.pdf 

However, I would say by answering the questions you should have a good idea of how the IRS would classify them if you filed it. 

[Critter-3]

If these kids are under the age of 18 they really need to be on the payroll to take advantage of the rules on hiring your kids.   Too late for 2020 but maybe going forward ...  https://www.irs.gov/businesses/small-businesses-self-employed/family-help

[intuse2001]

Thanks for the reply! I think I did not make myself clear. What I am asking is that form 1099-NEC should be used for contractors (regardless my own kids or others) for multi-member LCC. 

[VolvoGirl]

Yes you use 1099NEC now instead of 1099Misc.  1099Misc does not have box 7 anymore.  It has been replaced and split off to the new 1099NEC.  Turbo Tax Business, Home & Business and the Self Employed version all have the new 1099NEC.