QBI

[mwillenborg]

My spouse operates a single member LLC and reports income on a schedule C. She provides counseling services and we do not pay her any W2 wages from the business. We do take a monthly distribution, but do not take this as an expense. 

Should the business be paying her W2 wages?

Since we did not pay her W2 wages in 2019, do we have to somehow adjust the QBI benefit we received for the amount of these wages?

Thanks

Mike

[JamesG1]

The IRS presumes that a single member LLC will treated as a sole proprietor.  That means that the income and expense will be reported on Schedule C of the 1040.

You would have to make a specific election on IRS form 8832 to override the IRS presumption. 

So, you would not add wages paid to your spouse nor would you make other adjustments for sake of the QBI.

For more information, see this IRS publication.