Two member LLC filing

[zebco]

which turbo tax to use?  Do I need to be licensed?  Does state download file also

[Fern · Accepted solution]

If the two members are spouses and filing a joint tax return, you can elect to be treated as a single member LLC. A single member LLC is a disregarded organization by the IRS.  This means that all income and expenses get reported on Schedule C of your individual tax return. When using Turbo Tax, use either Turbo Tax Self Employed (online) or Turbo Tax Home and Business (desktop software).  

You will enter your business information under the Business tab of the program.  There is a section to enter the general information about the business and then there sections for both income and expense.  The program will generate a Schedule C which is included in your individual tax return.

Otherwise, you are considered a multi-member LLC. A multi-member LLC must file their own tax return. The IRS treats this type of LLC as a partnership.  This means that the LLC’s income and expenses are distributed to the members using a Form K-1. This tax return can be prepared using Turbo Tax Business.  

You will include the Schedule K-1 in your personal tax return.  Schedule K-1 is not reported on a Schedule C. You can use Turbo Tax Premier to include K-1 information.

You do not need to be licensed to complete a tax return for your LLC. You will likely have to file a state return as well.

Read the article below for more information on how to file an LLC return.

https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Limited-Liability-Company-Taxes/...

Also see the link below for information on how to purchase and install Turbo Tax Business.

https://turbotax.intuit.com/small-business-taxes/?srqs=null&cid=ppc_gg_b_stan_all_na_Brand-Business_...

[jenny59]

Does the single member LLC paperwork need to be amended to include the spouse as a partner? If so how?

Would we just file the form 1065 in March and then use Turbo Tax Premier for taxes?

Thanks so much.

[tagteam]

A single-member LLC (unless an election to be taxed as a corporation was made) is a disregarded entity and files an individual income tax return (1040) along with a Schedule C for the LLC. 

If you reside in a community property state, the LLC is owned only by you and your spouse, and not treated as a corporation, then the LLC is a qualified entity and you can elect to treat the LLC as a disregarded entity and file two Schedules C rather than a 1065. In that event, you could file an amended return with the second Schedule C.

See https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

In any other event, you would have to file a 1065 for the LLC if both you and your spouse are members and you would need a product such as TurboTax Business (link below) to prepare Form 1065.

https://turbotax.intuit.com/small-business-taxes/

[robdewo]

Where can I find IRS documentation confirming the statement that a two-member LLC made up of married couple can file as single member LLC? My tax accountant doesn't know this!

[tagteam]

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@robdewo wrote:

Where can I find IRS documentation confirming the statement that a two-member LLC made up of married couple can file as single member LLC? My tax accountant doesn't know this!

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It is in the Rev. Proc. in the above post (and the link below). Print it out and hand it to your tax accountant, but be advised that it only applies in community property states (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin).

https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

[robdewo]

Good to know about applicability only in community property states. So will TT Home & Business 2019 for Mac handle multi-member LLC? I recall trying to use TT for Self-Employed online last year and it did not.

[VolvoGirl]

Home & Business Desktop program or the Online Self Employed version is for personal returns that include a schedule C for self employment or sole proprietor. A single owner LLC would be reported on Schedule C unless the LLC elected to be treated as an S corp or C corp.  Not for 1065, 1120 or multi-member LLC Returns.

You would need Turbo Tax Business.  Turbo Tax Business  is not available to do online or on a Mac.  You can buy the Window's version here.  And you can have both TT Business and TT Home & Business (or any personal version) installed on  your computer at the same time.

https://turbotax.intuit.com/small-business-taxes

[robdewo]

Good to know. How can I get a refund on just-purchased Home & Business for Mac?

[VolvoGirl]

Contact Customer Service
5am-5pm Pacific Time (8-8 Eastern) Monday - Friday
https://support.turbotax.intuit.com/contact/

[Carl]

My tax accountant doesn't know this!

Fire your tax accountant yesterday, if not sooner. If they don't know something as *BASIC* as this, they more than likely cheated on tests in college where they were "supposed" to be taught this stuff. It's like learning your alphabet long before you can even "think" about learning to read.

So will TT Home & Business 2019 for Mac handle multi-member LLC?

No flavor of the personal version of TurboTax can be used for a multi-member LLC. A multimember LLC is required to file an IRS Form 1065 Partnership Return. Only TurboTax Business (different from Home & Business) can be used for that. TT Business will NOT work on a MAC. Period.

But if you live in a community property state and you and your spouse are the only owners/partners in the business and you and your spouse will be filing a joint return, then you can split all business income and all business expenses (including asset depreciation) 50/50 between the two of you. Then each of your 50% shares gets reported an separate SCH C's as a part of your personal 1040 tax return. That means you will have two SCH C's with your 1040. One for your 50% and one for your spouse's 50%.

So if your business is named something like "His & Her Diner" then on one SCH C you'll call it "His & Her Diner (A)" and on the other call it "His & Her Diner (B)" and you'll be fine.  This is because you can not have two SCH C's with the "Exact" same business name. It's not that the TT software can't handle it; its that the IRS computers can't handle it.

[tagteam]

Just so this is clear, each spouse must file his/her own separate Schedule C and Schedule SE and use their own taxpayer ID in order to get credit for self-employment taxes paid.

[mbgsvo]

Hi,

This is for tax year 2020.  I have TT Home & Business (desktop version) 

We are husband & wife in California - We formed an LLC last year (2020) which is treated as a single member LLC for tax purposes (50% each stake) for a condo that we rent in California.

I tried going thru the steps described here to generate TWO  schedule C's - one or me and another for my wife - by dividing the expenses and profits from the LLC business by half each. I called the two business with a (1) and and (2) suffix at the end of the LLC name. 

The above seemed to work just fine until I had to generate the CA 568 form when doing California taxes.

First question:  Do I say that these two are INDEPENDENT businesses?  Or should I say they are related somehow? This question applies to the Federal portion of the TT Home and Business.

Second question: When I generate the California taxes, I was hoping that I could "combine" the two businesses for generating the CA  568  form. 

There does not seem to be any way to do this?  How can I select multiple businesses as part of the single member LLC (for tax purposes)? 

I don't want to generate two CA 568 forms obviously - We only have one EIN for the LLC.

Thanks,

[JeffreyR77]

The CA 568 will need to be mailed in to the Franchise Tax Board (FTB). 

You can edit in Forms Mode to combine the income and expenses from the two entities into one entity to create the single integrated entity to mail in to FTB.

You can also create a second (duplilcate) tax return file, combine the 2 LLCs in the Federal return into one which will produce a single case for a single CA 568 to print and mail for CA FTB. 

Use caution when creating multiple versions of your tax returns to preserve original returns that are actually filed,

[mbgsvo]

Thanks Jeffrey!

Note that I don't have two LLCs - we just have the one California LLC (husband & wife, disregarded entity, single member LLC for tax purposes, 50% stake holders)

I think I follow your first option:  If I understand your suggestion, I need to do the following:

a) Create two businesses in the Federal portion with names like "LLC(A)" and "LLC(B)"  - one for me and another for my wife - and split the profits and expenses for our LLC across these two businesses equally .

The above creates two Schedule C's - one for me and another for my wife.

Question:  Do I need to fill in the EIN of the LLC?  Note that there is only one EIN - Or should I leave the EIN blank, and simply fill that in when the CA 568 form is generated for one of the LLCs? 

I think I should not specify the EIN for either business as it may confuse Turbo Tax?  Or should I specify it for one business, but not for the other?   It would be great if you can clarify this. 

2) When I go thru our California taxes, in the business portion, I indicate that I need to create a CA 568 form for one of these businesses. I can choose either one, and then proceed to update (double) the profits & expenses listed on the form, and also add missing information such as EIN etc, then print the form, and mail it by April 15.

When I  efile our federal & California State taxes, Turbo Tax Home & Business will *not* EFILE the CA 568 at all - but it will  EFILE all the rest of the forms to FTB.

Let me know if I understood the process here correctly.

Thanks,

mbgsvo