LLC

[LLCF]

My husband owns 1/3 of an LLC. He was paid $24,000 from the LLC in 2024. Does the business need to give him a form like a 1099 to claim this income (it was just cash and checks)? How do we put this income into TurboTax? 

[DianeW777]

It depends on the entity being used in the LLC such as partnership, s-corporation, etc.  If they file a return for the LLC, then the income will be transferred through a K-1 or a W-2 which would be reported on your return.

If your husband was subcontracted by the LLC for his service, then he would report the income as self employment. However, if it is a s-corporation, then any payment could be wages. Both of these actions would require either a 1099-NEC or a W-2.

If it is not a return of his capital invested in the LLC, then there would be nothing to report until he recovers his full investment in it.

We may need additional information to fully answer your question.

[MonikaK1]

If you received a distribution from an LLC, the entity needs to issue you a Schedule K-1.

If the LLC is taxed as a partnership, it needs to file a copy of Schedule K-1 (Form 1065) with the IRS to report your share of the partnership's income, deductions, credits, etc. and send you a copy to use in filing your personal return.

If the LLC is taxed as an S-corporation, it needs to file Schedule K-1 (Form 1120-S) and send you a copy to use in filing your return.

See this TurboTax help article for more information.

[LLCF]

Thank you for your help. It is a partnership. He invested $20,000 at the beginning of 2024. It's an appliance company and he worked delivering appliances and got $24,000 in "pay". 

[LLCF]

The business has a lawyer to file the business taxes separately. 

[DianeW777]

The LLC needs to file a partnership tax return (Form 1065) and issue a 1065-K1 to your husband which will be reported on your personal tax return. Until that happens you really don't know how the LLC is going to treat the income.

In this case, your husband will not receive a W-2 because it's a partnership LLC.

@LLCF 

[Edited: 03/05/2025 | 11:58 PST]

[LLCF]

Great. Once he gets the 1065-K1, I'm assuming he reports that as self employment income? Then should he choose that it's a business or major source or income or what? 

Thank you!

[DawnC]

The entry of Self-Employment Earnings (Loss) is found on Box 14 of the Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc.  For additional information regarding the requirements for Schedule K-1 (Form 1065) see: Partner's Instructions for Schedule K-1 (Form 1065).

[DawnC]

If the amount is in Box 14 of his K-1, it automatically gets reported as Self-Employment income.   You won't need to file a Schedule C and choose from business, side gig, or other major source of income.