@tugisuwon wrote:
First of all, thank you so much for your reply. I have some follow up questions if it is ok with you.
It was my wife making all the money last year while we both own the LLC. Does it still consider to be partnership? I will definitely take advice from experts from turbotax when completing the tax return. Thank you again for your detailed response.
If "we own an LLC" means you registered the LLC in both your names, then you are bound by the laws that apply to multi-member partnerships, no matter who did the actual work.
If you live in a community property state, a 2-member LLC where the only members are spouses will file as 2 schedule C companies, one in each spouse's name, and each spouse reports half the income and half the expenses, regardless of who did the actual work.
If you do not live in a community property state, the LLC must file a form 1065 partnership tax return. This is due March 15, not April 15, and the penalty for late filing is $200 per month per partner (unless you request an extension). To file a 1065 with Turbotax, you need Turbotax Business. This is a separate program from the personal versions of Turbotax (Deluxe, Premier, Self-Employed) and Turbotax Business is only available on a CD or download to install on a PC, there is no Mac or online version.
When you prepare the partnership 1065, you will also prepare a K-1 statement for each partner that is reported on the partner's personal tax return. (If you file married filing jointly, both K-1s will go on your joint personal return, along with any other income, personal deductions, dependents and credits.) The partnership allocates the income and expenses of the partnership to the partners on the K-1s. I don't know if you can use something other than a 50/50 allocation, it depends on the partnership agreement and may possibly also depend on tax laws that I am not familiar with.
You may want to see an accountant this year. They can teach you how to do it correctly going forward.
