As an LLC being treated as an S-Corporation for tax purposes, you do not file Schedule SE. What you should have been doing is treating yourselves as employees of the LLC/S-Corp, paying wages and withholding social security and medicare tax, and then reporting that on a W-2. Income reported on a Form K-1 from an S-Corporation is not subject to self-employment tax, so TurboTax is not going to generate a Schedule SE. S corporations can pay out some of their profits as a distribution. Distributions are not subject to self-employment tax. A sole proprietor pays self-employment tax of 15.3% (Social Security and Medicare) on all profits. ... However, an S corporation need not pay all of its profits to its employee(s) as wages. It's one of the advantages of being taxed as an S-Corp; however, you are required to pay yourself a "reasonable salary".
