LLC question

[SLYKTAX]

Let's say I started a single owner LLC and I make $100,000 in one year.   Can I just keep the profit in the LLC not taking self employment pay and distribution? 

[Anonymous_]

No. You have to report income and expenses each tax year on Schedule C, the same as a sole proprietor.

You cannot defer federal income tax by not taking "distributions" (which would merely be withdrawals from a sole proprietorship).

[SLYKTAX]

Another questions on single owner LLC:

Is it mandatory  to take a self employment pay?  If so, I have retired with a government pension and with Medicare but not SSI pension.  Do I have to pay for SSI & Medicare tax as well? 

Assuming I have losses in LLC when first started.

I have loses in carryover from past years  stock trading that I can deduct $3,000  from my AGI,  can I also deduct losses (how much is the limit?) if I have LLC losses?

[Anonymous_]

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@SLYKTAX wrote:

Is it mandatory  to take a self employment pay?....Do I have to pay for SSI & Medicare tax as well? 

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As single-member LLCs are disregarded for federal income tax purposes, you do not take a salary. 

Rather, you report your income and expenses on Schedule C (1040) and the net profit is reported on Schedule SE where self-employment tax (SS/Med) will be calculated. 

[Anonymous_]

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@SLYKTAX wrote:

I have loses in carryover from past years  stock trading that I can deduct $3,000  from my AGI,  can I also deduct losses (how much is the limit?) if I have LLC losses?

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Net losses from your single-member LLC are ordinary losses and can be used to offset all other types of income. 

Losses from stock sales are capital losses (unless you are a dealer in securities), however, and can be used to offset capital gains with excess losses limited to $3,000 per year to offset other income.

[VolvoGirl]

If your Single Member LLC did NOT  elect to be an S Corp you report it on Schedule C in your personal tax return.  

Sole proprietors cannot take a withdrawal or salary and include it as an expense on their tax return. As a sole proprietor, you are not an employee of the business. You don't pay yourself or enter a salary or withdrawal for yourself. All the business income and expenses are your personal income and expenses in the first place. You just fill out a Schedule C. The net profit or loss is your income.  If you have a net profit of $400 or more on schedule C you will pay SE self employment tax on it in addition to your regular income tax. It's all included on your personal 1040 form.  

If you have a loss on Schedule C it is separate from your investment losses.  There is no max loss.  You can deduct the total loss on Schedule C from all your income.  BUT…Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year.  And you have to answer yes to both questions about exclusive and regular use, not just one.  The area of your home office must be used regularly and exclusively for business to deduct it.

[SLYKTAX]

A little confuse about carryover losses from prior year and/ with LLC Schedule C losses.

• Say, I lost $20K Stock trading in 2023 and is carry to 2024 TY.  In 2024, I have a stock gain of $10K, that mean I can use $10K loss from 2023 to offset the 2024 gain, correct?  Can I also use another $3K from the 2023 carryover loss  to offset other income?
• Let say with Item  1.) I also have LLC on Schedule C and I have a loss of $ 5K  (starting LLC capital outlay expenses).  Can I also apply  LLC  losses to reduce my AGI?
• Let say my LLC loss was $10K instead, can I use only $5K loss instead of $10K leaving another $5K for next year ? The reason being another $5K deduction does not help lowering  my tax bracket.

[Anonymous_]

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@SLYKTAX wrote:

• Say, I lost $20K Stock trading in 2023 and is carry to 2024 TY.  In 2024, I have a stock gain of $10K, that mean I can use $10K loss from 2023 to offset the 2024 gain, correct?  Can I also use another $3K from the 2023 carryover loss  to offset other income?

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Yes, that is correct.

[Anonymous_]

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@SLYKTAX wrote:

• Let say with Item  1.) I also have LLC on Schedule C and I have a loss of $ 5K  (starting LLC capital outlay expenses).  Can I also apply  LLC  losses to reduce my AGI?

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Yes. The net losses you sustain from your LLC's operations are ordinary losses and can be deducted from all other types of income.

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@SLYKTAX wrote:

• Let say my LLC loss was $10K instead, can I use only $5K loss instead of $10K leaving another $5K for next year ? The reason being another $5K deduction does not help lowering  my tax bracket.

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You do not have a choice in this instance; you have to recognize the entire loss which may be used to offset all other income and may create an NOL (net operating loss).

[SLYKTAX]

Not sure what you said by this:

Losses from stock sales are capital losses (unless you are a dealer in securities), however, and can be used to offset capital gains with excess losses limited to $3,000 per year to offset other income.

You mean:

In addition to using capital losses to offset capital gain,  excess capital losses can be used to offset other income but is  limited to $3,000 per year? 

Thanks

[SLYKTAX]

My wife and I are retired. I have a government pension, and my wife has SSI pension. 

Let say, I start a single member LLC.   The self-employment tax rate is 15.3% consists of 12.4%  for social security and 2.9% for Medicare. 

Why pay Medicare again as we both pay Medicare Premium every month? Can we deduct that?

If so and if I am the single member LLC and my wife wasn’t,  can I deduct her Medicare premium too if we file jointly?