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GCKirt
Returning Member

2020 Tax Year question regarding self-employed sick leave credit

In 2020 I worked full time for an LLC of which I was a general member, therefore was considered an independent employee receiving guaranteed payments in place of W2 salary and reported to me on a K-1.  I also had a side business I was trying to get going, selling a few custom specialty items online.  This side was operated under a sole proprietorship.  

 

I did get COVID-19 and took 2 weeks off from my primary, self-employed work and 5 days when my son got it.  When using TurboTax Home & Business to prepare my taxes, I tried to enter information to take advantage of the Sick Leave Credit and because my income was larger in 2019, wanted to use the 2019 net income from Self-employment.  TT automatically pulled in a (loss) value that was based on my side business (sold one product and had some expenses so ended 2019 with a small loss).  Since that was not my net income from my primary self-employment, I don't want to use it.  TT says it pulled it from Schedule SE Short form.

 

My question is what value do I use for the 2019 net income?  Do I use my K-1 - total income?  Some other number?  How to make sure it is not considered by the IRS as an error?  Should I remove my side business reporting since it was minor and resulted in no income or deductions?  

 

Thanks in advance.

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3 Replies
KrisD15
Expert Alumni

2020 Tax Year question regarding self-employed sick leave credit

For clarification, do you pay Self-Employment tax on the K-1 income? 

 

 

According to the IRS:

 

"Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. This treatment is for purposes of determining gross income and deductible business expenses only. For other tax purposes, guaranteed payments are treated as a partner's distributive share of ordinary income."

 

 

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GCKirt
Returning Member

2020 Tax Year question regarding self-employed sick leave credit

Yes, there is self-income reported on lines 14 of the K-1.

RobertB4444
Employee Tax Expert

2020 Tax Year question regarding self-employed sick leave credit

Then combine your self-employed earnings on your K-1 with the net income from your side business and that is your earned income for the year.

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