Self employment tax not required, even though I have a K-1??

[garybeck1]

Hello,

In addition to my regular job with W2, I have an LLP business with 1065 and K-1 forms.   I am doing my turbotax now and it is saying that Self Employment tax is only required for people with K-1 forms and is not required for me.  However I **do** have a K-1 and it is entered.   it shows up on my income summary page.  yet still, there is nothing showing on the self employment tax section.   

I think I am supposed to have some self employment tax from my K-1 but it is not asking me for it.

please help!

thanks

[DirkR]

Hi Gary,

Do you have the original partnership Schedule K-1? The self-employment section of the Schedule K-1 is line 14. The most common values on line 14 are coded A and C, for net earnings from self-employment (A) and gross non-farm income (C). If you enter those values, TurboTax will calculate the appropriate self-employment taxes.

Please let me know if you have any additional questions.

Thanks,
Dirk

[garybeck1]

I do have the original K1.  it shows zero on line 14 A.  I used Quickbooks to produce the K1, which sent me to an independent website to have it printed - at tax1099.com.   it is a very simple business and we had a slow year.  I only had ~$2500 of income on the K1.  regardless, line 14A says zero.   is this a problem?

[DirkR]

Maybe... If you are the owner of the business (a closely held partnership), then the box 1 income should be subject to the self-employment tax. Which of the first three lines have value on the Schedule K-1? If line 1 does not have a value, then it makes sense that there is no SE tax. Lines 2 and 3 are for rents received and those are not subject to SE tax.

[garybeck1]

box 1 has the $2500

[garybeck1]

Boxes 19-A and 20-Z also show almost the exact same $2500 amount as Box 1, but nothing in box 14

[DirkR]

Okay. Then I would suggest including the $2,500 on line 14 with code A. It won't match your Schedule K-1 though the IRS will accept the additional tax generated. I see that tax1099.com does work with Quickbooks. Was it filing an estimated 1065 Schedule K-1 or did it prepare the entire return for submission to the IRS?

[garybeck1]

I got shut down for posting too many messages!  what the?   anyway I used Quickbooks (and tax1099.com) to file the K-1s.  Then I used Turbotax Business to prepare and file the 1065.  In there I told it I had already sent out the K-1s.    I followed your advice and added the $2500 to line 14 on the K1.  however this did not change my tax refund amount... and it still says "currently you are not required to pay self-employment tax".   

[DirkR]

Did you make it a code A amount?

[DirkR]

Code C would not change anything. Just informational.

[garybeck1]

yes I used code A on box 14 and my refund did not change at all.
and still, when i peek at the self employment tax section, it says that is only for people with K-1's and not required for me.   

[DirkR]

Since you have the desktop version of the software, I would suggest going to "Forms Mode" and view the Schedule K-1. From there, you can enter your information directly on the Schedule K-1 worksheet.

[garybeck1]

thanks. i had already filed.   but just to check  I went into the forms view and on line 14A it does show that amount.  I have no idea why it was not saying I need to pay self employment tax.  very frustrating.  and it's all filed now so there's nothing i can do.  the only thing I can think, there are two sections for K1 in the Turbotax software.  one is under personal income, it asks if you have any K1s to report.  then there is another section "business taxes."  that is where it shows self employment tax 0 and if i click on it it says I i'm not required.

[DirkR]

Glad to hear the amount was on the line 14. It can be challenging to find where all the data gets recorded/reported in the different worksheets and forms. I suspect you were looking at an area that was meant for Schedule C (self-employed) individuals and it had the wording that mentioned it was only for people with K-1's and not considering there was a K-1 present. I'm glad your taxes were accurate. Sounds like there was an interview screen or help content that could use a little improvement. Thank you.

[garybeck1]

i appreciate your help.  yes I also have a Schedule C.   but i am concerned that I didn't pay self employment tax on my income from my LLP.  on that section where it showed previous year, it showed I paid self employment last year but not this year.  still, I had the amount showing on line 14 of the K1 so hopefully i'm not in trouble.  thanks again.