Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
Mbronster
New Member

I started a PLLC home business. If I take on a full time W2 position, would that affect how I file my taxes and the deductions I take, if so, how?

I started a PLLC home teletherapy business. If I take on a full time W2 position (doing the same thing), would that affect how I file my taxes and the deductions I take, if so, how?

1 Reply
Opus 17
Level 15

I started a PLLC home business. If I take on a full time W2 position, would that affect how I file my taxes and the deductions I take, if so, how?

If you are in business as a single member LLC, you are considered a "disregarded entity" and you report your business income on a schedule C, that is part of your regular tax return.  You can deduct ordinary and necessary business expenses, and you pay income tax and self-employment tax on the net profit.

 

If you also have a W-2 job, that is reported on line 1 of the same form 1040.  All your taxable income (from W-2s and the schedule C) are combined, you adjust for personal tax deductions, dependents, and personal credits (not part of the business) and you pay income tax on the total taxable income, plus self-employment tax on the self-employment part of the income.

 

It doesn't change anything if the W-2 job is the same type of work as the LLC.  However, you must allocate your business expenses because you can only deduct expenses related to the self-employment (on schedule C); expenses for a W-2 job can't be deducted from your W-2 income. For example, suppose you need a license of some kind, and a requirement to complete CME training.  If 40% of your work effort is for the LLC and 60% for the W-2 job, you can deduct 40% of the cost of your license renewal and training as a schedule C expense, and not the entire cost.  Or if both jobs are work from home, you might be able to deduct a portion of your computer and internet expenses, but only the portion you can allocate to the schedule C business activity. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Dynamic AdsDynamic Ads
Privacy Settings
v