My wife and I have always filed a joint tax return. This year she started a new business, which is organized as an LLC. All of her income flows through the LLC and she pays estimated taxes on the business.
My question is whether we can still file jointly. I am imagining that her income in the joint return would be $0. Is this legal? If so, is it advantageous? My income is significantly higher than her business income.
Of course you can still file jointly. The single member LLC is filed on a Sch C which is part of your personal tax return form 1040 UNLESS she incorporated. If this is your first time with this kind of business I HIGHLY recommend you seek professional guidance the first year to be educated on your new situation.
Is she a Single Member LLC? Is it an S corp? If not a S Corp it is a disregarded entity and she files it on Schedule C as self employment personal income. Her income is not 0. It is the Net Profit or Loss on Schedule C. She has to have a Net Profit to show earned income to qualify for some credits.
To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version. How to enter self employment income
Then enter the estimates. You can type estimates paid in the search box at the top of your return and click Find and it will give you a link to Jump To it.
To enter Federal or State Estimated Taxes Paid, including a state estimated payment made in January for the prior year, go to
Federal on left or at top. Personal (Home & Business)
Deductions and Credits at top
Then scroll way down to Estimates and Other Taxes Paid
Estimated Taxes - click the start button
For 2020 Federal Estimated payments should be on 1040 line 26.
Many thanks, VolvoGirl. This has been very helpful.
I've run into a couple of other questions:
1.) I notice a schedule C that seems to be from last year. It has limited data populated and doesn't seem to make any sense. Any idea why this is there? Can I delete it? If so how.
2.) Having some problems on form 8829. I've entered the square footage of the office space we use in our home: 225 sq. ft. In the Simple Method Smart Worksheet that same number is populated in line B. Line C asks to enter the lesser of 300 or our square footage. I've entered 225. Everytime I run the check function it brings this up as an error. Not sure how to correct. Any thoughts?
Thank you so much for your help. It has been invaluable.