My wife has a Revocable Trust, which owns an LLC, which I manage. Not a community property state. Can we file as a disregarded entity? Do we file separately, or jointly?

[hulsebos58]

I have Turbotax Home and Business. Can I use it?

[Carl]

If the trust is the sole owner the LLC, then the trust will report all business income/expenses on SCH C as a part of that 1041 trust return which has to be completed with TurboTax Business. You can't do a 1041 trust return with TurboTax Self-Employed.

[hulsebos58]

So is that to say all Revocable Trusts need to file a 1041 trust return? Is there any situation in which it can file as pass through?

[hulsebos58]

By the way, the trust is the sole owner of the LLC.

[Carl]

There are so many different types of trusts, and just as many ways in which they can be set up. Also, laws governing trusts differ state to state. So I would suggest that for at least your first year dealing with this yourself, you consult with a tax pro who is knowledgeable in the laws of your state governing trusts. Try to find one with the "heart of a teacher" that will educate you, and not someone who is not willing to share their knowledge with you (which you are paying them for by the way).

[Rick19744]

Your trust could be taxed as a grantor trust for income tax purposes which would then report all activity on your personal return without having to file a form 1041.  Would need to read the provisions of the trust document.  I suggest you consult with a tax professional who could provide direction here.

[hulsebos58]

Since we are not in a community property state, it seems my wife and I can't file as a Qualified Joint Venture with our LLC. That means we need to file as a Partnership. Do we need to use Turbotax Business? Or, is there a possibility that as a married couple we could be considered a Single Member LLC, and therefore possibly use Turbotax Home and Business, which I already purchased?

[Rick19744]

You are correct in that since you are not in a community property state, if you have a multi-member LLC that is being taxed as a partnership (which is the default entity selection), you must file a partnership return form 1065.

Attached is a link to TT Business:
<a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/small-business-taxes/">https://turbotax.intuit.com/small-business-taxes/...>

You will still use the Home & Business software to prepare your personal return.  When completing the form 1065 the software will also generate 2 K-1's; one for each member.  These K-1's will then be used to prepare your personal tax return.

As noted previously, we do not know the specifics of your wife's revocable trust.  You need to determine how the trust files as this information will be needed when preparing the applicable K-1.  I would venture to say it is a grantor trust which would mean that no separate trust return would be necessary.  BUT, that is just my guess at this point with limited facts.

[hulsebos58]

Yes, it is a grantor trust.

So now I see that the deadline for filing a partnership return is March 15. Is it possible to file for an extension?

Our LLC was formed Jan 20, 2017 but that wasn't the beginning of the business. It was started years ago. We filed as a Qualified Joint Venture prior to forming the LLC. For 2017, would we file as a Qualified Joint Venture from Jan 1-Jan 19?

If I knew the complications, I might not have created the LLC. Can I revert back, or is that asking for a lot of complexity?

[hulsebos58]

Wait, hod the presses!!! I just read our LLC Articles and found that it was formed as a Single Member LLC in my name. That changes a lot. Now I shouldn't have to file a partnership return.

However I need to figure out how to equalize our income so we both pay into Social Security/Medicare equally. Should I have my wife be an employee? Is it too late to do that for 2017? Will I have to pay penalties? We have been paying estimated taxes, probably in excess.

[Carl]

It's too late to make your wife an employee for 2017, unless you want to pay a lot of fines, penalties, interest and late fees for not having filed and paid the required quarterly withholdings payments for the employer side. As a sole proprietor or single member LLC, all income is reported on SCH C. Period. But there's no reason you can't hire her now for 2018. Keep meticulous records and make "SURE" you file the required forms each quarter (each month if your state requires it) and pay the employer side of her SS and Medicare tax. The fines for a business for not doing so, or for paying late, can be rather high.
Remember, if your state taxes personal income, then you have to deal with that too, in addition to the IRS.