Contact UsNew LLC, Qualified Joint Venture with one spouse on a green card. Tax implications? Also, LLC has an EIN, does that require a 1065?
I’m an independent tax preparer in California with 6 years’ experience. I have just a few (~25) clients (for whom I provide bookkeeping & tax-related services) because I’m a full-time nursing student as well. My newest client is a husband-and-wife qualified joint venture. She is a citizen of Great Britain and has a green card. Their LLC was created in March 2014, and I am tasked with preparing their tax return. They have asked for advice regarding whether or not to elect S-corp status, and also what benefits and drawbacks are relevant for them in determining whether to file a 1065 or 2 Schedule Cs. I feel moderately comfortable answering that question in general, but are there any differences in their outcomes based on the wife’s citizenship status?
Also, the LLC has an EIN that it’s been using for paying employees. Does that require a separate return for the LLC anyway? I know if we file using 2 Schedule Cs, each member must use their own SSN (or ITIN). Where would the LLC’s payroll tax, etc. expenses be deducted if we choose the Schedule Cs?
Also, the LLC has an EIN that it’s been using for paying employees. Does that require a separate return for the LLC anyway? I know if we file using 2 Schedule Cs, each member must use their own SSN (or ITIN). Where would the LLC’s payroll tax, etc. expenses be deducted if we choose the Schedule Cs?
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Tax Professional Answers
John Stancil
Several issues here. First, as a qualified joint venture formed as an LLC, they cannot file two schedule C's. The must file a 1065 or elect S corp status. I don't know enough about the organization to advise you which way to go on that. Having payroll does not affect how the organization files its income tax return. The EIN is used for all Federal tax matters, you don't have separate one for payroll and another for income tax. Since you can't file Schedule C's, its a moot point, but you can put the EIN on a Schedule C. Holding a green card does not affect reporting for the LLC.
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473 weeks ago
Question Owner
Hi! Thank you for your detailed reply! Yes, they did this without consulting me. To be fair, we hadn't yet met when they started their business, which is a doggy day care/boarding facility. Based on my previous research, it seems that since we live in a community property state, the QJV status is allowed for a H/W LLC.
(See: Rev. Proc. 2002-69, 2002-2 C.B. 831)
Assuming that my interpretation is correct, would electing QJV status affect their ability to write off their organizational expenses?
Also, assuming they choose to be QJV, their Sch Cs (presumably) would be filed with their SSNs. But they are using an EIN to pay employees. How will we reconclile the EIN's payroll tax returns (940, 941, etc) with the H/W Sch C deductions for wages, taxes, etc?
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473 weeks ago
(See: Rev. Proc. 2002-69, 2002-2 C.B. 831)
Assuming that my interpretation is correct, would electing QJV status affect their ability to write off their organizational expenses?
Also, assuming they choose to be QJV, their Sch Cs (presumably) would be filed with their SSNs. But they are using an EIN to pay employees. How will we reconclile the EIN's payroll tax returns (940, 941, etc) with the H/W Sch C deductions for wages, taxes, etc?
John Stancil
Several issues here. First, as a qualified joint venture formed as an LLC, they cannot file two schedule C's. The must file a 1065 or elect S corp status. I don't know enough about the organization to advise you which way to go on that. Having payroll does not affect how the organization files its income tax return. The EIN is used for all Federal tax matters, you don't have separate one for payroll and another for income tax. Since you can't file Schedule C's, its a moot point, but you can put the EIN on a Schedule C. Holding a green card does not affect reporting for the LLC.
Leave a Comment
473 weeks ago