Incblog for Entrepreneurs

Covering entrepreneurship and business start up questions for non-residents and US citizens.


Apr 17 2009

Husband and Wife LLC members: is it a partnership?

by John Gordon | 10:04 GMT

If a husband and wife are both members of an LLC and file their (US) tax return jointly, are they considered one taxpayer or two? If they are one taxpayer, it would mean that the LLC is a single-member LLC, and therefore a disregarded entity who need only add the LLC’s profits and losses on their Schedule C. If they are considered separate members for tax purposes they are a partnership, and must file a Form 1065 and prepare separate form K-1s.

The answer is: two members for tax purposes and therefore a partnership. There’s important tax consequences for this, particularly related to self-employment tax and the deductibility of health insurance!



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