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Partner of an LLC who also works for a wage?

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Azreaal

Junior Member
What is the name of your state (only U.S. law)? Arizona

I am in an LLC Partnership in Arizona with 5 members, each with equal shares of P/L (20%). However, 2 of the members, myself included, work in the business full-time for a wage that has been agreed upon by all members, that does not count as our portion of the profits. Should the two working members receive 1099 forms for their wages? If so, how would you account for that on a Schedule SE, as it only mentions income from Schedule C and Schedule K-1 which don't seem applicable for these wages.

Thank You
 


adjusterjack

Senior Member
I suggest you consult a tax pro.

My guess is that the two of you are W-2 employees and your company should be withholding taxes and social security and the two of you should be filing individual tax returns based on that W-2 income.

And, by the way, should also be paying into your state's unemployment compensation program and covering you for workers compensation.

If you are getting this wrong, it could cost you penalties from several directions.
 

LdiJ

Senior Member
What is the name of your state (only U.S. law)? Arizona

I am in an LLC Partnership in Arizona with 5 members, each with equal shares of P/L (20%). However, 2 of the members, myself included, work in the business full-time for a wage that has been agreed upon by all members, that does not count as our portion of the profits. Should the two working members receive 1099 forms for their wages? If so, how would you account for that on a Schedule SE, as it only mentions income from Schedule C and Schedule K-1 which don't seem applicable for these wages.

Thank You
Those are not really wages, they are guaranteed payments to partners. Those guaranteed payments to partners would be handled in the 1065 and would flow through to those partners via their K-1s. There would be no 1099's issued and the Schedule K-1s would flow through to the Schedule SE on their personal returns, to handle the self-employment tax.

Hopefully you will not be doing the business taxes yourself. Just let your tax professional know that two of the partners have received guaranteed payments to partners.
 

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