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LLC Tax returns

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superdairyboy

Junior Member
What is the name of your state? PA

Ok if I have done my Research correctly then.....
Regardless of how an LLC is Treated, weather it be treated as a sole proprieter or as a multi member corporation, the members will be paying the self Employment tax. correct?
Is there any benefit to filing on a 1065 rather then a Schedule C if you are registered as a single owner?
 


LdiJ

Senior Member
What is the name of your state? PA

Ok if I have done my Research correctly then.....
Regardless of how an LLC is Treated, weather it be treated as a sole proprieter or as a multi member corporation, the members will be paying the self Employment tax. correct?
Is there any benefit to filing on a 1065 rather then a Schedule C if you are registered as a single owner?
No, that is not correct.

A single member LLC can be a disregarded entity (a schedule C still filed) or can elect to be taxed as an S-corp. If the LLC elects to be taxed as an S-Corp then as long as the single member receives a reasonable wage for the work that they perform, with proper withholding and social security and medicare taxes withheld/paid, then any remaining profits would not be subject to self employment tax.

In addition, whether taxed as a partnership or as an S-corp, non active partners (limited) or members would not be subject to self employment taxes.

In general, its usually wiser for a single member LLC to be treated as a disregarded entity and a schedule C be filed, but that would/could change if the company experiences significant growth.

Example:

A two member LLC (husband and wife). Wife is NOT active in the LLC. The LLC elects to be taxed as an S-corp. The LLC has 40k in profits, after paying the husband a wage (with proper withholding) of 50k. The profits are split between the husband and wife, on schedule K1's and neither is subject to self employment taxes on the profits.
 

superdairyboy

Junior Member
Ok then so a single owner llc is not reporting as an S-Corp. but is either being treated as a sole Prop, or a corp, will have to pay self employment tax. Is there any other benefit to filing a return as a corp, and filing out a 1065.
 

LdiJ

Senior Member
Ok then so a single owner llc is not reporting as an S-Corp. but is either being treated as a sole Prop, or a corp, will have to pay self employment tax. Is there any other benefit to filing a return as a corp, and filing out a 1065.
A 1065 is a partnership return, not a corporate return. Since there is just one of you, you would simply file on schedule C. The results will be the same as both returns would subject you to self employment taxes.
 

superdairyboy

Junior Member
The reason I ask is that I'm a single owner LLC but have a letter from the IRS stating that we have to file a 1065. And just wanted to know if there were any benefits to filing a 1065 over a Schedule C.
 

LdiJ

Senior Member
The reason I ask is that I'm a single owner LLC but have a letter from the IRS stating that we have to file a 1065. And just wanted to know if there were any benefits to filing a 1065 over a Schedule C.
Explain in more detail about the letter. If you have filed in the past on a schedule C, but did not include the EIN number for the LLC on the schedule C, that could be a reason why you would get that kind of letter from the IRS. However there could be other reasons as well. No, I can't see any benefit to you in filing a 1065 over a schedule C.

However, as I previously explained, there could be an advantage to making an S-corp election for the LLC.

Go get a consult with a local tax pro, with your records in hand so that they can see exactly where you are at with everything.
 

superdairyboy

Junior Member
We formed an LLC in 2007 and were assigned an EIN in the letter the they sent with the EIN they said based on the info provided to them We have to file a 1065. We are a single owner LLC. I'm assuming that our attorney selected to have us treated as an corp so we we have to file the 1065.
I spoke with the IRS and they told me I can get it changed. The lady I spoke with told me I could just send in a letter stateing that we chose the wrong option. I assume that there is a form for this I will go search the IRS site to find it.
I still do all my own taxes so an S-corp sounds like a lot of work. and if I file a 1065 then I have to buy 2 Turbo tax products.


Thanks again for your help.
 

LdiJ

Senior Member
We formed an LLC in 2007 and were assigned an EIN in the letter the they sent with the EIN they said based on the info provided to them We have to file a 1065. We are a single owner LLC. I'm assuming that our attorney selected to have us treated as an corp so we we have to file the 1065.
I spoke with the IRS and they told me I can get it changed. The lady I spoke with told me I could just send in a letter stateing that we chose the wrong option. I assume that there is a form for this I will go search the IRS site to find it.
I still do all my own taxes so an S-corp sounds like a lot of work. and if I file a 1065 then I have to buy 2 Turbo tax products.


Thanks again for your help.
Again, a 1065 is NOT a corporate return, its a partnership return.
 

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