Originally Posted by Epetrarcaepetrarca
In 2010 my wife an I started a DBA for our new consulting service we started. I immediately became Ill and never contributed any work effort to it. For 2010 true 2013 I filed the earnings all under my wife's SS using a schedule C and paid all taxes due. I just received two notices from the irs wanting to know why we did not file the 1065s for 2010 and 2011. Do I have to refile my returns along with the 1065s or can I check one of the exception boxes in the back of the notice and explain that I was a passive partner all theses years?
In general, the IRS regards your LLC as a partnership UNLESS you formed the LLC as qualified joint venture(you can set it up as QJV only if your state is a community pty state ; QJV is a special tax situation in which a husband and wife jointly running a business that is not a corporation may qualify to file as a sole proprietorship rather than a partnership. The IRS has determined that in the case of spouses owning a partnership, they do not need to file as a partnership on Form 1065, with individual K-1 forms;however to set it up as QJV, your entity shouldn’t be a SMLLC/ MMLLC) or sole proprietorship (where you hire your spouse as an EE and issue her a W2 then you can file Sch C/SE in lieu of complex 1065; If your spouse is your employee, not your partner, you must pay FICA Medicare taxes for her. The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and fica taxes, but not to FUTA tax).So as you said, aslongas you and wife started a DBA and then you hired your wife as your EE and issued her a W2 , then you do not have to amend your Sch C/SE unless your biz was a PS. So unless your biz was qualified joint venture or a sole proprietorship, then you need to file your return as a PS(you need to file form 1065).i guss you need some accurate professional help from an IRSEA/ a CPA in your local area for more accurate info in detail.