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Old 01-07-2015, 06:49 PM
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LLC Self Employment Tax Question

My business is an LLC electing to be taxed as a partnership. I was reviewing my partnership and personal tax returns from last year in preparation for going to meet with the CPA who prepared them. I noticed that my K-1 reported self employment income but my personal return did not have a Schd SE and no self employment tax was calculated on my personal return.

Did my CPA not include a Schd SE on my personal return because my capital account has a deficit balance?

Thanks for any help you can offer!



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Old 01-08-2015, 02:32 AM
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Did my CPA not include a Schd SE on my personal return because my capital account has a deficit balance========no;it doesn ‘t affect your 50% deduction for SECA tax you paid;your capital account is an equity account in the accounting records of the LLC. It contains the Initial and subsequent contributions by you to the LLC;profits and losses earned by the LLC, and allocated to the partners based on the provisions of the partnership agreement or Distributions to the partners. you, as a partner, are not an employee of the llc(UNLESS you receive a W2 from the LLC). your distributive share of ordinary income from the llc is generally included in figuring net earnings from self-employment (net earnings from self-employment of $400 or more for the year, then, you ned to must figure self-employment tax on Sch SE of Form 1040.) Taxes are not withheld on llc income distributed to a general partner. However, aslongas yu are a limited partner, you , generally do not include your distributive share of income / loss in computing net earnings from self-employment. This exclusion does not apply to guaranteed payments made to a limited partner for services actually rendered to or on behalf of a partnership engaged in a trade or business. Aslongas you are both a general and a limited partner, only the income and loss allocable to the general partnership interest is subject to self-employment tax. Aslongs you pay SECA taxes to IRS, then you do, however, get a tax deduction for one-half of the self-employed taxes paid as an above-the-line deduction on line 29 of 1040. It’d affect the amount of your income subject to income tax to IRS.



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