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Old 03-28-2015, 05:37 PM
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New LLC, Qualified Joint Venture with one spouse on a green card. Tax implications? Also, LLC has an EIN, does that require a 1065?

I’m an independent tax preparer in California with 6 years’ experience. I have just a few (~25) clients (for whom I provide bookkeeping & tax-related services) because I’m a full-time nursing student as well. My newest client is a husband-and-wife qualified joint venture. She is a citizen of Great Britain and has a green card. Their LLC was created in March 2014, and I am tasked with preparing their tax return. They have asked for advice regarding whether or not to elect S-corp status, and also what benefits and drawbacks are relevant for them in determining whether to file a 1065 or 2 Schedule Cs. I feel moderately comfortable answering that question in general, but are there any differences in their outcomes based on the wife’s citizenship status?

Also, the LLC has an EIN that it’s been using for paying employees. Does that require a separate return for the LLC anyway? I know if we file using 2 Schedule Cs, each member must use their own SSN (or ITIN). Where would the LLC’s payroll tax, etc. expenses be deducted if we choose the Schedule Cs?



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Old 03-28-2015, 07:17 PM
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I’m an independent tax preparer in California with 6 years’ experience. I have just a few (~25) clients (for whom I provide bookkeeping & tax-related services) because I’m a full-time nursing student as well. My newest client is a husband-and-wife qualified joint venture. She is a citizen of Great Britain and has a green card. Their LLC was created in March 2014, and I am tasked with preparing their tax return. They have asked for advice regarding whether or not to elect S-corp status,===>>Of course; they can after setting it up, they can elect to have the LLC treated as an S corp for tax purposes. If their LLC operates an active trade or business, and payroll taxes /SECA taxes on sch se on the owner or owners are high, they may find that an S corp election is the best choice.


and also what benefits and drawbacks are relevant for them in determining whether to file a 1065 or 2 Schedule Cs.==>>as far as I know, 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.QJV is allowed only in a community pty states,i.e. CA or etc. QJV does not need to file complex LLC RETURN FORM, F1065. The IRS states specifically that a LLC\ cannot elect to be a QJV.BUT IRS
says that a husband-wife LLC in a community property state can make the decision to be taxed as either a partnership ., it is a lot cheaper and it takes less time to file taxes with a Sch C through your personal tax return than to file 1065 which is
more complicated partnership return and additional schedules. Both spouses receive Social Security/Medicare credits for business profits. Married co-owners failing to file properly as a partnership may have been reporting on a Sch C in the name of one spouse, so that only one spouse received credit for social security and Medicare coverage purposes. The election as a qjv permits certain married co-owners to avoid filing partnership returns, provided that each spouse separately reports a share of all of the businesses’ items of income, gain, loss, deduction, and credit. Under the election, both spouses will receive credit for social security and Medicare coverage purposes.
I feel moderately comfortable answering that question in general, but are there any differences in their outcomes based on the wife’s citizenship status? ====no problem based on her citizenship status; as a US resident, a green card holder, she also needs to pay taxes to irs/CA on her US source and world wide income and she can deduct her foreign taxes paid to UK taxing authorities on her US return on 1040 line 47 I guess or on SCh A line 8 by claiming either one of them.

Also, the LLC has an EIN that it’s been using for paying employees. Does that require a separate return for the LLC anyway?==>>yes; as said each spouse must file a separate Sched C to report profits and losses and, if otherwise required, a separate Schedule SE to report self-employment tax for each spouse.


I know if we file using 2 Schedule Cs, each member must use their own SSN (or ITIN).=========>>correct;I guess either ssn# oe EIN#


Where would the LLC’s payroll tax, etc. expenses be deducted if we choose the Schedule Cs=======>>Assuming you paid your employees by check legally and withheld payroll taxes then your employees gross wages goes on Line 26 of Sch c. The amount of payroll taxes you paid goes on Line 23 along with any other taxes and license expenses you paid.



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