Originally Posted by Jandvs
Followup question. I'm using TaxAct for my return. The 1065 filing gives me two K1's. One for me and one for may wife. Does that mean I have to add both to the 1040, one for me and one for her? or can I combine them for me and her equally? The K1's show everything to be 50%. (I'm assuming the latter).
it deepends; as;longas you file your return as MFJ with your spouse, you need to combine them on your j oint 1040.An S corp filed federal form 1120S. This is an informational return only. By that, I mean that the income and expense figures for the S corp are reported on the tax form, but the bottom line is divvied up between the shareholders and taxed on their Form 1040 at their individual tax rate. since you?re a husband and wife filing a joint return, you?re considered one person in the eyes of the IRS so all the S corp income or loss will be lumped together with all your other 1040 items.
if a husband and wife are both shareholders but they file separate returns, thenEach spouse?s portion of the S corp income or loss is reported separately on the individual 1040s.In genral,It is advisable to report it separately on Sch E - listing it as - one owned by taxpayer and one by spouse.
Tax effect would normally be the same