“We are fully running the business, paying the expenses, and paying my mother.Is her share in anyway deductible for us as a cost?”=====> I guess UNLESS your biz actively run by you and your spouse is treated as a Qualified joint venture( I mean sole proprietorship treated as a QJV), it is treated as a partenership run by you, your mother and your spouse; then, a partner's income or loss from a partnership is the partner's distributive share of partnership items for the partnership's tax year that ends with or within the partner's tax year. These items are reported to the partner on Sch K-1 of Form 1065. And each poartner’s 1040; I mean yor mother needs to report her distributive share of PS income reported on Sch K1 on hewr 1040. O fcourse as long as the PS pays her guaranteed payment, it d be deducted from taxable PS income. Yur mother, as a partner , is not an EE of the partnership. Your mother’s distributive share of ordinary income from a partnership is generally included in figuring net earnings from self-employment. However, a limited partner generally does not include his or her distributive share of income or loss in computing net earnings from self-employment.I mean UNLESS she is a general partner, she doesn’t fiel Sch SE with the IRS. 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. As long as she is a general partner, then, . Ifshe has net earnings from self-employment of $400 or more for the year, she must figure self-employment tax on Sch SE
“How in the world do we enter this? Its not an LLC...”========>As a PS, you need to file form 1065/Sch K1/Sch E/Sch SE. The other business structure option for married couples jointly owning a business is a partnership. Like a qualified joint venture, you and your spouse and yur mother will share ownership of the business. They make joint business decisions, and both partners take on full liability of the business. However, they need to obtain a tax identification number through the IRS and file different tax forms than sole proprietors.
“I'm lost and I can't afford an accountant.”===->I guess you can contqact the IRs for more info in detail. Please visit the IRS Webpage here to see if you are subject to for free tax filing; Free Tax Return Preparation for You by Volunteers Find a Location for Free Tax Help
You can visit yur state Dept of Rev for free filing:
For example in the case of OR state,QUOTE,” CASH Oregon seeks to help low income families and individuals from every community and background in Oregon. Through our partnerships with AARP Tax-Aide and VITA, CASH Oregon's aggressive Earned Income Tax Credit outreach and free tax preparation programs - coupled with our financial programs in partnership with Innovative Change$ - provide families and individuals with the tools and resources to begin building solid financial futures. 95% of our clients are living on poverty's edge.”