My wife, along with two other people, put on sports camps during the summer. At the present she gets paid with a check and gets a 1099-MISC after all profits and expenses are counted up at the end of the summer. We file a Schedule C and pay the SE tax and also have to put this all on our 1040. This essentially taxes the income at about 40-50%. If they were to form an LLC and essentially do everything else the same along with filing a Form 1065 and K-1's each year for the LLC are we able to just file with a 1040 and avoid the SE taxes?
2007-04-14 19:45:07 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
You would gain no tax benefit by forming an LLC. An LLC is a pass-through entity, therefore all of the income and deductions would be directly passed through to you and you would still be taxed at the same rates. In addition, you also have to file an informational return for the LLC. You would still have to pay self-employment taxes.
If you have any legal liability issues with the sports camp, then the LLC would sheild your personal assets.
2007-04-18 16:37:46 · answer #1 · answered by Anonymous · 0⤊ 0⤋
No you cannot file as a LLC with a 1040 form. LLC's have reduced liability compared to companies but do not allow you to file as an individual (a "partnership" would). An LLC is a corporate entity and the company files as an entity itself not it's directors/board.
2007-04-14 20:06:08 · answer #2 · answered by Blackheart 2 · 0⤊ 0⤋
Partners in a partnership (Form 1065) also pay SE tax on their earnings so you would not gain anything.
2007-04-15 02:41:17 · answer #3 · answered by Wayne Z 7 · 1⤊ 0⤋
i imagine you ought to search for suggestion from a tax adviser before doing some thing extra. inspite of you're charged is going to be funds properly spent if it in elementary words keeps your butt from getting kicked once.
2016-12-04 01:33:26 · answer #4 · answered by ? 4 · 0⤊ 0⤋