Are their any tax advantages for a married couple to form a partnership or incorporate?

Question

We own two homes, both work, and have two kids. We are getting killed come tax season and it seems there should be some tax advantages - but we aren't seeing them.

Answer 1

My husband and I own a business and formed an LLC. I would highly recommend finding an excellent CPA in your area and working closely with them. I struggled for years doing our taxes and hating writting the tax check every year. Our investment, retirement planning CPA went over our previous taxes, amended them and got us plenty of money back.

Answer 2

Unless your income is really high, those kids should be saving you tax money, since you'd get $1000 tax credit for each of them if they're under 17.

If you say you're getting killed come tax season, sounds like you're not having enough withheld from each paycheck.

I'm a little confused about your question about incorporating. Do you own a business and work in it together? If you are both employees of other people, then you don't have anything to incorporate.

Answer 3

Not really- if you are just forming the corporation or LLC in order to avoid taxes, the IRS can just pierce your corporate veil and take the taxes it is due. Im in a similar situation to you, except that we only own 1 home, so I would get less of a mortgage interest deduction than you (Ive got 1 less kid too, so less of a deduction there as well). You really just have to suck it up and pay. The only way incorporating could help you is if one or both of you are self employed- then it may be possible to get an advantage.

Answer 4

Unless you're going to go quit your jobs and go into business together, neither of those would do anything for you except run up attorney and accountant bills.

When you say that you're getting killed at tax time, what do you mean? Are you being hit with a large tax bill? If so, you both need to adjust your withholdings at work to ensure that enough money is withheld to cover your tax liability.

If you post some information -- approximate earnings and what you're claiming on your W-4s -- someone here can probably make an intelligent guess as to what you should change your W-4s to.

Answer 5

no tax benefits for partnership.. many tax benefits for incorporating. go get the book "Tax loopholes for the rich" Your second home, if it is income-producing property, should be handles as a business. Also, a lot of two-income families are paying more in taxes than the second income is bringing in. If that's the case, then one of you can afford to stay home, and read more books about reducing your tax debt while building wealth.

Answer 6

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