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How does pass-through taxation work in regards to an LLC?
First you need to realize that an LLC is a legal entity and the way it’s taxed depends on whether it consists of a single member or multiple members. A single member LLC is considered by the IRS to be a “disregarded entity” which means that the business income and expenses get reported on your individual  Schedule C,E, or F (depending on the type of business) and the results “pass-through” to your Form 1040.  The result is that your business income gets added to all your other types of income to compute your tax liability.If you have a multiple member LLC you can choose to be taxed as a partnership or a corporation.If you choose partnership taxation, the business will file Form 1065 and items of income and expense will “pass-through” to the partners via Schedule K-1 which then flows to Schedule E on your personal tax return.If you choose corporate taxation and meet the requirements to be an S corporation, you can file Form 1120S which lets the business profit “pass-through” via Schedule K-1.Basically, what “pass-through” taxation means is that the business is a reporting entity only, NOT a tax-paying entity.  The business income passes through to the individual business owner who must pay taxes on it.This is not the case for a multiple member LLC who chooses to be taxed as a C (or regular) corporation because that entity IS a tax-paying entity.
Which tax filings apply if I pay myself, through my LLC, as a 1099 contractor?
The short answer - no.The long answer - there are other ways to accomplish your goals and some of it depends on how you're organized.LLCs can choose to file taxes as though they are a corporation (form 1120 or form 1120s) or a partnership (form 1065).  However, if you are a single member LLC, you cannot use a form 1065 - you must file schedule C on your personal form 1040.If you've chosen to file as a corporation, then you can pay yourself a small(ish) salary and take the rest of your income as dividends/shareholder distributions.  There are varying formulas that different CPAs recommend to their clients.  I tend to lean a bit on the conservative side and I recommend that my clients take approximately 50% of their profits as salary and the balance as distributions.  The salaries are subject to unemployment insurance, FICA taxes and worker's comp insurance calculations (although you can choose to exempt yourself from worker's comp), but the distributions are not.  There is an added need within a corporate structure to have "reasonable" salary.  So even if you do not follow a 50% split and choose something lower for salary, it still must be reasonable.  For example, a doctor who has $300,000 of corporate income may not pay him/herself a salary of $30,000.  The IRS will view that (rightfully) as an attempt to avoid payroll taxes and assess additional tax, penalties and interest accordingly.If you've chosen to file as  partnership or if you are a single member LLC, then you just write yourself a check for whatever amount you choose.  Paying a salary to an LLC member is not the proper way to be compensated.  You simply take whatever you like out of the company as an equity distribution.  ALL of your net profits are taxable for both parts of FICA (Self Employment Tax), but none of it is subject to unemployment insurance.  Regardless of which tax structure you've chosen - partnership, sole proprietorship or corporate, it is never proper to pay yourself as a subcontractor.  Amounts you pay yourself as a partnership or a sole proprietor are not deductible as an expense.  For a corporation, only amounts paid to you as salary are deductible.
Tax Law: May a single member LLC use Form 1065 and Schedule K-1 instead of Schedule C?
No, you cannot file a single-member LLC as a partnership. The only option that you have in this case is to make an election to be treated as a association taxable as a corporation, by filing Form 8832 (and then you can elect to be treated as either an S-corporation by also filing Form 2553). See Limited Liability Company (LLC) on the IRS Web site.
Required documents for single member LLC in WA for taxes?
Based on the nature of your question I assume that you have not elected to be treated as an S-corporation or C-corporation for tax purposes.If you are the 100% owner of the LLC, you disregard the LLC for tax purposes and file Schedule C with your Form 1040 to report the income and expenses from the LLC. If you have positive net income in excess of $400, you will file Schedule SE to pay self-employment taxes on the net income. You don't need any special form from the LLC, all you need is the documentation of the LLC's income and expenses.If you have more than one owner of an LLC, you will file Form 1065 as a partnership. The net income from the LLC will be reported to the partners on Schedules K-1, and each partner will report the income from the partnership on their individual Form 1040s (usually on Schedule E). Partners who are actively involved in the conduct of business for the partnership will pay self-employment taxes on their share of the partnership income. For your individual tax purposes you will use the Schedule K-1 from the LLC.If you have elected to be treated as a corporation for tax purposes, you file the appropriate form (1120S for S-corporation, 1120 for C-corporation). If the LLC is being treated as an S-corporation, you will receive a Schedule K-1 from the S-corporation for your individual taxes. If the LLC is being treated as a C-corporation, the only thing that affects your individual taxes would be a dividend distribution from the C-corporation to you, and you would then receive a 1099-DIV from the C-corporation.Added after reading Joe's answer: Washington State provides a good guide on its Web site: Small Business Guide Page on Wa.
Where can I e-file Form 1065 and Schedules K-1 for free?
I used taxsoftware.com for several years in a row to do my 1065 and K-1s. Although the interface was kind of “rinky-dink” (as another answerer put it), I was able to make it work. They were always quick to answer and resolve my questions. It got the job done and it was much cheaper than the alternatives.This year I went to do my 1065 • and got“DNS address could not be found.” A little annoyed, I sent an e-mail to their old help address. It bounced, of course. Then I did some searching just to see if anything else turned up.This is what I found: On February 27, 2022. the people who made taxsoftware, Alessandra and Mickey Buarque de Macedo, died in a car crash along with their son.He was going 115 mph. They were driving to a school play. Then, a deadly crash.Driver Sentenced to 12 Years in Crash That Killed 3 Members of Bethesda FamilySite of River Road Crash That Killed Family Undergoing ChangesAside from using their software • on the last occasion, just a week or so before their deaths • I didn’t know the Macedos. I didn’t even know their names. But I appreciate that they made my life a little better, and I thank them for that. It’s making me think about how to be sure that I make other people’s lives better too. It could happen to any of us, any time.
LLC is a year-old in TX and I'm 60% owner. When do I report my earnings to the IRS?
LLCs are created to limit owners liability to the assets of the business and to protect their own personal assets. In general, all profits and losses are passed through to their owner(s) for tax purposes.Assuming your LLC has not been re-categorized as a Corporation or S-Corp, you will pay taxes (and self-employment taxes) on your share of the profits every year. You should get a K-1 from the LLC delineating your share and report it when you file your personal income taxes each year.If your LLC is now a year old, I would expect you to get a K-1 for 2022 tax purposes. If you are expecting substantial profits, consider paying estimated taxes to avoid a tax penalty when you file your return.
Is the Schedule K-1 the same as the Form 1065?
Form 1065 is an information return filed by partnerships in the US. Partnerships are not taxed on the income that the partnership earns; the tax liability on the partnership income is passed through the partnership to the individual partners.When Form 1065 is filed, the partnership reports each partner's share of the partnership income and deductions and credits that are passed through to them on Schedule K-1. Each partner gets a copy of the applicable Schedule K-1 and uses the information from that form on their own individual tax returns. So Schedule K-1 is a part of Form 1065, generated from the information that the partnership reports on Form 1065.
The IRS sent me a form 1065, but I am a sole proprietor. Do I ignore this form and fill out a schedule C?
I would assume that you applied for an employer identification number and checked the partnership box by mistake instead of sole proprietor. If this is the case, this requires you to obtain a new EIN.If you properly filled out the application for an EIN, you can ignore the 1065 notice.Your EIN acknowledgement letter from the IRS will state what type of return they expect you to file under the EIN.
Do you have to file schedule K-1 as well as form 1065?
1065 is the LLC or LLP filing if there is more than one ‘partner or owner’. That generates the K-1 that goes onto every ‘owner/partner’s• form 1040 personal taxes. (Not tax advice)
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