Husband-Wife Partnerships: The Tax Angles—Part 1

Do you and your spouse work together in a business?

Could the IRS consider the business a partnership?

Then watch out.

You see, running your business as a proprietorship can have major tax consequences… both good and bad.

That’s why the Tax Reduction Letter is devoting two articles to this important subject.

If you want to make sure you’re handling things the right way, don’t wait.

Read my new article titled Tax Tips: Husband-Wife Partnerships: The Tax Angles—Part 1.

Three ways our fact-filled article can help you:

1. You’ll learn why partnership status can cost you big money. The real issue here is the impact on your self-employment tax situation. You see, for 2020, the first $137,700 of an individual’s net self-employment income, including any net self-employment income from a husband-wife partnership, gets hit with the maximum 15.3% self-employment tax rate and that’s just for starters. You’ll get the whole story when you read the full article.
2. We’ll show you how to measure the self-employment tax hit. First, you have to file an annual Form 1065 (U.S. Return of Partnership Income) for the business. Then the partnership must issue separate Schedules K-1s for both you and your spouse. Sorry. This is just the beginning of your calculation. But don’t worry. We’ll tell you all the steps you’ll need to take when you read the full article.
3. We’ll cover many other important topics too, such as…
   • Why the husband-wife partnership exists for tax purposes
   • The penalty for failure to file partnership returns
   • How to elect qualified joint-venture status
   • And a lot more