Iraheta CPA
Level 2

Because they reside in a community property state, the IRS mandates the use of two Schedule Cs. Below is an excerpt taken directly from the IRS website explaining how to report federal income tax as a Qualified Joint Venture, including self-employment tax:

"When spouses opt for qualified joint venture status, they are considered individual sole proprietors for federal tax purposes. The spouses are required to divide the business's income, gains, losses, deductions, and credits in accordance with their respective interests in the business. This same division applies when calculating self-employment tax, if applicable, and may have implications for each spouse's social security benefits. Each spouse must file a separate Schedule C (or Schedule F) to report their individual profits and losses. If necessary, they should also file a separate Schedule SE to report their self-employment tax. Spouses engaged in a rental real estate business not otherwise subject to self-employment tax should mark the QJV box on Line 2 of Schedule E.

 

Election for Married Couples Unincorporated Businesses | Internal Revenue Service (irs.gov)

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