Self-employed spouses still owe taxes even if one loses more than the other makes | North Salem NY Real Estate

 

The vast majority of real estate brokers and agents are self-employed sole proprietors. They are often married to spouses who are self-employed as well. Marital togetherness is great, but when spouses each have their own separately run business, they need to keep their business income (or losses) separate for self-employment tax purposes. One spouse’s business losses cannot be used to reduce the other spouse’s net self-employment income and thereby reduce the Social Security and Medicare tax due on that income. This is so even if spouses live in a community property state like California. The U.S. Tax Court recently taught this lesson to Brenda Fitch, a California-licensed real estate agent, and her husband, Donald, a CPA. Self-employment taxes are based on net earnings from self-employment — that is, on the profit earned from the business after subtracting deductible expenses.

 

 

– See more at: http://www.inman.com/2014/02/24/self-employed-spouses-with-separate-businesses-still-owe-taxes-even-if-one-loses-more-than-the-other-makes/?utm_source=20140224&utm_medium=email&utm_campaign=dailyheadlinesam#sthash.qv1F5J6t.dpuf

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