Retirement Plans for an LLC which issues K-I that does not pay social security tax
I and another individual own a business and formed a LLC. We each receive a schedule K-1 and pay no SSA tax. Which retirement plans are available to contribute into. Income exceeds 150,000 and over 50 age. Thanks
Permalink Submitted by David Mertz on Thu, 2018-09-27 19:16
If your $150,000 of income includes income from the LLC (i.e., the LLC makes a profit), why do you pay not Social Security and Medicare taxes? If the company is a partnership, your compensation should be shown as net earnings from self-employment with code A in box 14 of the Schedule K-1 (Form 1065) and be subject to self-employment tax (for Social Security and Medicare). If the company is an S corp, you are required to pay yourself a reasonable wage on which Social Security and Medicare taxes are required to be withheld.