Are the members of LLCs subject to self-employment tax?
Good afternoon, I’m hoping the network will be able to help me answer this tax question that I haven’t been able to answer through research: The Internal Revenue states that earnings from a trade or business are subject to the SE tax and that general partners are also subject to the tax. The rules also provide that the earnings of limited partners are not subject to the SE tax. The key issue is: individuals in an LLC are members and not partners, so attempting to classifying them as either general or limited partners isn’t necessarily relevant. This issue has come up when we try to identify strategies to reduce or eliminate the self-employment tax of clients who own LLCs. Thanks to all in advance for their time, consideration, and replies to this question. Best Regards, Joe Jordan joe@spizzirri.
