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I am regular salaried employee, my wife is unemployed and started a sole proprietorship business this year (more a hobby than a serious source of income). Her business is quite slow and will hardly break even by the end of the year. IRS p583 states that she has to file her income in regular tax return. Questions:

  • Do I understand correctly, that we still can file as "Married filing jointly", just add Schedule C and Schedule SE for her?
  • Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)?
  • Do I understand correctly that we do not qualify as "Family partnership" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)?
  • Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year?
  • How did she register the business with the state (sole proprietor, LLC, etc.)? The answer to that will determine if the business has to pay tax returns, which would be separate from your personal returns. It sounds like you're getting to two confused, but it's hard to tell with the information that you provided. – user32479 Sep 16 '15 at 12:25
  • @Brick, It's sole proprietorship, as stated in the first line... – n0rd Sep 16 '15 at 14:41
  • In my state, what you've described doesn't make sense. Sole proprietorships don't register as businesses unless they take the legal form of an LLC. Yet your question states that it's a sole proprietorship and that you got a business registration letter. That might be correct where you live, but we may need more information to help. It's hard to tell if you're using the terms loosely, using them correctly under the laws of your state, etc. What state? What type of license / registration? – user32479 Sep 16 '15 at 14:52
  • @brick A sole proprietorship has to register with the state if you sell retail, because you have to collect sales tax. (Assuming your state has a sales tax.) Also, at least some states require that you register the business name. I presume so that they can verify that you're not duplicating someone else's business name and/or so they can track you down if there are complaints. And to collect the fees. I've created tiny businesses in two states -- Ohio and Michigan -- and in both cases I had to register the name with the state. – Jay Sep 17 '15 at 6:13
  • Are you sure Jan 31 isn't the due date to make estimated payments? Or that it's not an option if you are using a fiscal year different from the calendar year? Or perhaps a due date for something other than income tax, like property tax, sales tax, etc? The feds normally don't require payment until April 15, and the states where I've lived have all had state taxes due on or after that date. – Jay Sep 17 '15 at 6:16
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Do I understand correctly, that we still can file as "Married filing jointly", just add Schedule C and Schedule SE for her?

Yes.

Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)?

IRS sends no such letters. IRS also doesn't require any registration. Be careful, you might be a victim to a phishing attack here. In any case, sole proprietor files a regular individual tax return with the regular April 15th deadline.

Do I understand correctly that we do not qualify as "Family partnership" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)?

Yes.

Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year?

You're asking or saying? How would we know what she expected? In any case, you can use your withholding (adjust the W4) to compensate.

  • Letter regarding January 31st being the tax return due date was from State Department of Revenue and came with the business license. – n0rd Sep 16 '15 at 6:41
  • That's regarding state taxes (sales and use, we don't have state income tax) then, I suppose? – n0rd Sep 16 '15 at 6:49
  • @n0rd can't say anything about State taxes, I don't even know what State you're in – littleadv Sep 16 '15 at 17:18
  • After having a sleep and reviewing everything I think I have everything figured out. Thanks a lot! (It's Washington state) – n0rd Sep 16 '15 at 17:39

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