Self Employment Tax for Spouse on MFS Community Property State

[raym2612]

My client files MFS in a community property state. The income is split between each person but the SE tax does not get allocated and is only associated with the person whose business it is. When splitting the income, the SE calculation is auto completed. How can the amounts be overridden for the return that is not liable? Income was entered as Schedule C for both returns.

[Just-Lisa-Now- · Accepted solution]

Youd make adjustments for splitting the net profit on Line 21, other income.  Leave the SE form on the SE clients return.

[George4Tacks]

Use the search box at the top of the left column and search for "Schedule SE" You can enter a negative adjustment there. 

If you are entering a Schedule C, there is a check box, almost to the bottom on the Business Information screen for Not subject to self-employment

[Just-Lisa-Now-]

It was my understanding that you don't split the SE tax, only the income.

[raym2612]

That is correct. You only split the income and the tax stays with person that has the business.

[Anthony1s]

Search Schedule SE and enter the amount claimed on the spouse tax return in the box "Community income taxed to spouse [Override]". This will adjust the self employment tax and deduction without increasing self employment income. On the spouse return, go to Schedule C, scroll to the bottom and check the box "Not subject to self-employment tax".