If you are in business with your significant other or know someone who is, listen up!
QJV stands for “Qualified Joint Venture”, and it’s just a fancy IRS term for an unincorporated business that is jointly owned and run by a married couple. Ordinarily, a jointly owned unincorporated business would have to file a partnership return, but if the partners are married, they can file as a sole proprietorship with their personal tax return.
This rule does not apply to a business that is formed as a corporation or a limited liability company (LLC). If that’s the case, you’ll need to file a corporate tax return or a partnership tax return. There is an exception to this one. If the LLC is operated by spouses in a community property state, they are allowed to do simplified filing as a Qualified Joint Venture.
We’ve already covered two of the ways you qualify to be a Qualified Joint Venture – the parties must be married and the business must be unincorporated – however, here are a few more:
The couple must share net income and deductions in the same proportion as each spouse’s interest in the business. Their respective percentages of the business are determined by the partnership agreement.
There must be no other partners in the business.
Both spouses must materially participate in the business.
Each spouse must include a separate Schedule C reflecting his/her share of the income and deductions on their joint tax return.
Each spouse must include a separate Schedule SE that shows that spouse’s self-employment income with their joint tax return.
If the business has employees, then one of the spouses must be designated as the party responsible for reporting and paying employment taxes for those employees.
There’s no formal election required to file as a Qualified Joint Venture. If you qualify as a QJV, you simply include Forms Schedules C and SE with your personal tax return instead of corporate or partnership tax returns. Unless you have employees, there is no need to apply for an Employer Identification Number (EIN).