Family members may operate a business together. A husband and a wife may be partners or be running a joint venture. Each member of a couple who has such a business should report a share of the business profits as net earnings on separate self-employment returns (Schedule SE), even if they file a joint income tax return. The partners must decide the amount of net earnings each should report (for example 50 percent and 50 percent). Each spouse should include his or her respective share of self-employment income on a separate Form 1040 Schedule SE. Self-employment income belongs to the person who is the member of the partnership and cannot be treated as self-employment income by the nonmember spouse, even in community property states. This generally does not increase the total tax on the return, but it does give each spouse credit for Social Security earnings on which retirement benefits are based. However, this may not be true if either spouse exceeds the Social Security tax limitation.

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