I have a company with 4 partners, 2 of which receive W-2 wages. Is this allowed?
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LLC-Members W-2
How did the LLC elect to be taxed? Partnership? C Corp.? S Corp?
If elected to file as partnership, then no W-2s. There could be guaranteed payments,
but these would be reported on the K-1.
If C or S Corp. then, yes, there should be W-2s issued if they participate in the
operations of the corp. -
TTB, page 20-5, "Author's Comment: It is not uncommon to see partnerships pay partners as employees, withhold taxes, and issue W-2 Forms at the end of the year. However, according to Revenue Ruling 69-184, a partner should not be treated as an employee of a partnership, and is not subject to employee withholding for FICA, FUTA, or federal income tax. Partners should be compensated with guaranteed payments, and should not be treated as employees by a partnership."Comment
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