Sole Proprietor or Partnership for a Married Couple?

Sole Proprietor or Partnership for a Married Couple?

Member since 2022 · 5 posts · 4 votes

Hello everyone, my wife and I are just starting out and we were hoping for some guidance on an issue.

Basically we are trying to fill out a W-9 and aren't sure if we should be a "sole proprietor" or a "partnership." My limited understanding is that in a community property state (such as Arizona) a married couple can be considered a sole proprietor. I have been looking for a CPA, but I was hoping for some advice in the meantime.

We first purchased the property in May of 2022. It is a single family home and we are renting out by the bedroom while living in the master bedroom.

The issue is that one of the applicants we received is in a program for human trafficking victims and the first few months of her rent would be paid by a scholarship from a local church. Her background and credit history are all fine and I don't have a problem with any of this. The church has asked that I provide a W-9. I've read some forum posts and learned that this isn't too unusual, but I'm not sure how I should go about filling out Section 3 of the form.

Any help is much appreciated. Also if you know any CPAs that are familiar with the house hacking strategy in the Phoenix area, I would appreciate their contact informaton.

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  • Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    3y

    You can just provide one or your social security numbers. I think doing it as a partnership would be a horrible idea. So the "sole proprietorship" is the way you want to go. Don't complicate your tax situation for no reason.

  • Member since 2022 · 5 posts · 4 votes
    3y
    Quote from @John Teachout:

    You can just provide one or your social security numbers. I think doing it as a partnership would be a horrible idea. So the "sole proprietorship" is the way you want to go. Don't complicate your tax situation for no reason.

    That does make sense. My fear is that if I make the wrong choice I could lose out on the rental real estate loss allowance. If we file separately, i may pass the $75,000 limit.
  • Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Travis Rush:

    Hello everyone, my wife and I are just starting out and we were hoping for some guidance on an issue.

    Basically we are trying to fill out a W-9 and aren't sure if we should be a "sole proprietor" or a "partnership." My limited understanding is that in a community property state (such as Arizona) a married couple can be considered a sole proprietor. I have been looking for a CPA, but I was hoping for some advice in the meantime.

    We first purchased the property in May of 2022. It is a single family home and we are renting out by the bedroom while living in the master bedroom.

    The issue is that one of the applicants we received is in a program for human trafficking victims and the first few months of her rent would be paid by a scholarship from a local church. Her background and credit history are all fine and I don't have a problem with any of this. The church has asked that I provide a W-9. I've read some forum posts and learned that this isn't too unusual, but I'm not sure how I should go about filling out Section 3 of the form.

    Any help is much appreciated. Also if you know any CPAs that are familiar with the house hacking strategy in the Phoenix area, I would appreciate their contact informaton.


    Normally, in AZ you would create an LLC with you and your wife (Keytlaw.com) as a single member LLC (even though there are two of you), apply for your EIN and do business under your LLC. It's sole proprietor. A partnership has unneeded complications and is undesirable for what you are wanting to do.

  • Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    3y
    If you have "losses" that you can't utilize, they're not "lost", they get carried forward until you can utilize them.
  • Member since 2022 · 5 posts · 4 votes
    3y

    Hello everyone,

    Thank you for your responses. I wanted to post the resolution here just in case someone eventually gets here via a search. I ended up choosing "sole proprietor" thanks to the advice above.

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