First of all, your father in law cannot take payroll from an LLC!!
Your compensation from the LLC (assuming you are a partner in it), would be considered a guaranteed payment, subject to self employment taxes.
Now, this income should have been recorded on your K-1 as guaranteed payment, representing your distributive share of income and deductions from the LLC that you own jointly with your father in law.
Clearly, this is reportable income and must be included on your personal tax return that you filed with your spouse. If this income was excluded or not reported on your 2009 tax return, you must have your CPA file an amended tax return and you would have to pay the additional taxes along with interest related to the underpayment.
So, your answer is yes, you can and should file an amended return as soon as possible to avoid possible penalties related to non-reporting income. |