1120s

[NYCHINO]

To all-

For the past 2-years (2021 & 2022) I filed 1120-S believing that when I opened my LLC I filed the proper paperwork to be treated as an S-corp. Come to find out I didn't. So now what do I do? Do I file an amended personal tax return & add the Schedule C for this sole member LLC?

[Mike9241]

not so fast. you may be eligible for relief. you may want to consult with a pro if you seek this relief so proper filings are done. 

Rev. Proc. 2013-30 facilitates the grant of relief to late-filing entities by consolidating numerous other revenue procedures into one revenue procedure and extending relief in certain circumstances. This procedure provides guidance for relief for late:

• S corporation elections,

Generally, the relief under the revenue procedure can be granted when the entity fails to qualify solely because it failed to file the appropriate election under Subchapter S timely with the applicable IRS Campus and all returns reported income consistently as if the election was in effect. For purposes of this guidance, the “effective date” is the date the election is intended to be effective and cannot be more than 3 years and 75 days from the date relief is requested.

To assist in determining if an entity qualifies for late election relief, Rev. Proc. 2013-30 includes flow charts, as well as specific guidance for each of the five categories listed above.

If an entity does not qualify for relief under Rev. Proc. 2013-30, the entity may request relief by requesting a private letter ruling. The procedural requirements for requesting a letter ruling and the associated fees are described in Rev. Proc. 2021-1(or its successor).

[BrittanyS]

Per the IRS, "Both single-member LLCs and multi-member LLCs can elect to be treated by the IRS as either a C corporation or an S corporation. This election requires filing IRS Form 8832, Entity Classification Election, which must be done no later than two months and 15 days after the beginning of the LLC's tax year."

How did you determine you did not file the appropriate forms?  Did you receive a notice from the IRS?  If you receive a notice, you may just need to respond to the IRS with the Schedule C that should have been filed, as the IRS has already started the process of reviewing the return.  

If you did not receive a notice from the IRS, you would need to amend your personal return and include schedule C.  I would also recommend attaching a copy of the 1120 return with a statement explaining the 1120 was filed in error.  

To amend your return, you can follow these steps:

Re: How do I amend my 2022 Federal tax return?

If the IRS accepts your 2022 return, you will have to amend your return to add the additional W-2.  As @xmasbaby0 stated,  you will not want to make any changes or adjustments to the return while it is in pending status.  The IRS will first have to accept or reject the return.  

If the return is rejected in TurboTax, you will receive a notification with a rejection code from TurboTax, and the return will be opened back up to make changes.  You can add your W-2 at this point.

low the following steps in TurboTax to amend the return:

1. Sign in to TurboTax
2. On the home screen, scroll down to Your tax returns & documents and select the year you want to amend
3. Select Amend (change) return, then Amend using TurboTax Online
   • If you're told to amend your return via TurboTax Desktop, follow the steps for TurboTax CD/Download below instead
4. On the screen OK, let's get a kickstart on your amended return, select the reason(s) you're amending and Continue
5. When you reach Here's the info for your amended federal return, select Start next to the info you need to change
6. Continue through the screens, make the changes you need to make, and carefully answer the remaining questions to finish amending your return

For more information on amending returns, see the link below:

How do I amend my federal tax return?

@NYCHINO 

[NYCHINO]

I came to realize that my 2022 return was rejected when I e-filed. I filed 2021 return by paper & it wasn't filed until Oct -2022. Given how long it takes the IRS in replying or sending out notifications, I am assuming my 2021 tax return was rejected but haven't been notified me yet hence my 2022 filing was rejected when e-filed.  I take I have to amend my 2021 personal tax return to include a schedule C?

How do I cancel my 2021 & 2022 1120-s filings? Since it was rejected does that mean I need not do anything & just amend my personal?

[NYCHINO]

I'm way beyond the 3-years from the date established  the LLC.

I came to realize that my 2022 return was rejected when I e-filed. I filed 2021 return by paper & it wasn't filed until Oct -2022. Given how long it takes the IRS in replying or sending out notifications, I am assuming my 2021 tax return was rejected but haven't been notified yet hence my 2022 filing was rejected when e-filed.  I take I have to amend my 2021 personal tax return to include a schedule C?

How do I cancel my 2021 & 2022 1120-s filings? Since it was rejected does that mean I need not do anything & just amend my personal?

[RobertB4444 · Accepted solution]

You don't cancel the returns.  You have two choices-

1-Amend your personal.  This new amended return will supersede the 1120S returns that you have filed and the IRS should disregard them.  Just make certain that you have entered the EIN for your business into the schedule C.

2-Paper file your 2022 return along with all of the necessary paperwork to qualify you for your S-election (had you filed it on time) and a letter explaining your situation.  Then wait for the IRS to contact you about your 2021 and 2022 filings.

I would do the second, but if you're determined to amend the returns then TurboTax can do it.  Just add the schedule C.

@NYCHINO 

[NYCHINO]

Thank you so much so I should include Form 8832 with my return then

[GeorgeM777]

Yes, and to follow-up on the previous posts, you will need to check the box on Form 8832 indicating that you are seeking late classification relief.  In Part II of Form 8832 you will enter your explanation why your entity classification was not timely filed.  Below is a link to Form 8832, and on page 7 are instructions regarding the late election.  You can use the requirements on page 7 to form your explanation that you must include in Part II of Form 8832.    

Form 8832_Entity Classification Election

@NYCHINO