Steps to Amend my return (filed as Sch C instead of 1065)

[okron38]

I'm confused on how to get started...

Background: using TT Home and Business I filed my 2020 return with a Schedule C, however,  the Sch C business should have been filed as a partnership using Form 1065 on TT Business. 

Where do I start, what are the steps?

Do I open TT Business and say amend the Schedule C (even though that form is not on the software)?  Any help is appreciated.

[ThomasM125]

First of all, if you had a partnership, that means the business would be owned by more than one person. Otherwise, if you were the only owner, you were correct in completing a schedule C, even if the business was organized as an LLC.

Assuming you have partners, then you should complete a partnership form 1065 using TurboTax Business and generate a K-1 schedule that you can use to prepare your amended personal tax return. To amend your personal return, you would remove the schedule C entries and enter the K-1 schedule in TurboTax. You will see an option to prepare an amended return on your Tax Home page in TurboTax.

[okron38]

@ThomasM125

In the BUSINESS INFO section (after the initial questions and notice of filing before March 15, 2021) of TT Business it asked me "Do you need to file an amended return?" 

Am I correct that at this point because I'm in TT Business creating my 1065 return I should say "NO"?  It will be in the TT Home and Business product that I tell TT I'm filing an Amended return?

[RobertB4444]

An amended return is a change to the original return.  Since you never filed the original 1065 this isn't an amendment it is a new return.

You should be aware that there are penalties for filing a partnership return late even if no money is owed by the partnership.  

The penalty is $210 for each month (or part of a month) per partner up to a year.  So be sure that you want to do this and be prepared to submit the original schedule C along with a receipt showing that you filed in order to request that they waive the penalties.

[VolvoGirl]

I assume you have both programs?   Turbo Tax Business and Turbo Tax Home & Business?   And you filed the Home & Business personal return with Schedule C.   

Yes you need to amend your personal 1040 return to take off Schedule C and add the K-1 you will get from the 1065 Partnership return.   So you can't amend until you file the 1065 Business return.  You will use the Home & Business program to amend.

Right, you don't need to tell Turbo Tax Business anything about amending.   Just do a new 1065 return.   

[okron38]

@RobertB4444 

I filed on time a return for this business (I'll call it XYZ LLC) using TT Home and Business.  I also have other business' which requ;ired using TT Business.  I now realize that the return I filed (which was a Schedule C) should have been a Form 1065.  Surely I'm not penalized as a first time filing in this situation?

[RobertB4444]

It would be nice if the IRS was as understanding as that but they aren't.  When you file this 1065 it will be seen as filing a return almost a year late.  They will almost certainly send you a bill - and a big one.

That is why I say you should gather up the documents you need now - be prepared.  Have a copy of the schedule C that shows that the business was reported albeit incorrectly.  Then you'll send that form (and your 1040) along with proof that you filed on time and a letter explaining what happened.  Since you did file timely that should - no guarantees, but should - get them to abate the penalties.  

[ThomasM125]

You will get a penalty for filing the form 1065 late, but you can protest the penalty and it may be removed. You just have to respond to the penalty notice you will receive with the reasons it was filed late.