Schedule C should be 1065 in 2020, Amendment Required for 2020? Can I file 2021 first?

[okron38]

Wife and I own a multimember LLC along with W2 earnings and file a joint return.  For the 2020 return I see I should have filed a 1065 return but instead I filed a Schedule C.  Since it all flows to the 1040 I don't think there is a tax difference.  Do I need to Amend the 2020 return?  If so, can I go ahead and file the 2021 return first (with a 1065 return)?

Thanks

Ron

[AliciaP1]

Since you are a registered (with your state) multi-member LLC you will need to file a tax-year 2020 Form 1065 and amend your tax-year 2020 Form 1040.  However, you do not need to wait to file tax-year 2021 1065, but it may be easier for carrying information forward.  There are owner capital balances that have to reconcile forward and the 2020 return will be listed as the first return.

Per the IRS:

Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities.

See Limited Liability Company (LLC) for more information.

[okron38]

When filing my Amended 2020 return...I have two business', the one with the multi member LLC only did business in my home state.  The second is an S-Corp which did business in two states.  When I'm starting the Amendment process in Turbo tax it wants me to download and pay for the second state.  Since my problem business only did business in my home state do I need to pay to load the second state?  

[JohnB5677]

Yes, you will need the additional state to account for the S-Corp business that you did out of state.  You should also be preparing an 1120-S for the S-Corp, and issuing a K-1 for your personal tax return.

[okron38]

The 1120-S and K-1s were created in the original filing, I do not need to make changes to that business...If I'm only amending my multi-member LLC filing why do  I  need to do anything again for the other business?

[DianeW777 · Accepted solution]

Even though there is not going to be a tax difference you should file your Form 1065 for 2020. There is nothing to do for the 1120-S business if that return was filed correctly and K1s included on your tax return as they should.

As far as the LLC here is the IRS guidance and what is required.  Complete the 1065 for 2020, then amend your own individual return for 2020 to stay in compliance simply because the LLC indicates incorporation.

• Election for Married Couples-Unincorporated Business (Key is unincorporated)
• Married Couples In Business (Discusses the Qualified Joint Venture)
• How Should A Married Couple LLC File?  (Detailed but very thorough based on residency state)

You will need to use the TurboTax Business version for the Partnership Form 1065 and associated Schedule K-1s.  

• For the Partnership, here is the link to the TurboTax Business software.

[okron38]

@DianeW777 

thanks for that clarification, that makes sense.  Just for clarification regarding my followup TurboTax setup question, I can just ignore the request to pay for a second state form (having to reload the software) since I won't be filling anything new (amending) for that state?

[DianeW777]

Yes, that is correct.  If you do not need to amend the state you can ignore and do not pay for the state.