How to amend or undo a submitted partnership return when I should have just filed as a single member LLC?

[hollyvie2801]

My husband opened a LLC with the state of Florida. His EIN is for a sole member. When I did our taxes I purchased Turbo Tax Business. I filed our taxes as a 50/50 partnership. I only submitted the business taxes to the IRS. I thought I had to file this way because we are married. I am filing a prior year late and procrastinated on submitting them because the business took a 14,000 loss. Even though we’re at a loss for the year, the IRS imposed a $5,000 fine and late filing fee. Then I realized I screwed up big time and there is light at the end of the tunnel. Upon reviewing my husbands EIN, I see he is a sole member and I should have just filed a regular 1040 tax return with a schedule c. Which would have worked out better for us because I had w2 income. So my husbands business loss would have offset my w2 income and we would actually get a refund. How do I fix this? Should I just file my taxes the right way (married joint with 2 dependents) using 1040 and my husbands schedule for his business and attach a letter explaining my mistake? We do not live in a community property state. Please help. 

[RobertB4444 · Accepted solution]

This is a difficult one to fix because you need to undo a submitted return with a new return.

First, I would file the corrected 1040 showing the page for the single-member LLC.  That gets your stuff in the right lane.

Second, I would submit a copy of that return along with a copy of the filing that named your husband a single member LLC and a letter explaining that the partnership return was filed in error to the address that you received the penalty notice from.  This may not help - you may still receive further letters.  But this will get everything into the system so that you can call the service and ask them to help you.  

Good luck!

@hollyvie2801 

[AmeliesUncle]

Go to a good tax professional.  They can file your tax returns correctly, reduce your stress from the wrong-filing, and hopefully be able to abate the penalties.

As you are finding out, in many cases, doing your tax returns yourself (including using Do-It-Yourself software like TurboTax) is the most expensive way to have your tax returns prepared.

[hollyvie2801]

Thank you for the response! This is very helpful! @RobertB4444