I started an LLC in 2023 and added it to my tax return even tho there was very little claimed on it.
There was no activity in 2024, and I plan to close the LLC by the end of the year by filling out the forms.
Can I leave this off this year's tax return due to inactivity?
SINGLE MEMBER LLC (SMLLC)
A single LLC is considered a Disregarded Entity and defaults to a Schedule C (Profit or Loss From Business) or Schedule F (Profit and Loss from Farming) as applicable, thus, you do NOT have to include it on your 1040 if there is NO ACTIVITY. One thing that needs to be clarified, having expenses for the operation of the business despite having little to no income is regarded as Business Activity and the appropriate tax forms should be filed as such.
MULTI MEMEBER LLC and S-Corporations
A Multi-Member LLC , by default, is regarded as a Partnership and files IRS Form 1065, unless an election is made to be regarded as an S-Corporation by filing IRS Form 2553.
Per IRS, a domestic partnership must file an information return, unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal income tax purposes.
Partnerships Filing Requirement - IRS
However, an S-Corporation that has no expenses, depreciation, assets, carryforwards, etc., MUST still file a Tax Return (IRS Form 1120-S) regardless of activity as long as the S-Corporation Election remains in effect.
The penalty for NOT filing the S-Corporation Tax Return is $235 for each person who was a shareholder any time during the tax year, for each month or part of a month that the return was filed late, for up to 12 months.
U.S. Income Tax Return for an S Corporation
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Hello Lori_E,
If this is a single member LLC and there is no activity in 2024, you do not need to report it on tax return. Make sure to file paper work with state to dissolve it. If this is a LLC that elected to be treated as Corp., you have to file a return and mark this as a final year.
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Regards,
TurboTax Expert
SINGLE MEMBER LLC (SMLLC)
A single LLC is considered a Disregarded Entity and defaults to a Schedule C (Profit or Loss From Business) or Schedule F (Profit and Loss from Farming) as applicable, thus, you do NOT have to include it on your 1040 if there is NO ACTIVITY. One thing that needs to be clarified, having expenses for the operation of the business despite having little to no income is regarded as Business Activity and the appropriate tax forms should be filed as such.
MULTI MEMEBER LLC and S-Corporations
A Multi-Member LLC , by default, is regarded as a Partnership and files IRS Form 1065, unless an election is made to be regarded as an S-Corporation by filing IRS Form 2553.
Per IRS, a domestic partnership must file an information return, unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal income tax purposes.
Partnerships Filing Requirement - IRS
However, an S-Corporation that has no expenses, depreciation, assets, carryforwards, etc., MUST still file a Tax Return (IRS Form 1120-S) regardless of activity as long as the S-Corporation Election remains in effect.
The penalty for NOT filing the S-Corporation Tax Return is $235 for each person who was a shareholder any time during the tax year, for each month or part of a month that the return was filed late, for up to 12 months.
U.S. Income Tax Return for an S Corporation
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