Married Filing Joint with income from LLC

[lnbartolome]

My husband and I have been doing our taxes for a few years on TT but our business wasn't making any income so we haven't had to file Business income/expenses. We used to have our business taxes done (2013-2015) by a CPA and he filed us as married joint with two separate schedule c's.

I'm getting confused with all the different responses for this situation. Is it newly implemented that we have to file a form 1065? how do I go about doing that? Our business has been active since 2013 but we haven't reported any income/losses since 2016. Do i have to treat it as a new business? 

I already paid for the home & business TT since that is what we have been using for many years. I've been reading that I may need a different program?

Please help!!

[tagteam]

Do you reside in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin)?

If so, your CPA was using the guidance from Rev. Proc. 2002-69 (link below) which involves treating the LLC as a qualified entity (disregarded for federal income tax purposes) and filing a Schedule C for you and another Schedule C for your husband. 

https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

If you do not reside in a community property state, then the LLC should most likely have been filing a Form 1065. The only exception would be if the LLC had neither income nor expenses.

See https://www.irs.gov/instructions/i1065#idm140672607580960

[lnbartolome]

@tagteam We live in Hawaii.

We didn't have income nor expenses from 2016. 

But, 2019 is when we restarted the business and now we have to report income and expenses.

So now that I have to purchase the Business program, how do I got about filing our personal? Do I just do the online version? or do I also need the home and business program? 

[tagteam · Accepted solution]

@lnbartolome If you need to prepare a Form 1065 for your LLC (and it appears as if you do), then you need TurboTax Business (link below). Note that TurboTax Business is not

https://turbotax.intuit.com/small-business-taxes/

Note that TurboTax Business is not available online nor is there a Mac version; it must be installed and run in a Windows environment. Further, you will need a personal income tax preparation product to prepare your individual income tax return. If you already plan to use TurboTax Business, you can select any TurboTax desktop (installed) product.

[Carl]

We live in Hawaii.

Wife and I lived there for about 8 years back in the 90's. Are you aware that if you have a business in Hawaii you are required by state law to register your business and get your GET (General Excise Tax) number? If you were officially "open for business" prior to 2019 and never got that GET number, you're in for a rude and expensive awakening when you file your first return reporting income/expenses (2019 I presume).

Overall, my initial impression is that you were not officially "open for business" until 2019. So if correct you've nothing to worry about for prior years. But you "DO" need to obtain a GET number yesterday, if not sooner if you don't have one already. Start at https://tax.hawaii.gov/geninfo/get/ to make absolutely certain you've got your ducks in a row on this.

We didn't have income nor expenses from 2016.

makes me wonder why a CPA was involved at all then.

But, 2019 is when we restarted the business and now we have to report income and expenses.

One word in your above statement caught my eye. ***RE***started the business? What do you mean "re"started the business?

I get the impression your CPA may have been filing SCH C's for the two of you in the past, which is *NOT* valid for a Hawaii business that has more than one registered owner. Is your business registered with the state with more than one owner?  How you answer this, determines if you need to purchase TurboTax Business or not.

So now that I have to purchase the Business program, how do I got about filing our personal?

Deal with that later. If you are "in fact" required to report business income on IRS Form 1065 Partnership Return, you can't even start your personal 1040 tax return until you have completed the Partnership return and all K-1's have been issued to each owner. That K-1  is "required" for you to complete your personal 1040 tax return. Additionally, the due date for the partnership return is March 15th. I do not know if the IRS has extended that or not, they way they have extended the filing date for personal returns to July 15th.  But if they have not extended it, then you're late. Your late filing penalty is $200 per month, per owner. So if this is a partnership, your late fee is already $400. Seeing the current national situation, you may be able to get that waived this year for all I know.

You can search your business at https://hbe.ehawaii.gov/documents/search.html;jsessionid=381279DBEC0CE9715488175DF4F16C4D.prodapp1 to confirm it's properly registered with the state and that the registration is current and active. You can also view the last filing to see who it named owner(s) of the business is/are.

You can search more basic data on your business at https://hitax.hawaii.gov/_/