Tax Year Prior to 2020: Single Member LLC Filing

[daniellegreen06]

The past two years my CPA had filed my taxes using form 1065. I was informed by an IRS agent that since I am a single member LLC and my husband is not a part of the operation of my business or listed on my LLC documents we do not have file as a partnership. Although for 2013 and 2014 my business taxes was filed on form 1065, can I now just do 1040 along with my personal household taxes? or once you file as 1065 you can't change another tax year and file differently?

[SheriD]

Single member LLCs may include their business activity on Schedule C, which is included with your personal income tax return (Form 1040).

TurboTax Home and Business will help you. Indicate you have a business and we'll ask you if it's a single member LLC.

Make sure your state does not have a separate form that's filed separately from your personal state return. Some states have a different requirement than the federal return.

[annievk-g]

the above answer would seem to indicate that one would be walked through every aspect of accounting for a single member LLC by following the prompts/questions in the home/business package.  this was not my experience.  I cannot find anything that asks about LLC membership/status at all, and especially not single-member LLC status.  Also, it does not seem to do anything with owner contributions or distributions, or ask any questions related to them.  seems like a pretty big gap here.  leaves me feeling very unsure about using this package.

[TaxGuyBill]

@annievk.g   There is no need for the Federal tax return to know if it is an LLC or a non-LLC Sole Proprietorship.  They are treated the same on the Federal tax return.  If you live in a State that has different requirements, it will ask you if it is an LLC or not.

A Sole Proprietorship (including a Single Member LLC) does not need to know anything about owner contributions or distributions.  You are taxed on the business profit, and the contributions or distributions don't affect anything and are not entered on the tax return.

[AMD]

I am learning the hard way, Single Member LLC is treated as a separate entity based on state you live. It would be ideal if state filing had the prompts to walk you through and fill the requisite forms for state based on how state rules apply for the LLC. I am being asked for income details 10 years ago from my state as I had filed my returns as single member LLC and reported SCHED C. Now state is coming back to request details and submit data on tax years as long ago as 2008.

[siwei-shen]

I second what annievk.g said. I cannot find anything that asks whether my business is LLC at all. I am in California. Is this expected?

[TaxGuyBill]

Have you checked in the State interview?  That is where it should be.

[siwei-shen]

Ah that's right. Thanks for clarifying!

[Jerseygirl1969]

Since you mention distribution, sounds like you're an LLC filing as an S corp and need TurboTax Business.  You'd need a separate filing for your personal income.

[tickerfixer]

I cannot load the disc you sent me for 2019.  I hope resetting the account has fixed the problem. If not, is there a way to speak directly to a service rep?

[tickerfixer]

Not a new member, been a member for many years, but was required to reset my password.

[MM991]

I have a similar situation.  The difficulty lies in answering what happened to the prior two-member LLC, which was treated as a partnership.  There is a questionnaire to indicate what happened and the appropriate choice is not there.  The fact is that the other partner retired.  There was no taxable transaction.  The taxpayer is continuing as a single-member LLC and reporting as a disregarded entity on schedule C.  The problem is in when you indicated that it is the final year for the prior two-member LLC, there is no options available to indicate what really happened here.  It is asking if you sold, gifted, etc.  Has anyone run into that?

[ThomasM125]

Since you did not sell the partnership you don't need to report the disposition of it, assuming you don't have any carryover losses to account for. So, you can delete the K-1 entry that will get carried over from the previous year and then set up the sole-proprietorship as if it was a new business.

[gibsonaz1]

Why isn't this a topic that is discussed every year? Home business zoning can be especially challenging. To know if one should try and form an LLC prior to and then going backwards is difficult when you think you have everything lined up. There needs to be pro bono consultative attorneys out there in every state that prepares these type of documents for you with the inside of them becoming your LLC attorney. I think that would work for all don't you?

[ReneeM7122]

Your CPA is correct, in general the IRS treats an LLC owned by a husband and wife in a non-community property state  as a  partnership.  It can also be treated as a  a qualified joint venture (QJV), but some rules apply.  Here is a TurboTax article about QJV's.   If one spouse does not participate in the business at all, then it can file as a "disregarded entity" separate from its owner, but again, some requirements must be met.

@gibsonaz1