In 2021, my husband and I created 2 separate LLCs (2 member) for our 2 residential rental properties in Arizona which we have owned for many years and have reporting income/expenses on Schedule E on our personal income tax return. The LLC was created in late 2021 so we only have the expenses for establishing the LLCs.
When we created the EIN for the LLCs for banking purposes, we accidentally selected multi-member LLC which indicates a partnership for federal tax purposes requiring a Form 1065 filing. Since we are the only owners of the properties and in a community property state, I'd like to change the reporting to a disregarded entity for federal income taxes purposes so that we can continue to report our rental income/expenses using Schedule E on our personal tax return and not have to file Form 1065. It doesn't seem like there is any tax benefits, just more paperwork with filing taxes. How do we go about to make this change? Do we need a new EIN or is there a form that needs to be submitted to change the classification? With the deadline for filing Form 1065 coming up in a few weeks, what is your recommendations since we don't have any income to report for the LLC in 2021?
Also, do we also need to file Schedule C?
Thanks for your help!
