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LLC income wrongly reported and deposited

theunbelievable — Tue, 29 Aug 2023 15:04:55 GMT

What can I do to correct LLC income that was reported on my social instead of business EIN and direct deposited into a personal account?

Re: LLC income wrongly reported and deposited

Bsch4477 — Tue, 29 Aug 2023 15:59:57 GMT

You can use either tax ID number since your LLC income is reported on your personal return. Keep good records to show what income and deductions were business related.

Re: LLC income wrongly reported and deposited

VolvoGirl — Tue, 29 Aug 2023 15:59:59 GMT

What kind of LLC? A Single Member LLC? Do you file a separate business return for the LLC? If you file your LLC on schedule C in your personal tax return then it is a disregarded entity and it doesn't matter if you use the EIN or your ssn.

Re: LLC income wrongly reported and deposited

theunbelievable — Wed, 30 Aug 2023 13:03:08 GMT

The LLC is a partnership--myself and my husband. And yes, it is filed separately from our personal tax return. And there is no way that I can get the payers to report this income to the EIN instead of to my personal SSN. So I guess my question is, how do I report this income as coming in but going right back out to the LLC?

Thanks in advance for any help!

Re: LLC income wrongly reported and deposited

theunbelievable — Wed, 30 Aug 2023 13:05:35 GMT

The LLC is a partnership--myself and my husband. And it is filed separately from our personal tax return. And there is no way that I can get the payers to report this income to the EIN instead of to my personal SSN. So I guess my question is, how do I report this income as coming in but going right back out to the LLC? Will Turbo Tax handle this situation and if so, where?

Thanks in advance for any help!

Re: LLC income wrongly reported and deposited

Opus 17 — Wed, 30 Aug 2023 13:16:57 GMT

@theunbelievable wrote:

The LLC is a partnership--myself and my husband. And yes, it is filed separately from our personal tax return. And there is no way that I can get the payers to report this income to the EIN instead of to my personal SSN. So I guess my question is, how do I report this income as coming in but going right back out to the LLC?

Thanks in advance for any help!

If you live in a community property state, your LLC will file as two separate Schedule C businesses, in the name of each spouse, each reporting half the income and half the expenses. Just ignore the discrepancy and report your business income from your own accurate business records, regardless of what the 1099s say.

If you don't live in a community property state, the LLC will file a form 1065 partnership return. (Note that partnership returns are due March 15, not April 15, and there is a substantial late fee unless you request an extension. The extension request is separate from and in addition to any extension request you file for your personal return. Hopefully you are asking about a 2023 transaction that will be reported next year instead of filing a late 2022 return.)

The LLC simply files a correct tax return using its own accurate business records, regardless of what the 1099s or bank account says, you don't do anything special. If you get a 1099 in your personal SSN, that will need to be explained on your personal tax return. You can enter the 1099 as income, then create an extra item of "other income" in a negative amount to offset the 1099, and use a reason like "LLC income already reported on form 1065". If the IRS wants to see more details, they will send a letter.

Re: LLC income wrongly reported and deposited

theunbelievable — Wed, 30 Aug 2023 15:15:16 GMT

Thank you so much for your extremely helpful answer and yes, blessedly I am thinking ahead to the 2023 return! We are in a state where we file a 1065 partnership return and yes, I will be reporting the income there as I will write a check from my personal account to the LLC. I just needed to know how to get the income off my personal return in a way that the IRS will recognize as legitimate.

Re: LLC income wrongly reported and deposited

Opus 17 — Wed, 30 Aug 2023 15:39:48 GMT

@theunbelievable wrote:

Thank you so much for your extremely helpful answer and yes, blessedly I am thinking ahead to the 2023 return! We are in a state where we file a 1065 partnership return and yes, I will be reporting the income there as I will write a check from my personal account to the LLC. I just needed to know how to get the income off my personal return in a way that the IRS will recognize as legitimate.

To be extremely technical, the IRS official instructions say that if you get a 1099 that is incorrect, you should not enter it on your tax return, but attach a copy and a letter of explanation to your return and file by mail. However, since e-filing is preferred even by the IRS, the negative entry procedure seems to work. If the amount is under $600 and this is the only payment from that particular client, you probably won't get any tax paperwork at all.

Re: LLC income wrongly reported and deposited

theunbelievable — Wed, 30 Aug 2023 16:03:54 GMT

Up until last March, I have filed by mail anyway. This year was my first E-file of the LLC return. I just want to do things honestly and correctly and don't want to make my already hectic life more difficult by throwing up red flags by making missteps so I can do whichever way best accomplishes that. 😜

That said, these payments will likely generate a yearly substantial 1099 and they will keep coming to my SSN. I have exhausted all my options at this point at getting them to report on the EIN instead. 🙁 Using Turbo Tax has been simple and straightforward but up until now I have not had anything out of the ordinary to deal with.