LLC filing

[johnslic]

My wife and I formed an LLC for our AirBnB rental last year.  We live in a communal property state so I believe we can treat the LCC as a Disregarded Entity.  Can I use TT Premier for my filing and disregard filing Form 1065 ?  Thanks

[Vanessa A]

Yes, if you live in a community property state, you can treat the LLC as a Disregarded Entity and use TurboTax Premier to file your return.  However, if you are a disregarded entity, you file a Schedule C instead of a 1065.  The Schedule C is for individuals (which you would be considered in a community property state even as a couple), the 1065 is for partnerships that are not disregarded entities. 

Which state do you live in? State laws vary, some states may require that you still file a 1065 or other business tax form for the state. 

[johnslic]

thank you for advice.   I live in North Carolina with my property in Pennsylvania   Regards  

[LeticiaF1]

Neither North Carolina nor Pennsylvania are community property states.  The nine states that have community property are; Wisconsin, Washington, Texas, New Mexico, Nevada, Louisiana, Idaho, California, and Arizona.  

You will have to file a Form 1065, a partnership return.  A partnership doesn't pay tax on its income but "passes through" any profits or losses to its partners on a Schedule K-1.  You will need to report your Schedule K-1s in your personal return.  

You can file Form 1065 using TurboTax Business.  A K-1 can be a complicated form, but TurboTax asks about the data you need to enter.  Due dates for Form 1065 are March 15, 2024 (September 16, 2024, with extension) for 2023 calendar-year tax returns.

@johnslic 

[Edited 2/18/24 | 11:45AM PST ]

[johnslic]

Thank you for the clarification.  So as I understand it, I file two returns.  One is the form 1065 from TT Business for which there are no direct tax payments,  and the other is my personal return where the K-1 comes into play.   How do I incorporate the K-1 's from TT Business into the personal return ?   Is it a questioned item for which I enter the K-1 data ?  (like a W-2 etc.) and can I use TT Deluxe for the personal return ? 

 Also,  Do I need to file the 1065 with both NC and PA.  PA is the state where the LLC is set up.

Again, thank you for your help, after year 1, I will know how to do it.

[PatriciaV · Accepted solution]

Yes, you will prepare and file two tax returns. Form 1065 (available in TurboTax Business) will report the activity of your LLC. Form 1040 (available in TurboTax Deluxe) will report your personal income and deductions, including the activity reported on Schedule K-1 from your LLC.

The LLC tax return will include a Schedule K-1 for each member. To enter this in TurboTax Deluxe, use the Search function (magnifying glass) in the TurboTax header and type in "k-1." Then click on the "jump to k-1" link to go directly to that topic. Follow the interview to enter your LLC information and the activity from your K-1s.

Pennsylvania law taxes the income you earn, receive and realize from PA sources. You will need to file a PA non-resident personal tax return. North Carolina taxes all income you received in the form of money, goods, property, and services that isn’t exempt from tax, including any income from sources outside North Carolina - this is your resident state on your tax return. 

Tip: When preparing returns in multiple states, it's best to do your nonresident and/or part-year resident state returns first, and your resident state last.

If at any time you feel overwhelmed or need individual help, consider upgrading to TurboTax Live. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing.

@johnslic

[johnslic]

Thank you again for helping me get through this  johnslic