Hi all,
I have 2 partnership LLCs, one with my friend that had zero activity since it's inception in 2023 (The only expenses were LLC creation fees), it had a bank account opened and closed the same year, no activity in bank account, no deposits and withdrawals. No other income, expenses occurred.
Another partnership LLC is with my wife, I filed it under 1040 (Not 1065) for the past two years and it was accepted.
I just realized that there are massive penalties for partnership LLCs who do not file 1065. In my case, the partnership with no activity was filed in my 1040 for $750 loss in 2023 (deducting formation fees). I did not file it in 2024 due to zero activity. The LLC with my wife was filed for the second year under 1040. Everything was accepted by IRS. So far the LLC with my wife incurred losses and no income.
After doing some research, I realized that moving forward I should file the correct 1065 form for active LLC, but will IRS penalize me? The tax information was correct, the only thing is the wrong form was filed.
Secondly, should I file 1065 for the inactive LLC? I'm afraid for the penalties stacking up for LLC that literally had zero activity. IRS states to file 1065 even with no activity, but then in another article IRS writes:
- A domestic partnership must file an information return, unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal income tax purposes.
SOURCE - https://www.irs.gov/faqs/small-business-self-employed-other-business/entities/entities-4
Please, if anyone can guide me on what to do to be in good standing with IRS and avoid close to $500/month in penalties for inactive LLC. I know it's my error and I should've known better, but what should I do now and in the future to clear things out? No letter from the IRS was received as of yet.
I truly appreciate your advice.
