1065 Ammendment

[DreaSan]

This is my first year with my LLC. I filed my personal taxes in April, and now (in September) I filed for my LLC. I have my Form 1065, but my accountant, who handled my taxes, is closed indefinitely. Can I use TurboTax to file the 1065 now? Is it an easy process? 

[tagteam]

I have to presume this is a multi-member LLC, is that correct? Single-member LLCs do not file Form 1065.

Further, what do you mean by " I have my Form 1065"? Did your accountant prepare the 1065 already and you just need to file the return?

For Form 1065, you would need to use TurboTax Business and whether it is an easy process or not is entirely dependent upon the complexity of the return. If you would provide some additional information, you will get a more accurate response.

See https://turbotax.intuit.com/small-business-taxes/cd-download

[tagteam]

Also note that your 1065 was due on March 15, 2024 assuming calendar year reporting for the 2023 tax year (unless an extension was filed).

It is also unclear how you managed to file your personal income tax return for 2023 in April without the K-1 from your 1065. 

[Opus 17]

Your situation is really unclear.

To prepare a 1065, you need Turbotax Business.  This is a different program from any of the personal versions of Turbotax, and is only available as a download to install on a PC, or is now available online.  There is no Mac version.  https://turbotax.intuit.com/small-business-taxes/

If you have a multi-member LLC that files a 1065, that is due March 15 unless you have an extension (not April 15) and the late penalty is $195 per month per member.  You must prepare the 1065 first, this results in a K-1 statement being issued to each partner that they must include on their personal tax return with their other income and deductions.

If this is a single member LLC, you don't file a 1065, as mentioned above.

If this is all for 2023, and no one filed a 1065 for the LLC, then your worst-case scenario is that you owe at least $2000 in penalties, and after you prepare the 1065, all the members will have to file amended tax returns with their K-1s (unless they have extensions and did not file yet).  Or maybe the LLC has an extension (to September 15, 3 days from now?)

Can you clarify what you filed, and when?

[DreaSan]

I apologize for the confusion, as I'm trying to make sense of the situation myself. My accountant filed my personal taxes in March, but for some reason, they didn’t guide me properly regarding our multi-member LLC (with two members). It's a very small business with practically no profit. I didn’t request an extension, and I was waiting for my partner to file the LLC taxes. Unfortunately, we ended up missing the deadline.

To make matters worse, my original accountant disappeared (their business was closed by the IRS), so we hired a new accountant for the LLC. That’s when we discovered we should have filed the LLC taxes along with our personal returns. Now, I’m trying to figure out the best and least expensive way to handle this situation, especially with the potential $2,000 penalty being mentioned. I'm shocked and unsure of what to do.

[tagteam]

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@DreaSan wrote:

.......potential $2,000 penalty being mentioned. I'm shocked and unsure of what to do.

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Contact an Enrolled Agent, or other tax professional, in your area.

https://taxexperts.naea.org/expertdirectory

[Opus 17]

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@DreaSan wrote:

To make matters worse, my original accountant disappeared (their business was closed by the IRS), so we hired a new accountant for the LLC. That’s when we discovered we should have filed the LLC taxes along with our personal returns. Now, I’m trying to figure out the best and least expensive way to handle this situation, especially with the potential $2,000 penalty being mentioned. I'm shocked and unsure of what to do.

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If you want to DIY, these would be the steps.

First, prepare the 1065 for the LLC.  You would use Turbotax Business installed on your own PC.  There is also an online option, but apparently it is not available in all states.  I would not include any penalty payment at this time.  When the IRS bills you for the penalty, you can apply for a waiver/abatement.  If you have never owed a penalty before, there is often a waiver granted for first time problems, especially if you have a good reason (like relying on an accountant that was forced out of business by the IRS. It's easier to apply for the waiver when you get the bill, rather than paying the penalty and then applying for the waiver to get it refunded.)

When preparing the 1065, each partner gets a K-1 statement listing that partner's share of expenses and income, so the second step is for each partner to file an amended personal tax return to include the K-1 statement, and pay any additional tax if the business had a profit. 

You could certainly hire a tax preparer.  In addition to helping negotiate the penalty, they should be able to teach you things you need to know about accounting for income and expenses, handling assets, and preparing next years tax return.  

Good luck.  

[tagteam]

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@Opus 17 wrote:
If you want to DIY, these would be the steps.

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Sorry, bad advice, particularly since @DreaSan indicated an accountant had been used previously and was inquiring as to whether the process was easy. 

Further, @DreaSan needs a tax professional at this point since there is more than one taxpayer involved here, the entity being a multi-member LLC.

[DreaSan]

Thank you so much for your help. The new accountant I mentioned has already taken care of the 1065 form, and I now have the K-1 statement in hand. He advised me to reach out to my previous accountant to handle the K-1, but as I mentioned, that accountant is out of business. The new accountant also said that if he were to file it, he’d have to charge me as if he were filing my personal return again.

I have two questions and I really appreciate your time:

1. Can I call the IRS myself to request a waiver, or would it be better to hire an accountant to negotiate, for a better chance of acceptance?
2. Can I handle the K-1 myself?

Thank you!

[Opus 17]

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@DreaSan wrote:

Thank you so much for your help. The new accountant I mentioned has already taken care of the 1065 form, and I now have the K-1 statement in hand. He advised me to reach out to my previous accountant to handle the K-1, but as I mentioned, that accountant is out of business. The new accountant also said that if he were to file it, he’d have to charge me as if he were filing my personal return again.

I have two questions and I really appreciate your time:

1. Can I call the IRS myself to request a waiver, or would it be better to hire an accountant to negotiate, for a better chance of acceptance?
2. Can I handle the K-1 myself?

Thank you!

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If your new accountant filed the 1065, let the new accountant deal with any penalties if and when the IRS issues an assessment.  The accountant should be able to help you request a waiver. 

If you filed your personal tax return with TurboTax for 2023, it is fairly easy to file an amended return to add the K-1.  Open the program on your computer, or log into your account, and click the button to start preparing the amended return.  

If you used an accountant to prepare your personal return, there are a few extra steps to preparing an amended return using Turbotax.  It will cost about $100-$150 for the DIY package, depending on which version you use.  Turbotax also has live assistance (where you can video chat with an expert to get help) and Live Full Service, where a CPA prepares your return for you, all at additional cost, of course.  You can look at the program versions and costs at the home page.

https://turbotax.intuit.com/

Many people prepare their own returns with Turbotax, but it depends on your level of personal comfort with tax returns and finance.  Using a professional is always a good option, sometimes spending the money is better than struggling with an unfamiliar process.  (And I agree that if the new pro did not prepare your original return, they would have to charge you as if they were starting from scratch).  

We can provide the steps for using Turbotax if you want to go that route.  

[DreaSan]

Thank you so much for your help! Your advice was incredibly informative and helpful!