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We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?

 
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6 Replies

We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?

You file one tax return for the entire year.  If the LLC has more than one member, you file a form 1065 partnership return for the LLC, which issues a K-1 to each member, and the member puts the K-1 on their personal tax return and pays the taxes.  (The only time an LLC does not have to file a form 1065 is if the only two members are spouses and you live in a community property state.)

 

So the taxes on the LLC income are really due on each member, not the LLC itself.  And the members do have to pay estimated taxes.  You don't "file" a quarterly return, but you are required to make quarterly payments.  Form 1040-ES can be used to calculate the estimated payment, but you don't send the 1040-ES to the IRS, you keep it for your own records, and only send your payment.  

We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?

It is just my husband in the company. He hasn't had any income for some time, but keeps the company up and running so he will have something to do when he retires.

 

The problem we are running into is that the bank is threatening to close the accounts for the business because we cannot provide a tax return for the company.

 

Any income that he did make years ago was included in our personal tax return as pass through income.

 

Any idea how we can get the bank to back off?

 

We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?

What kind of LLC is it?  Is he a Single Member LLC?  Did he elect to be an S Corp?  If he is not a S Corp he probably files it on Schedule C in your personal tax return.  So the business tax return would be the Schedule C.  Has he been filing Schedule C each year?  

A Single Member LLC that is not an S corp is a disregarded entity and is filed on Schedule C in your personal 1040 tax return.  Or what kind of business return did he file years ago that was passed through your personal return?  Did he get a Schedule K-1 for it or a W2?

We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?

Your problem is with the bank, not the IRS.  If you are keeping the business "open" but are not engaged in ongoing business activities, so that you don't have income or expenses to declare, you would usually not be required to file a schedule C as part of your tax return.  However, if you have property you were depreciating, that is still part of the business even though the business is not active, that needs to be dealt with one way or another.  You can't just ignore business property you are in the middle of depreciating if the business takes a break.

 

There may be state requirements to keep an LLC active, like paying a yearly registration fee or filing forms, we can't tell you about individual state requirements.

 

If you are not engaged in ongoing business activities, and not filing schedule C, you need to talk to someone at the bank about why they are trying to close the business account and what they want you to do.  Of course, if you are not engaged in business activities, you don't need a business account, do you?  Could you close it and open another account when you need it (maybe at a different bank)?  And, since a single member LLC is a disregarded entity, there is no tax reason you can't run the business from a personal account—although it does make it easier to keep track of finances and is always a good idea to have separate accounts, it is not a legal requirement.  

 

And if you are running money through the business account but not filing a schedule C, that could raise some questions about what you are really doing with the account.  

We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?

At this point, the checking account has already been closed. However, he still has a business credit card that he uses to buy equipment and pay for such things as internet access. The bank has frozen the credit card and is saying that if we do not provide them with a tax return for the business, they will close the account.

 

The credit card has been used on a continuing basis and we have never been late on making payments. So, we're not quite sure why they will have a problem with continuing the credit account.

 

My husband is asking if there Is there a way to file quarterly zero income and monthly expenses through turbo tax? So that we can provide something to the bank so that they will unfreeze the credit card?

We are an LLC that we treat as a pass through. Are we required to file a quarterly estimated tax return? If so, how do we file a $0 return?


@cyntthor wrote:

 

My husband is asking if there Is there a way to file quarterly zero income and monthly expenses through turbo tax? So that we can provide something to the bank so that they will unfreeze the credit card?


There is no such thing as a quarterly tax return.  At this point, you would have to file an amended return for 2023, to include a schedule C for the business that shows no income and no expenses.  Turbotax may not want to file a return that has no change in money owed or refund due, you might have to file it manually.

 

Of course, what equipment and expenses are you buying?  If they are for the business, and he is actively engaged in business activities, then he should be filing a return to capture those expenses, they can create a deductible loss (sometimes in the year they occur, sometimes carried forward to when the business is active again).  If he is not using the business credit card for business, then maybe the credit card company is on the right track.  If they provide enhanced benefits to business cardholders, and he isn't engaged in business any more, maybe he hasn't earned those benefits.  You may need to check the credit card terms of service.

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