Can TurboTax Business handle our Partnership LLC Tax Forms (Form 1065 & K-1) correctly?
My buddy and I started a small partnership LLC last year (split 50/50) and we only made about $850 total. We have our EIN set up and from what I can tell, we need to file Form 1065 and create Schedule K-1 forms. The money is currently just sitting in our business checking account since we're planning to use it all for marketing later this year. We haven't actually distributed any profits to ourselves yet. We also have some business expenses to report, but they're not evenly split between us. I paid for the website hosting and he covered the business cards and some initial supplies. I'm looking at TurboTax Business since they claim they can handle all this partnership LLC stuff, but I've seen some pretty mixed reviews online. Since this is our first time filing taxes for our business, I really don't want to screw anything up. Has anyone here used TurboTax Business for a simple partnership return? Is it reliable enough for our situation or should we look into other options?
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Alice Pierce
TurboTax Business should be adequate for your situation. Form 1065 and Schedule K-1s are standard partnership returns that any tax software should handle well. Since your partnership is straightforward with limited activity, you shouldn't run into the more complex issues that sometimes cause people to leave negative reviews. One thing to note - even though the profits are still sitting in your business account, you and your partner will still need to pay taxes on your respective shares. Partnership income "passes through" to the partners regardless of whether you physically distributed the money. The K-1 will show each partner's share of income and expenses. Also, make sure you track those uneven expenses properly. TurboTax Business will let you allocate specific expenses to different partners rather than splitting everything 50/50.
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Esteban Tate
•If they don't distribute the money and just keep it in the business account for future expenses, do they still have to pay taxes on it personally? That seems unfair if they're just reinvesting it.
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Alice Pierce
•Yes, they absolutely do have to pay taxes on it personally. Partnership taxation operates under what's called "pass-through" taxation. The partnership itself doesn't pay taxes - instead, all profits and losses flow through to the individual partners who report it on their personal returns, regardless of whether money was distributed. This is different from a C-Corporation where the business itself pays taxes on profits and owners only pay personal taxes when they take distributions. With partnerships, the IRS assumes you have access to your share of profits even if you chose to leave them in the business account.
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Ivanna St. Pierre
I was in the exact same boat last year with my photography business partner. We struggled with TurboTax Business for our partnership returns until I discovered taxr.ai (https://taxr.ai). It was a lifesaver for sorting out our Schedule K-1 forms when we had uneven expense contributions. What I liked about taxr.ai was that I could upload our operating agreement and expense receipts, and it helped identify which expenses could be deducted where. It's designed specifically for partnership tax situations like yours where the documentation can get confusing. Saved us hours of head-scratching over whether TurboTax was allocating things correctly.
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Elin Robinson
•Did you still need to use TurboTax after using taxr.ai or does it actually file the forms for you? I'm confused about how this works together.
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Atticus Domingo
•Sounds interesting but I'm wondering how accurate it is. Did you have any issues with the IRS after using their recommendations? My partner and I are really worried about triggering an audit with our new business.
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Ivanna St. Pierre
•I still used TurboTax for the actual filing, but taxr.ai helped me understand exactly what information needed to go where and how to properly categorize our business expenses before entering them into TurboTax. It basically took all our business documents and explained how they should be handled tax-wise. The accuracy has been spot on in my experience. We had a situation with some home office deductions and equipment depreciation that was confusing us, and their guidance matched exactly what our accountant friend later confirmed was correct. They use actual tax professionals to review the AI recommendations, so you're not relying solely on an algorithm.
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Atticus Domingo
Just wanted to update on my experience - I ended up trying taxr.ai for our partnership return and it was actually really helpful! The system analyzed our operating agreement and flagged that we needed special allocations for our uneven expenses (something I wouldn't have known to look for in TurboTax). They broke down exactly how to handle our retained earnings that we're keeping in the business account. When I entered everything into TurboTax Business afterward, I felt way more confident about what I was doing. Definitely recommend checking it out if you're confused about partnership returns like we were!
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Beth Ford
If you do run into issues with your Form 1065 or K-1s and need to talk to someone at the IRS (which can be a nightmare), I highly recommend Claimyr (https://claimyr.com). I spent THREE DAYS trying to get through to the IRS business tax line after TurboTax kept giving me errors on our partnership return submission. Used Claimyr and got a callback from the IRS in under 45 minutes! They have this system that navigates the IRS phone tree for you and holds your place in line. You can see exactly how it works in this demo: https://youtu.be/_kiP6q8DX5c - totally changed my perspective on dealing with tax problems.
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Beth Ford
•They don't call the IRS for you - their system basically waits on hold in your place. It navigates through all those annoying IRS phone menu options and then holds your spot in the queue. When an IRS agent is about to pick up, you get a call connecting you directly to that agent. It saves you from having to sit there listening to the hold music for hours. I understand the skepticism! I felt the same way. Their system essentially works by using specialized software that can stay connected to the IRS phone system longer than a regular person would want to wait. The technology monitors the line and only calls you when it detects a human has picked up. You still talk directly to the IRS yourself - Claimyr just handles the waiting part.
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Morita Montoya
•How does this actually work? Do they just call the IRS for you? I don't get how they can get through when nobody else can.
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Kingston Bellamy
•This sounds too good to be true. I've literally spent hours on hold with the IRS and got disconnected multiple times. How much does this service cost? There's no way they're doing this for free.
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Beth Ford
•They don't call the IRS for you - their system basically waits on hold in your place. It navigates through all those annoying IRS phone menu options and then holds your spot in the queue. When an IRS agent is about to pick up, you get a call connecting you directly to that agent. It saves you from having to sit there listening to the hold music for hours. I understand the skepticism! I felt the same way. Their system essentially works by using specialized software that can stay connected to the IRS phone system longer than a regular person would want to wait. The technology monitors the line and only calls you when it
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Kingston Bellamy
I'm back to eat my words about Claimyr. After my skeptical comment yesterday, I decided to try it since I was desperate to resolve an issue with our partnership return. I got a call back from the IRS in about 30 minutes which is INSANE considering I'd previously waited 2+ hours and got disconnected. The IRS agent was able to explain exactly why our Form 1065 was rejected (turns out we had entered our EIN incorrectly in one section) and walked me through fixing it. Resubmitted through TurboTax Business and everything went through perfectly. Just wanted to share since I was wrong about this being too good to be true!
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Joy Olmedo
One thing nobody's mentioned - have you considered using a CPA instead of TurboTax Business for your first year? We tried doing our partnership return ourselves last year and made a mess of it. Ended up hiring a CPA to fix everything and it cost us more than if we'd just gone to them in the first place. A good accountant will charge around $500-800 for a simple partnership return like yours, but they'll also set up your books properly for next year. Just something to consider if you're worried about getting it right.
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Amy Fleming
•We thought about a CPA but since our operation is so small (literally just a few transactions), it seemed like overkill to spend $500+ when our total revenue was only around $850. Do you think it's still worth it at our scale? Or maybe using TurboTax this first year and then a CPA if we grow?
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Joy Olmedo
•Given your revenue level, you're right that a CPA might be overkill for now. TurboTax Business should handle your situation just fine. The main benefit would be education - a good CPA teaches you about your tax situation while preparing your return. But here's a middle-ground approach: use TurboTax this year since your business is still very small, but consider consulting with a CPA for an hour ($100-200) just to review your completed return before filing. That way you get expert verification without the full preparation cost. Then as your business grows, you'll know when it makes sense to transition to full professional preparation.
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Isaiah Cross
Just an FYI - don't forget about filing deadlines for partnerships! Form 1065 is due March 15, not April 15 like personal returns. This catches a lot of new partnerships by surprise. If you miss the deadline, each partner can be penalized $210 per month for each month the return is late, up to 12 months.
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Kiara Greene
•You can also file for an automatic 6-month extension using Form 7004 if you need more time. Just remember that this only extends the filing deadline, not the payment deadline if you expect to owe taxes.
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Logan Stewart
Just wanted to add that you should also make sure you have proper documentation for those uneven business expenses you mentioned. The IRS likes to see clear records showing which partner paid for what, especially when expenses aren't split 50/50. Keep copies of receipts, bank statements, and maybe even a simple spreadsheet tracking who paid for what and when. Also, since you're keeping the profits in the business account for future marketing expenses, make sure you're treating that business account properly - don't mix personal and business expenses. It'll make next year's taxes much cleaner and help protect your LLC status if there are ever any legal issues down the road.
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Gemma Andrews
•Great advice about keeping detailed records! I'd also suggest creating a simple partnership expense log that shows the date, amount, what it was for, and which partner paid. This will make things so much easier when you're entering everything into TurboTax Business. One thing that helped us was opening a separate business credit card that both partners have access to, so all future expenses go through one account instead of having to track who personally paid for what. Makes the bookkeeping much cleaner going forward.
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