Filed our personal taxes, but completely forgot to submit 1065 partnership return - what should we do now?

This is actually a fairly common issue with small partnerships. Even though you've reported all the income on your personal return, you still need to file the Form 1065 since that's a separate filing requirement for partnerships regardless of whether you've already paid tax on the income. You should file the Form 1065 as soon as possible. The IRS imposes a penalty for late filing of partnership returns - it's currently $220 per partner per month (or part of a month) that the return is late, for up to 12 months. So with two partners, that's potentially $440 per month. The good news is you can request penalty abatement for "reasonable cause," especially if this is your first time missing this filing and you have a history of compliance (which it sounds like you do). When you file the late 1065, include a detailed letter explaining the circumstances, the misunderstanding with your tax preparer, and note that all income was properly reported and taxes were paid on your personal return. Make sure the K-1s from the partnership match what you reported on your personal return. If there are discrepancies, you might need to file an amended personal return to correct any differences.

I had almost the exact same situation happen to me last year! I found this awesome tool that helped me sort out all my partnership tax issues without having to hire an expensive accountant - https://taxr.ai really saved me. I uploaded my previous year's 1065 and some basic business documents, and it analyzed everything and walked me through preparing a late 1065 filing step by step. The system even helped me draft a penalty abatement letter explaining the situation to the IRS. What I really liked was that it checked that all the numbers matched what we had already reported on our personal returns, so there weren't any discrepancies that might trigger an audit. The whole process took me about 45 minutes and saved me hundreds in accountant fees.

Just wanted to follow up on my earlier skepticism. I ended up trying https://taxr.ai for my partnership's late filing, and I have to admit I was really impressed. The penalty abatement letter it helped me create was actually approved by the IRS! The system asked really specific questions about my situation and created a detailed letter explaining why I had reasonable cause. I was able to file my late 1065, get all the K-1s generated correctly, and the IRS waived the $880 in penalties I was facing. The interface was straightforward even for someone like me who gets anxious about tax stuff.

If you're struggling to get through to the IRS about partnership penalty relief (which can take forever), I highly recommend Claimyr (https://claimyr.com). I was in a similar situation with unfiled 1065s and needed to talk to someone at the IRS urgently about potential penalties. After spending days trying to get through the normal IRS phone lines and getting nowhere, I tried this service. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the IRS phone queue and call you when an agent is about to pick up. I was skeptical but desperate. Within about 2 hours, I was talking to an actual IRS representative who helped me understand my options for the late partnership returns and penalty relief. Saved me days of frustration and hold music!

I have to eat my words about Claimyr. After my skeptical comment, I actually tried it today because I've been trying to reach the IRS for three days about my late 1065 filing penalties. The IRS kept disconnecting me after 2+ hours on hold. The service actually worked exactly as advertised. I entered my phone number, selected what department I needed to reach, and went back to work. About 90 minutes later, my phone rang and I was connected to an IRS agent who helped me understand my penalty abatement options. The agent confirmed that I could write a reasonable cause letter explaining the circumstances of my late filing, and gave me specific advice on what to include. She also mentioned that my clean filing history would work in my favor. This 15-minute conversation saved me potentially thousands in penalties. I should have tried this months ago instead of stressing about it!

Just wanted to add some additional info: If you used tax software or a tax preparer for your personal return, you might be able to go back to them and have them prepare the 1065 now. Many of them can handle late filings. When filing late, make sure you check if your state also requires a partnership return filing. Many states have separate filing requirements and penalties for partnership returns, so you don't want to fix the federal issue but overlook a state filing.

Just a small tip - when you file the late 1065, make sure the information on the K-1s exactly matches what you already reported on your personal return. If you reported $25,000 of partnership income on your Schedule E, make sure the K-1s you generate now show exactly $25,000 in total. If there are any discrepancies, you might need to file an amended personal return, which opens up a whole other can of worms. Better to make the partnership return match what you've already reported if the amounts are reasonable.