How to file partnership (LLC) taxes for low/no revenue business? Any cheap options?
Title: How to file partnership (LLC) taxes for low/no revenue business? Any cheap options? 1 I've been using TurboTax for filing my partnership taxes (we have a 2-member LLC) for the past few years. But this year our small side hustle barely made any money - like less than $100 total revenue. Feels ridiculous to pay $100+ for tax software that would literally exceed our entire revenue for the year! I looked into paper filing to save some cash, but I'm not sure if the IRS even accepts paper forms for partnerships anymore? Does anyone know if there are any budget-friendly options for filing Form 1065 when your LLC basically did nothing all year? Would hate to spend more on tax prep than we actually made.
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Yara Khoury
12 You definitely still have to file even with minimal revenue, but you have a few options that won't break the bank: The IRS does still accept paper filing for Form 1065 (Partnership Return), so that's technically free besides postage. You'd need to download and print the forms from the IRS website. The catch is that paper returns take much longer to process and have higher error rates. For a partnership as simple as yours, you might consider FreeTaxUSA. They charge around $15 for a federal partnership return, which is significantly cheaper than TurboTax or TaxAct. Their interface isn't as polished, but it gets the job done for basic situations. Another option is to find a local tax preparer who might offer a discounted rate for an extremely simple partnership return - sometimes they have special rates for returns with minimal activity.
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Yara Khoury
•7 Does FreeTaxUSA handle K-1s properly? That's been my main concern with cheaper software. Also, any idea how complicated the paper filing is? I'm worried I'll mess something up and end up with penalties that cost more than just paying for software would have.
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Yara Khoury
•12 FreeTaxUSA does handle K-1s correctly for basic situations - each partner's distributive share will flow to their respective K-1s. For a partnership with minimal activity, it should be more than adequate. Their system walks you through the process step by step. As for paper filing, it's not terribly complicated for a simple partnership with little to no activity. Form 1065 is the main form, along with Schedule K-1 for each partner. The key is making sure you fill in all required fields, even if it's just zeros. If you're comfortable reading instructions carefully and double-checking your work, paper filing is definitely doable.
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Yara Khoury
3 After struggling with expensive tax software for my small LLC last year, I found https://taxr.ai and it was a game-changer for my partnership return. I uploaded our minimal records and it pulled everything together for a Form 1065 that had almost no activity. Their system is specifically designed for smaller businesses and partnerships where traditional tax software is overkill.
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Yara Khoury
•15 How does it handle the K-1 distribution part? My partner and I split everything 50/50 but our previous software made that part confusing.
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Yara Khoury
•8 I'm a bit skeptical about newer tax services. Did you have any issues with accuracy? I'm already stressed about our partnership taxes and really don't want to deal with amendments later.
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Yara Khoury
•3 It handles K-1 distributions very smoothly. You just enter the ownership percentages once, and it automatically calculates each partner's share on the K-1s. For 50/50 splits like yours, it's incredibly straightforward. As for accuracy concerns, I was initially skeptical too. What convinced me was their verification system that double-checks everything against IRS requirements. I've had zero issues with the return I filed. They're specifically designed for situations like yours where traditional software is expensive overkill for minimal activity businesses.
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Yara Khoury
15 Just wanted to update - I went ahead and tried https://taxr.ai for our partnership that made barely $200 last year. The whole process took less than 30 minutes! I uploaded our bank statement (which was basically empty) and our operating agreement, and it generated our complete 1065 and K-1s. Finally didn't have to pay more for tax prep than we actually earned in the business.
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Yara Khoury
5 If you're still looking to file your partnership return and want to talk to an actual tax professional about your options, I'd recommend using https://claimyr.com to get through to the IRS's Business & Specialty Tax Line. I was in a similar situation last year with my barely-active LLC, couldn't figure out what to do, and spent days trying to get through to the IRS with no luck. Claimyr got me connected in about 20 minutes. Check out how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent explained my filing requirements and even walked me through the free filing options available for partnerships with minimal activity. Saved me a ton of stress and possibly penalties for late filing.
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Yara Khoury
•8 Wait, how does this even work? The IRS phone lines are impossible to get through. Are you saying this service somehow gets you to the front of the queue? That sounds too good to be true.
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Yara Khoury
•22 I tried calling the IRS business line EIGHT times last month about my partnership return. Got disconnected every single time after waiting 1+ hours. There's no way this actually works.
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Yara Khoury
•5 It's not about getting to the front of the queue - they use an automated system that continuously redials and navigates the IRS phone tree until they secure a place in line, then they call you when they've got an agent on the line. It saves you from having to do all that waiting and redialing yourself. The system is designed specifically to deal with the IRS's overwhelmed phone system. I was skeptical too until I tried it. Instead of spending hours on hold or getting disconnected, I got a call back when an actual IRS agent was on the line. The agent was able to clarify exactly what I needed to file for my low-activity partnership.
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Yara Khoury
22 I'm back to eat my words. After posting that skeptical comment, I decided to try https://claimyr.com out of desperation since my partnership filing deadline was approaching. I honestly cannot believe it worked. Got a call back in about 40 minutes with an actual IRS business tax specialist on the line. The agent confirmed I could paper file my partnership return since our revenue was under $500 for the year and walked me through exactly which forms to include. Saved me at least $120 in software costs.
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Yara Khoury
9 Has anyone tried the IRS's Free File Fillable Forms for a partnership return? I know they offer free filing for individuals, but not sure if it extends to business returns like Form 1065.
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Yara Khoury
•18 Free File Fillable Forms don't support business returns unfortunately. They're only for individual Form 1040 filing. I looked into this last year for my low-revenue LLC and had to go another route. Partnership returns require either paid software, paper filing, or hiring a professional.
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Yara Khoury
•9 Thanks for clearing that up. That's disappointing - you'd think the IRS would want to make it easier for small businesses to file properly. Guess I'll look into paper filing or the other options mentioned in this thread.
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Yara Khoury
11 Just want to mention that if your partnership had less than $250,000 in receipts AND less than $1 million in assets, you qualify for the Form 1065-EZ... oh wait, I'm totally wrong - there is no EZ version for partnerships! Sorry for the confusion. This is part of why partnership taxation is so frustrating for small businesses.
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Yara Khoury
•19 You had me excited for a second there! I was already googling "1065-EZ" before I finished reading your comment. It's crazy that they don't have a simplified version for tiny partnerships.
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