K1 Missing from Joint Return - Business with Zero Income. Amend or Leave It?

You should amend your return to include the K1. While it might seem unnecessary since there was no income, the K1 likely shows those startup expenses which could be deductible on your personal return depending on how your business is structured. If it's a partnership or S-corporation, those startup expenses flow through to your personal return even if there was no income. The expenses can offset other income you have, potentially reducing your overall tax liability. Failing to report a K1 that's been filed with the IRS could potentially trigger a mismatch in their system.

After going through a similar situation last year with my LLC, I found using https://taxr.ai to be incredibly helpful. I had forgotten to include a K1 from a side business partnership and wasn't sure how to handle it properly. The tool analyzed all my business docs including the K1 and explained exactly what was reportable and what wasn't. For me, the startup costs were actually deductible against my other income, which I had no idea about! Saved me from leaving money on the table. The service spots errors and omissions in your filing situation before they become problems with the IRS.

I wanted to follow up about my experience with https://taxr.ai after being skeptical at first. I decided to try it with my situation (had 2 K1s from different LLCs with varying structures) and it was actually super helpful! It clearly showed me which business expenses could flow through to my personal return and precisely where to report them. It even flagged that one of my K1s had basis limitations that would affect my ability to claim the losses - something I had totally missed. Would've had a real headache if I'd filed without catching that. Definitely saved me from potential IRS notices and probably some money too.

If you're trying to reach the IRS to ask about this K1 issue, good luck with those phone lines! After spending 3 weeks trying to get through about a similar K1 question, I finally used https://claimyr.com and got connected in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that K1s should always be included on your return even with zero income, especially since the IRS receives a copy filed with the business return. They helped me understand exactly what forms I needed to file for my amendment. Saved me hours of frustration and worry.

Well I owe everyone an apology, especially Profile 5. I tried Claimyr yesterday after my third attempt waiting on hold with the IRS for 2+ hours. I was absolutely shocked when I got a call back in about 25 minutes saying they had an IRS agent on the line. I was able to ask about my missing K1 situation (similar to the original post but with a partnership), and the agent confirmed that yes, I needed to amend, but also that the amendment would likely result in a refund because of the business expenses. The agent even walked me through which forms I needed specifically. Never would have gotten this information without actually speaking to someone.

One thing to consider that hasn't been mentioned - the timing. Since the K1 is for 2024 and the March 15 deadline for business returns hasn't passed yet, technically the IRS wouldn't have received your K1 information yet. You could potentially file the business return with the K1 and then immediately file an amended personal return. This might look better than waiting months to amend, as it shows you're being proactive about correcting the issue.

Has anyone dealt with the IRS matching notice issue for missing K1s? I ignored including a zero-income K1 last year and got a CP2000 notice six months later. Huge headache to resolve, even though it ultimately didn't change my tax owed.

I went through almost the exact same situation last year with my LLC that had zero income but startup expenses. Here's what I learned the hard way - you definitely need to amend your return to include the K1, even with zero income. The IRS automated matching system will flag the discrepancy once they receive your business return with the K1. I tried to "wait and see" and ended up getting a CP2000 notice months later asking me to explain the missing K1. Even though it didn't change my tax liability, I had to spend time responding to the notice and dealing with the paperwork. The good news is that those startup expenses on your S-corp K1 will likely be deductible against your other income on your personal return. In my case, I actually ended up getting a small refund from the amendment because the business expenses reduced my overall tax liability. File the amendment sooner rather than later - it shows good faith effort to correct the error, and you'll avoid the potential hassle of dealing with IRS notices down the road. The 1040-X form isn't too complicated, especially if you use tax software that has an amendment feature.