Filing a LLC tax return is required of any LLC operating in the United States. The forms needed to accomplish a tax filing by an LLC depend on the type of LLC organization form. Single member LLCs or ones that have a single owner file a tax return using the Internal Revenue Service (IRS) Form 1040 and Schedule C. An LLC that has more than 1 owner, known as a multi-member LLC, treats their income as partnership income. These LLC forms file IRS Form 1065 and Schedule K-1.
Additionally, an LLC that wishes to change its tax status from individual to corporate tax rates can elect to be classified as a Subchapter S corporation and file Form 8832. Once Form 8832 has been filed, the LLC makes it annual filing on Form 1120. An LLC that is dissolving its business must file Form 966.
Form 1040 and Schedule C
Form 1040 (U.S. Individual Income Tax Return) and Schedule C (Profit or Loss from Business (Sole Proprietorship) are for a single-member LLC. These forms are the same forms that individual W-2 employees file by 11:59 PM of April 15th of each year.
Income earned by a single member LLC is treated as earned income of the individual owner. The income becomes part of the total income earnings of the owner for the year and is taxed at the maximum individual tax rate of 35 percent.
Form 1065 and Schedule K-1
The income of the LLC passes-through to each member of the LLC and is reported as earned income on Multi-member LLLCs file Form 1065 (U.S. Return of Partnership Income) and Schedule K-1 (Partner's Share of Income, Credits, Deductions, etc. (For Partner's Use Only).
Although a LLC is a corporate form, the distribution of earnings to the members of the LLC means that the income is taxed at the maximum 35 percent individual tax rate. The amount distributed to the members of the LLC is net deductions and other allowable exemptions of the business.
Form 8832 and Form 1120
An LLC wishing to change its tax rate from the maximum personal rate of 35 percent to the lower corporate tax rate charged C Corporations of 15 percent need to reclassify their entity using Form 8832 (Entity Classification Election). This form is required to be filed within 75 days after the formation of the LLC or at the beginning of the tax year.
Once filed, the LLC uses Form 1120 (U.S. Corporation Income Tax Return) for its annual tax filing.
Form 966 (Corporate Dissolution and Liquidation) is used by an LLC that is in the process of dissolving itself and liquidating its assets, as in the case of a bankruptcy.
Software from TurboTax or H.R. Block can assist an LLC. A certified public accountant or qualified tax preparer may also assist in the completion of this task for a fee. The required forms necessary to accomplish a tax filing can be found online via the IRS website.