This is a question we get a done, especially from new business owners, do I even need to file a tax return? In this article we are going to break that down exactly so you know when you need to file a return, whether that be for you personally or your business.
Do I Need To File A Personal Tax Return?
We will talk about the various scenarios but just note that even if you do not NEED to file a return, you still may want to.
- In 2020 you do NOT need to file a tax return if ALL of the following are true:
- 1) Under Age 65
- 2) Don’t have any special circumstances (ex: self-employment income).
- 3) Single earning less than $12,400 or married filing jointly (MFJ) earning less than $24,800
- If you are 65 and older those numbers for item #3 move to $14,050 (Single) and $26,100 (MFJ) or $27,400 (MFJ w/ both 65 or older)
- Note: If you are a dependent of someone the rules change slightly.
- Now, just because you are not required to file a tax return does not mean you should not.
- If you do not file a return you will not be able to take advantage of any credits or possible refunds coming to you.
Do I Need To File A Business Tax Return?
The first thing you need to determine is what TYPE of business tax return needs to be filed.
- Single Member LLC – If you own it an LLC all by yourself and have no other tax elections you would file your business return on a Schedule C on your personal tax return. If you have any income or expenses you will want to include a Schedule C on your personal tax return.
- Multi-Member LLC – If you have an LLC with more than one owner you will need to file a partnership tax return (Form 1065). Even if you have no activity during the year you will need to still file the Form 1065. All owners will get a K1 from the business activity to report on their respective returns.
- S Corporation – If you have a company that you elected S Corp status for you will need to file a S Corp tax return (Form 1120S). Even if you have no activity during the year you will need to still file the Form 1120S. All owners will get a K1 from the business activity to report on their respective returns.
- C Corporation – If you are organized as a C Corp you will need to file a Corporation tax return (Form 1120). Even if you have no activity during the year you will need to still file the Form 1120.
- Due Dates:
- Multi Member LLC – Partnership (1065): March 15
- S Corporation (1120S): March 15
- Single Member LLC (Schedule C): April 15
- C Corporation (1120): April 15
If you are required to file a tax return for yourself or your business but you FAIL to do so you will face penalties that will continue to grow the longer you go without filing. It is important that if you have a filing requirement that you do get that return completed.
If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.