When an LLC closes, the IRS expects one last federal tax return for the final year. Which return that is depends on two things: who owns the LLC, and how the LLC is taxed. Many owners get this wrong, either because they think a closed LLC files nothing, or because they file the wrong form. This guide shows which final return applies to your LLC, what the "final return" box means, and how deadlines work in the year you close.
First, two questions about your LLC
Who owns it? One member or several? And is the owner a US person, or a person or company outside the US?
How is it taxed? Most LLCs keep the default tax treatment. A single-member LLC is then "disregarded", which means the IRS treats it as part of its owner. A multi-member LLC is then taxed as a partnership. Some LLCs chose to be taxed as an S corporation or a C corporation instead. If you are not sure, your accountant or the letters the IRS sent when the EIN was issued can usually tell you.
Which final return your LLC files
| Ownership and tax treatment | Final federal return |
|---|---|
| Single member, US owner, default (disregarded) | No separate LLC return. The last year goes on the owner's own Form 1040, usually on Schedule C, E or F. |
| Single member, foreign owner, default (disregarded) | Form 5472 attached to a pro forma Form 1120, marked as final. |
| Several members, default (partnership) | Final Form 1065, with a Schedule K-1 for each member. |
| Several members, one or more foreign partners | Final Form 1065 with K-1s. Withholding forms 8804, 8805 and 8813 can also apply if foreign partners had effectively connected US income. |
| Taxed as an S corporation | Final Form 1120-S, with a Schedule K-1 for each member. |
| Taxed as a C corporation | Final Form 1120. Corporations generally also file Form 966 after deciding to dissolve. |
The owners may also need their own personal returns. For example, foreign partners may need to file Form 1040-NR, depending on their US income. That is a question for each owner and their accountant.
The "final return" box
Forms 1065, 1120-S and 1120 have a box to mark the return as a final return. Check it on the last return. This tells the IRS that the business has ended and that no more returns will come.
If the box is not checked, the IRS may expect a return again next year. When none arrives, it can send notices and, in some cases, penalties. The final return also matters for closing the EIN account, because the IRS will not close it until all required returns are filed and taxes paid. See how to close your EIN business account.
For a US owner of a single-member LLC, there is no LLC return to mark. The owner simply reports the last months of the business on their personal return and does not include it the following year.
Deadlines in the year you close
For calendar-year businesses, the usual due dates are:
- Form 1065 (partnership): the 15th day of the 3rd month after the tax year ends, which is March 15 for a calendar year.
- Form 5472 with pro forma Form 1120 (foreign-owned single-member LLC): April 15 for a calendar year.
- Form 1040 (US owner of a single-member LLC): the owner's normal personal deadline.
There is one important catch. When an LLC closes during the year, its final tax year may end early, on the date the business ends. The due date can then be earlier than the normal one. The rules differ by form and by situation, so confirm the exact due date with whoever files the return. Do not assume you have until the usual date in the following year.
If you need more time, ask your accountant about an extension before the deadline. An extension usually gives more time to file, not more time to pay.
Do not forget state returns
Many states also expect a final state return or a final report, and some need state tax accounts closed, such as sales tax permits or state payroll accounts. This differs a lot by state. Your accountant can tell you what your state expects. For the full list of tasks, see the checklist for closing an LLC.
What we do, and what we do not do
We do not prepare or file any tax return, and we do not advise which one your LLC files. The overview above is general information; your accountant decides what applies to your LLC. We are not a CPA firm and do not give tax advice.
What we handle is the rest of the closing:
- Dissolution package, $349 plus state fee: we check the LLC's standing with the state, file the state's dissolution document and send you the state's confirmation.
- Dissolution and EIN closure package, $449 plus state fee: everything above, plus the IRS letter that closes the EIN business account, prepared for one signature and sent by us. The IRS replies to the LLC's address on file.
We work with a network of independent, licensed CPAs and tax advisors.