myICLUB Blog

There are major changes coming to myICLUB tax preparation for 2024, so make sure that your investment club members and treasurer have access to this information guide.

Proper preparation can minimize the stress of filing your investment club's tax returns. Here are important details for the 2024 tax year regarding IRS and state partnership tax returns.

Club Tax Basics

The IRS and about half of all U.S. states require partnerships to file annual tax returns. Since most investment clubs are formed as partnerships, they fall under these legal requirements, and there are absolutely no exceptions and big penalties levied for late or missed filings.

Investing partnerships usually do not pay any taxes directly, but members are responsible for their share of club tax liabilities on their personal federal and state tax returns.

Brokerage firms must provide clients with the details of all relevant tax year activity on Form 1099 by  Monday, February 17, 2025 (though these are often delayed). The information on Form 1099 is required to prepare federal tax returns and report to members.

Partnerships must report partners’ tax liabilities to them on IRS Schedule K-1 (and, in some cases, Schedule K-3). These must be issued by Monday, March 17, 2025, to anyone who was a partner in the tax year so that these partners have the required information for their personal tax returns.

This year, the deadline for partnerships to file their IRS returns is Monday, March 17, 2025 (moved since March 15, 2025, falls on a Saturday). This date is also used by some, but not all, states. If you are unsure of your ability to meet this deadline, you can request an extension (keep reading for details on our new IRS Filing Extension e-Filing Service).

Read more on investment club tax basics.

What’s New for 2024

IRS e-File Form 7004 Request for Automatic Extension

With many brokerages expected to issue their Form 1099s past this year’s February 17th deadline, many clubs find it challenging to meet the IRS’s March 17th deadline. Fortunately, the IRS will grant automatic six-month extensions to partnerships that submit IRS Form 7004. While this form may be printed and mailed, the costs of USPS delivery with a return receipt (required by the IRS to confirm receipt) can reach $18 or more.

This year, myICLUB offers IRS Form 7004 e-Filing for just $13, a significant savings off the cost of printing and mailing (not to mention the time savings of not going to the Post Office!). With e-Filing, IRS confirmation is usually received within 10 minutes. Many clubs find it wise to request an extension if there is any doubt about their ability to meet the IRS March 17th filing deadline. There is no downside to requesting an extension and then filing on time, but there are significant penalties for filing after March 17th if an extension was not requested.

myICLUB Club Tax Federal — Deluxe

Because of the increasing complexity of complying with IRS regulations, we are introducing a new tier for our myICLUB Club Tax Federal program. Club Tax Federal – Basic will remain at the same $99.99 price, while larger clubs receive additional support and functionality with the Deluxe Add-on (+$40.00).

Larger clubs are defined as:

•     Clubs with 30 or more partners (based on the number of K-1s in Form 1065), OR
•     Clubs that have receipts (income) greater than $250,000 in the year OR
•     Clubs that have total assets of $1 million or more (the sum of the cost basis of all securities plus cash on hand at year-end) OR
•     Clubs that file Schedule M-3. Schedule M-3 is optional unless the club has more than $10 million in assets (as defined above) or more than $35 million in receipts (as defined above); then, schedule M-3 becomes required.

Certain other complex transactions also require the Deluxe Add-on. These larger clubs are often required to file additional IRS forms that aren’t required by smaller clubs. The vast majority of myICLUB investment clubs will use myICLUB Club Tax Basic to prepare their federal return and won’t be affected by this change.

myICLUB Club Tax State

The IRS isn’t the only organization making returns more complicated. About half of all states require partnerships to file, and myICLUB Club Tax State now supports 16 of those with filing or e-Filing (see the complete list of supported states).

Many states are introducing new requirements, including filing mandates for non-resident partners. myICLUB Club Tax State for the 2024 tax year reflects some of these changes.

Investment Club Tax Calendar

At this point, there appear to be no regulatory or rule changes that impact IRS Form 1065 or related schedules commonly used by clubs. However, until the IRS releases the final forms for the 2024 tax year, nothing is certain! You can rely on our team to continue to monitor for changes that affect clubs and let you know of any items that require your attention.

Attending our tax-related webinars (or viewing them on our YouTube channel after the live presentation) is a great way to keep up to date with tax issues and the release of myICLUB.com Club Tax for 16 states and the IRS. See below for dates.

Upcoming Events

•     12/17/24: Closing the Club's Books at Year-End webinar.
•     01/21/25: Preparing myICLUB Club Taxes webinar.
•     02/15/25: Delivery deadline for brokerage 1099s.
•     02/18/25: myICLUB Club Tax Clinic webinar.
•     03/17/25: Deadline for providing K-1s to club members.
•     03/17/25: Deadline for filing IRS Form 1065

This year, our team put together a separate webinar on “Conducting an Annual Investment Club Audit.” The replay of this webinar is viewable on our YouTube channel (www.YouTube.com/ICLUBcentral).

We have also released a completely overhauled “Investment Club Annual Audit Checklist.” You can download your free copy from your club’s myICLUB.com File Storage.

Using myICLUB Club Tax

Despite the complexity of tax regulations for partnerships, myICLUB Club Tax makes it a snap to complete and file a club’s federal and state returns (now for 17 states). Besides the ease of filing, clubs can rack up big savings for tax preparation when compared to the prices charged by professional tax preparers. According to the National Society of Accountants, the average cost nationwide for preparation of IRS Form 1065 is $733 or $177.29 an hour, with additional charges for Schedule D, Schedule B, and other required schedules.

Each year, the IRS and states change their requirements and release new tax forms. This means myICLUB Club Tax must be updated each year (often significantly), and clubs must purchase the service each year.

myICLUB Club Tax modules for states and the IRS may be released at any point between January and March, depending on when IRS and state approvals are received. You can check the status of form releases on the myICLUB.com homepage during tax season or in the myICLUB.com Tax Center.

To pre-order myICLUB Club Tax Federal or Club Tax State for 2024, a club officer should visit the Taxes tab on your club’s myICLUB website or visit our Club Tax 2024 Store (myICLUB login required).

Say "Yes!" to e-Filing

myICLUB Club Tax supports e-Filing for the IRS and a growing number of states. We recommend filing electronically if at all possible to save on printing and mailing costs and ensure that you meet filing deadlines.

Getting Help During Tax Season

Our myICLUB support staff typically experiences a high volume of traffic by phone and online from December through March. For the most efficient service, here are some of the resources that are available to clubs who need help with myICLUB Club Tax.

Attend Our Webinars. Registration and replay links are in the Videos section of the myICLUB Help & Support Center. The sessions are useful for both new and experienced treasurers. Live webinars are scheduled as above, and replays are available on our YouTube channel after the live events.

Read the Quick Start and User Guides. These are linked at the top of the myICLUB Club Tax page after purchase, in the File Storage area of your myICLUB club website, or from the myICLUB Help & Support Center.

Frequently Asked Questions. Our Frequently Asked Questions (FAQ) tool addresses dozens of questions about club tax preparation and myICLUB Club Tax.

Submit Your Question Online. Use our Customer Support Hub to submit queries at any time of the day or night.

Call Us Toll-Free. Call 1-877-33-ICLUB (or 1-248-654-3100) from 9:30 am to 6:00 pm ET, Monday through Friday, to speak to a representative. On Thursday evenings, phone lines are open until 9:00 PM ET to benefit customers on the West Coast.

Whether this is your first or fortieth year coping with investment club taxes, we are confident that myICLUB’s top-notch tools will help you and your fellow club members prepare an accurate and timely tax return.

Ready to pre-order? Log in now to the myICLUB Club Tax Store to place your order!