Business & farm

I also faced the same situation in 2023 filing. I mistakenly marked one of members from my LLC as a Foreign Partner who has been residing in the USA as an LPR (Green Card) but not yet US Citizen.

 

This obviously happened due to wrong TurboTax Business software (downloaded version) question that specifically asks whether "A member who is not a US-Citizen" and I checked it (this question appears in Business Info > Partner / Member Information" tab. Ideally TurboTax shold update this Question to "A member who is not a US-Resident" and it should stop misguiding users.

 

I received a notice from IRS informing my LLC has a Foreign Partner and I "may" need additional filings.

 

To fix this with IRS, I amended the tax return in TurboTax Business SW (Note - Amendment adds a form 1065X)  and unchecked the box for my member "A member who is not a US-Citizen." This helped in updating the K1 Schedule for this member from "Foreign Partner" to "Domestic Partner." You also need to add the Explaination of Amendment in IRS form 1065X. I saved and reprinted amended Fed Tax Return (You can't efile amendment it seems) and mailed it with "the copy of the IRS notice" plus a "cover letter to IRS" explaining the change.

 

Hope this helps.