topic Should a managing LLC member who is a resident alien be listed in TurboTax as a member who is not a U.S. citizen even if they have no foreign income or business dealings? in Get your taxes done using TurboTax

Should a managing LLC member who is a resident alien be listed in TurboTax as a member who is not a U.S. citizen even if they have no foreign income or business dealings?

agrunberg — Sat, 01 Jun 2019 20:14:28 GMT

The managing member of the LLC is a resident alien. He receives no funds from any other country. He has no business dealings in any other country. He is married to a U.S. citizen. He has a green card. Last year he indicated that he was not a U.S. citizen and the IRS indicated that we had indicated that the LLC had a foreign partner. However, he has lived in the U.S. for over 35 years and has no property, assets, or dealings outside the U.S. Is he really a foreign partner? If not, how can we fix the filing from last year?

For tax purposes a resident of the USA ( green card hold...

pk — Sat, 01 Jun 2019 20:14:29 GMT

For tax purposes a resident of the USA ( green card holder ) is not a foreign person. You may have to amend the original filing. The best way would be to seek help from a tax professional or a tax attorney -- only because IRS has taken a position based on your filings and therefore would be reluctant to change. Also you could consider having the managing member of the LLC resign , induct his citizen spouse as the member and then she appoints the husband as her POA. But you really need to discuss this with an attorney.

Re: For tax purposes a resident of the USA ( green card hold...

masonb1 — Sun, 03 Mar 2024 00:37:53 GMT

This issue is due to incorrect wording in the TurboTax for Business software. When filling in the Partner information, it simply asks is the partner a US citizen. Selecting no, immediately classifies them as a Foreign person. I'm surprised this has not been caught yet, this is a major issue and causing taxes to be filed incorrectly. Where do I create a report about this?

Re: For tax purposes a resident of the USA ( green card hold...

DaveF1006 — Mon, 04 Mar 2024 16:12:41 GMT

To clarify, is the partner a US person? If it isn't a US person, it is a foreign partner. If not a US or Foreign partner, how should your partner be classified?

Re: For tax purposes a resident of the USA ( green card hold...

masonb1 — Mon, 04 Mar 2024 16:20:01 GMT

Yes they are a US person. Problem is the TurboTax software only asks if they are a US Citizen, and sets it to foreign when you select no. The wording needs to be changed.
I actually just got off the phone with the IRS after receiving a notice from them about this. They will be updating my file to indicate that this was done in error and partner is not a foreign partner.

Re: For tax purposes a resident of the USA ( green card hold...

DaveF1006 — Mon, 04 Mar 2024 16:48:22 GMT

Yes, I can see why this is confusing and that the wording needs to be changed from US Citizen to US person, if the partner is a US person for tax purposes.