We had a tax preparer file the LLC in the following way:
I understand you can EITHER do a MO-1NR/2NR - OR - Composite MO 1040. I am not sure I understand why you would want to do one or the other?
I checked that I would do a composite return in turbotax business, but it still prints the MO-1NR saying we must file that doc.
Can someone explain the following:
You can file either and a link to each is attached:
http://dor.mo.gov/forms/MO-1NR_2015.pdf
http://dor.mo.gov/forms/Composite_Return_2014.pdf
Generally speaking, pass-through entities file a composite return on behalf of nonresident partners/members as a courtesy. This then relieves those nonresident members of having to file a tax return; and the expense of doing so. Some states require a composite tax return. Additionally, you could have estimated tax payment requirements for the composite tax. You need to look at this as well.
The downside of a composite return is that the tax paid is generally at the highest rate and there is no benefit of any graduated tax rate. You would also lose other benefits allowed in some states; partial dependency exemption, etc. However, this then puts the burden of filing a tax return on those nonresident members. The time, cost and energy in preparing the nonresident return could certainly out way paying a higher rate and being included in a composite.
For you last question, see the instructions above: The Form MO-1NR must be completed and a copy of the Form MO-2NR must be attached for each nonresident partner. This is only the case if you are not completing the composite return. See the FAQ below: