LLC filing as S-Corp Eligibility on working with EAD

[scsvel]

Hello all,

Can we file taxes as S-Corp for the Single member LLC when the LLC owner is working in US with EAD? Or Do we need to have green card for this scenario?

[pk]

@scsvel ,  Before one can answer this , we need more information on the  NRA with EAD.

(a) NRA citizenship ( for  Treaty assertions ) and in the US with which visa  ( F, Q, J, ?? )?

(b) Which state is the S-Corp registered in ?

(c) EAD tells you what you can and cannot do  ( for the entity/institution that  sponsored you  ) or  through the category code -- so what code  do you have  ?

I will circle back once I hear from you ?

[scsvel]

@pk please find the answers below. 

(a) NRA citizenship ( for Treaty assertions ) and in the US with which visa ( F, Q, J, ?? )?

[ Indian citizen and working with Green card based EAD as GC is filed and pending Adjustment of Status. Before that worked with H1B on W2 FTE]

(b) Which state is the S-Corp registered in ?

[ It's Pennsylvania ]

(c) EAD tells you what you can and cannot do ( for the entity/institution that sponsored you ) or through the category code -- so what code do you have ?

[ This is self petioned category and no employer sponsored. EAD issued based on Pending Adjustment of Status]

Thanks.

[DavidD66]

You don't have to have a green card to be an S-Corp Shareholder.  If the owner of the single member LLC qualifies a resident under the Internal Revenue Code an S-Corp election can be made.  

According the AICPA publication "The Tax Advisor":

One requirement for an S corporation is that it cannot have a nonresident alien as a shareholder (IRC Sec. 1361(b)(1)(C)). IRC Sec. 7701(b)(1)(B) defines a nonresident alien as an individual who is neither a citizen nor a resident of the United States within the meaning of IRC Sec. 7701(b)(1)(A).  IRC Sec. 7701(b)(1)(A) provides that an alien individual is treated as a resident of the United States with respect to any calendar year if (and only if) that individual either 

• (1) is a lawful permanent resident of the United States at any time during that calendar year (the green card test); 
• (2) meets the substantial-presence test of Sec. IRC 7701(b)(3); or 
• (3) makes the first-year election provided in Sec. IRC 7701(b)(4).

[pk · Accepted solution]

@scsvel ,  thank you very much for your answers .  Based on these  and generally agreeing with  my colleague @DavidD66 ,  YES you  can indeed   file as S-Corp  ( i.e. single member LLC electing to file a S-Corp ).  I am assuming  that what you are trying to achieve is to have the S-Corp employ you ( as sole employee) and you become a W-2 employee rather than  file a Schedule-C  ( dis-regarded entity ).  Note though that there are wage / remuneration requirements  as an owner/employee of  S-Corp.  

I am sure you have  gone through the rules and regs. of an LLC  vs. Corp ( S in your case ), with an attorney  -- here is a very simple comparison --   S Corporation vs. LLC: Differences, Benefits | Wolters Kluwer

Please also consider  having an awareness of code sections 1361 through 1363

Is there  more I can do for you ?

Namaste ji

pk

[scsvel]

@pk @DavidD66 Just to confirm some related things.

Can I file form 8832 and 2553 now to change the election for tax year 2024 and file taxes as S-Corp for 2024? or Only I can do it for 2025 when I file next year?

[RobertB4444]

You can file 2553 and 8832 with your timely filed 1120-S for 2024.  You need to get it all submitted by March 15th and you may have to mail in the return with signatures on all of the forms.

@scsvel