Technical Wednesday
Hello, I’m CPA Maximiliano Mira Salas, and today in our Technical Wednesday we will talk about a common error in tax returns for Non-Resident Aliens (NRAs) with LLCs in the United States.
🔎 The Problem
When filling out K-1 and 1065 forms, many accounting platforms or software have the default option to mark “Applied for” in the Tax ID field. This indicates that an ITIN was requested, but in practice, the W-7 Form was often never submitted.
⚠️ What does this error imply?
✔ It reports a non-existent ITIN application to the IRS.
✔ It may cause income to be classified as U.S. source income, generating tax complications.
✔ In some cases, it forces the return to be filed on paper and not electronically.
✔ It could lead to penalties or additional IRS requests.
🛠️ How to avoid it?
Before submitting K-1 and 1065 forms, carefully review this field:
✅ If the partner DOES NOT have an ITIN, correct it and mark “Foreign US”.
✅ If the software does not allow leaving it blank, manually check the settings or consult a specialist.
💡 Conclusion
A simple error on the Tax ID can cause serious issues with the IRS. To avoid problems, always review every detail before filing the return. At FINANCERS, we specialize in international taxation and can help you avoid these mistakes.
📣 Now that you know, make sure to do it right and share this information with other LLC partners. 🚀
