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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29573
Experience:  Taxes, Immigration, Labor Relations
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Lev I am back.. I had question regarding filing K1 on H1

Customer Question

Customer: Hi Lev I am back.. I had question regarding filing K1 on H1 Visa I started LLC with my friends, (US Citizens) LLC is a partnership.. I am wondering, is it legal file K1 on H1 B
JA: Thanks. Can you give me any more details about your issue?
Customer: I am one of the partner (Passive) in the LLC created in 2015 with two friends(both US citizens). LLC is classfied as Partnership. Would I have issues in filing K1 Form along with my taxes ?
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Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

From tax prospective - there is no issues - you will simply include income reported on K1 with your individual tax return.
From immigration prospective - there MIGHT be issues.

Generally - you are not allowed to be self-employed - and should not receive self-employment income passed to you from the partnership.

So - the first step is to confirm that NO income will be reported to you on K1 as self-employment income.

Then - if there is a business income realized by the LLC - not just investment, rental or other types of passive income - your activity related to that LLC might be questioned by immigration authorities.

So - you need to be prepared to address all these questions - and confirm that you conducted NO activity that might qualify as self-employment.

Customer: replied 1 year ago.
Is this Mandatory to report me on K1 if there is profit or loss every year.. because I have shares in the company ?
Expert:  Lev replied 1 year ago.

Generally - there is no "shares" - with the partnership - but you own a partnership interest which is a percentage of the partnership.

Expert:  Lev replied 1 year ago.

Yes - if the partnership realizes a profit or loss reporting is required to partners according to their partnership agreement.

But again - if K1 reports rental income, interest income, capital gains, etc - there would not be any issues.

But if K1 reports business income - your activity might be questioned.

For instance - if as a passive partner - you invested capital but performed NO activity related to that partnership - that is OK.

But if you actually conducted business activities and you actually a passive partner "in name only" - there might be issues which you better to avoid.

.
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