A Simple Guide to US Tax Compliance
Running a US LLC as a non-resident comes with specific tax obligations. While it may seem complex, understanding the basics can demystify the process. Note: This is for informational purposes; always consult with a qualified CPA for your specific situation.
Single-Member LLC (Owned by a Non-Resident Alien)
By default, the IRS treats a single-member LLC owned by a non-resident as a "disregarded entity." This means the LLC itself doesn't pay income tax. Instead, the tax obligations pass through to the owner.
- Form 5472 & Pro-forma 1120: If your LLC has any "reportable transactions" (like money moving between you and the LLC), you must file these forms annually. This is a critical information return, and failure to file carries a hefty $25,000 penalty.
- Form 1040-NR: You only need to file this US personal income tax return if you have income that is "Effectively Connected with a US Trade or Business" (ECI). If your income is from foreign sources, you may not need to file this, but the rules are complex.
Multi-Member LLC (Owned by Non-Residents)
An LLC with two or more members is treated as a partnership by the IRS.
- Form 1065: This is an informational return that the partnership must file to report its income, deductions, gains, and losses.
- Schedule K-1: The partnership issues a K-1 to each member, detailing their share of the partnership's financial activity.
- Form 1040-NR: Each partner will likely need to file a 1040-NR to report their share of the income and pay any applicable taxes.
Key Takeaway
Compliance is key. Even if you don't owe any US tax, you may still have a filing requirement. The penalties for failing to file informational returns like Form 5472 are severe. That's why we offer affordable, CPA-handled tax filing services to ensure you stay compliant and can focus on what you do best: growing your business.