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Do Non-Residents / Non-US Citizens Have to File Income Taxes in the US When They Own an Anonymous LLC?

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  5. Do Non-Residents / Non-US Citizens Have to File Income Taxes in the US When They Own an Anonymous LLC?
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  5. Do Non-Residents / Non-US Citizens Have to File Income Taxes in the US When They Own an Anonymous LLC?

Question:

For non-residents in the US who have a NM LLC, I know it’s a pass-through entity which means my profits, losses and expenses simply flow through to me as an individual. Do you know what tax form obligations I have yearly?… if any at all?

Answer:

Generally speaking, a nonresident alien engaged in a trade or business in the United States would need to file a Form 1040NR (U.S. Nonresident Alien Income Tax Return). Before they could do that, they’d need either a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). They’d actually need a SSN/ITIN before they can obtain an EIN for their company, as the IRS requires it for the designated Responsible Party. They could obtain an ITIN by filing Form W-7 with the IRS.

On the state level (assuming New Mexico), if the pass-through entity is a:

  • Single Member LLC taxed as disregarded entity, no state filing would be required; or
  • Multi-member LLC taxed as a partnership, the taxpayer would need to file a Form PTE (New Mexico Information Return for Pass-Through Entities).

We assume the LLC won’t (1) elect to be taxed as an S-Corp since S Corporations can’t have foreign owners, and (2) be taxed as a C-Corp because the question above acknowledged pass-through taxation.

If you wanted to consider C-Corp tax status, then the analysis would be different. Specifically, the LLC itself (not you as the nonresident alien) would file its own corporate tax return at the federal and state level. If this was what you were considering, then we would also advise to file in a state that has no corporate income tax, such as Delaware or Wyoming, versus New Mexico.

We encourage you to consult with a CPA who can advise you on such matters. For more information about Anonymous LLC’s, pricing and/or to order, you can use the following link:

Or please feel free to contact us with more questions.

Please read our other knowledge base article on this topic entitled, Do I Have to Pay Taxes in the US if I’m not a US Citizen or Resident?

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2 comments

  • Thanks so much for this information. May sound like a stupid question…but this is all very new to me. I have a very good record. I’ve always honored our country’s laws and want to keep it that way. I don’t want to do anything that I would get in trouble for. My question concerns those of us that are U.S. citizens. If I’m an employee being paid a salary by my Anonymous LLC’s child company, do I have to include that income in my tax filings? Also…do both businesses (the parent and child) have to file taxes or is the operating child company the only one required to file taxes?

    • Hi, Sema.

      If you are being paid W2 income, you need to report that as income personally. This is true, whether you work for a large company, or for your Anonymous LLC’s child company.

      As it relates to filing taxes for the LLCs? Assuming you have the following structure: YOU –> (own) an Anonymous LLC as a Holding Company (the parent) –> (which owns) a regular LLC as your Operating Company (the child), then the child would be disregarded for tax purposes (so it doesn’t file any taxes at all, its profits and losses flow up to the parent). So, what about the parent? The answer to that question depends on how you’re taxing the parent Anonymous LLC. I have a quick knowledge base article on this topic, located here: https://www.l4sb.com/knowledge-base/tax-status-for-companies/.

      Thank you! Larry.

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