Frequently Asked Questions
Tax Filing by Incorporation Structure

Will a foreign LLC (who did not elect to be taxed as a corporation) have to file 1120F regardless of any business activity?

Maybe. Where a foreign corporation has income effectively connected with a US trade or business and no treaty protections, and its activity in the US rises to the level of Permanent Establishment (PE), the corporation is subject to US taxation and reporting on the Form 1120F.

Where a foreign corporation has treaty protections and effectively connected income (ECI) associated with US trade or business but engages in a US trade or business without rising to the level of PE, the enterprise is not subject to US taxation, but Form 1120-F is recommended to be filed.

 

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If a single member LLC is a foreign owner that has income and expenses, will the Profit & Loss appear on the 1040NR (Schedule C or E) and not on 1120?

If they have effectively connected income (ECI) and permanent establishment (PE), the filing of 1040NR is required. A pro-forma 1120 with Form 5472 would also need to be filed.

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If a single member LLC has no business activity for the tax year, is the foreign owner required to file 1040NR?

If there is no permanent establishment (PE), no 1040NR is required.

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If the owner of an LLC did not elect to be taxed as a corporation and is a foreign person, how will they file?

The LLC will be treated as a disregarded entity and will have to file pro – forma Form 1120 for the sole purpose of filing Form 5472. The foreign owner will also have to file 1040NR.

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What are the tax deadlines for LLCs?

The 2019 tax deadline for an LLC filing Form 1065 for a partnership is March 15, 2019. If you’ll be filing for an extension, the deadline is September 16, 2019.

If you make an election to be taxed as a C-Corporation, the deadline will be on April 15, 2019 or October 15, 2019 for extended filing. Note that the payment of the tax due is on the original due date of the tax return.

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How do I file if one owner is foreign and one is a US citizen?

You would file a partnership Form 1065 unless you’ve elected to be taxed as a C-Corp through Form 8832. The S-Corp structure does not allow foreign owners.

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How do I file if I am a US-owned LLC with more than one owner?

The LLC would be considered a partnership in this case and file a Form 1065, unless Form 8832 (an election on how you choose to be taxed) is filed to be taxed as a C-Corp or S-Corp.

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If I’m a single member US-owned LLC, how do I file?

In this case, you are considered a disregarded entity. If no Form 8832 is filed (an election on how you choose to be taxed), you will file on Schedule C. However, through Form 8832, you can elect to be taxed as a C-Corp or S-Corp, filing Form 1120 or 1120-S, respectively.

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How will I need to file if I’m a multi-member foreign-owned LLC?

This depends on how you elect to be taxed (chosen in Form 8832). An election to be taxed as a corporation would file Forms 1120 with the 5472.

Otherwise it is classified as a partnership if it has two or more members. In this case they would file a Form 1065 with Form 5472 for each partner.

If it has two or more members and it is classified as a partnership, you would file a Form 1065.

A K-1 would be distributed to the partners and if during a partnership’s tax year and the partnership has taxable income effectively connected with the conduct of a trade or business within the United States that is allocable to a foreign partner, the Internal Revenue Code requires the partnership to report and pay a withholding tax. To report the withholding, you’ll need to file form 8804, 8805 and 8813.

 

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If I am a foreign-owned, single member LLC, how will I need to file?

As of January 2017, a domestic LLC that is wholly-owned (directly, or indirectly through one or more other disregarded entities) by one foreign person is treated as a domestic corporation (i.e., as an entity that is separate from its owner) for the limited purposes of the reporting and record maintenance requirements.

By treating an affected LLC as a foreign-owned domestic corporation, the LLC becomes a “reporting corporation.” Consequently, it is required to file a Form 5472 information return with respect to any “reportable transactions” between the LLC and its foreign owner.

As such, we file Form 1120 and 5472 for a foreign-owned single member LLC.

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