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Posted by rdrnws on May 29, 2007, 10:45 pm
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Hi,
me and my partner are considering forming an LLC in
Virginia. He is a state resident, I am a non-resident alien.
We were wondering about the following taxation issues.
1. Based on his profit share reported on the LLC's 1065,
will my partner pay federal taxes, state taxes, or both?
2. Do I have to pay federal taxes, state taxes or both
(remember I am a non-US citizen residing abroad)?
If that matters, the LLC will be providing services in all
50+ states and abroad.
TIA,
Nikolas
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Posted by Katie on May 31, 2007, 12:58 am
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> me and my partner are considering forming an LLC in
> Virginia. He is a state resident, I am a non-resident alien.
> We were wondering about the following taxation issues.
>
> 1. Based on his profit share reported on the LLC's 1065,
> will my partner pay federal taxes, state taxes, or both?
Both. In fact, he will pay state income taxes to every
state where the LLC provides services, assuming someone
physically goes to the other state to provide the services.
Virginia will tax 100% of his income from the LLC, and will
give him credit for the taxes he pays to the other states
(with some exceptions).
> 2. Do I have to pay federal taxes, state taxes or both
> (remember I am a non-US citizen residing abroad)?
Yes, both, and to all states where the LLC provides
services. You will have income effectively connected with a
U.S. trade or business, and income with a source in all the
states where the LLC's activities are taxable. Your home
country may give you credit for the U.S. federal income tax.
> If that matters, the LLC will be providing services in all
> 50+ states and abroad.
Oh, yes, it matters. If all of the services are actually
performed in Virginia or in a foreign country, then Virginia
will be the only state that can tax any of your distributive
share of the income. The LLC, and its members, will be
taxable in every state where its members, employees or
representatives perform services.
Katie in San Diego
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by rdrnws on June 5, 2007, 3:20 pm
Please log in for more thread options Katie wrote:
>> 2. Do I have to pay federal taxes, state taxes or both
>> (remember I am a non-US citizen residing abroad)?
> Yes, both, and to all states where the LLC provides
> services. You will have income effectively connected with a
> U.S. trade or business, and income with a source in all the
> states where the LLC's activities are taxable.
Would a "foreign earned income" exclusion via form 2555
apply to me? In a recent thread ("Schedule C Earned Income -
Excluded as Foreign Earned Income"), the general consensus
was that the OP (american citizen living in Japan and
running his Delaware-based LLC from over there) would be
entitled to a federal tax break.
Would the same apply to a non-US citizen living abroad and
partnering in a US LLC?
Thanks again,
Nikolas
Schedule C Earned Income - Excluded as Foreign Earned Income
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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