What Tax Compliances are required for me?
US taxes can be overwhelming and complex, Especially if you are a non-resident, you might be wondering, ‘What tax compliances are required for non-US residents?’ no worries we’ve simplified them for you. Check out which category applies to you and get the relevant tax compliance information you need. We’ve got your back!
Category 1: US Resident – Single Member LLC/Multi-Member LLC
- By default, your LLC’s income and expenses will flow onto your personal income tax return (Form 1040, Schedule C).
- If you choose to have your LLC taxed as a C-Corporation, you must file Form 8832, Form 1120, and Form 1040.
- If you choose to have your LLC taxed as an S-Corporation, you must file Form 2553, Form 1120S, and Form 1040.
- Additionally, you may need to file Form FBAR (Report of Foreign Bank and Financial Accounts) if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year. The penalty for failure to file is $100,000 or 50% of the account balance at the time of the violation, whichever is higher.
Category 2: US Resident – C-Corporation
- Form 1120 must be filed with the IRS for your C-Corporation, even if your taxable income in the US is zero or if there has been no activity throughout the year.
- The income from your C-Corporation will be reported on your US federal income tax return using Form 1040.
- Additionally, you may need to file Form FBAR (Report of Foreign Bank and Financial Accounts) if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year. Failure to file may result in a penalty of $100,000 or 50% of the account balance at the time of the violation, whichever is higher.
Category 3: Non-US Resident – Single Member LLC/ Multi-Member LLC – Online business in the US
- The income and expenses of your LLC will be reported on your personal income tax return in your home country.
- You must file Form 5472 with the US IRS. Failing to file Form 5472 or filing it incorrectly can result in severe penalties, including a fine of $25,000.
- Additionally, if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year, you must file Form FBAR (Report of Foreign Bank and Financial Accounts). Failure to file can lead to a penalty of $100,000 or 50% of the account balance at the time of the violation, whichever is higher.
Category 4: Non-US Resident – Single Member LLC/ Multi-Member LLC – Engaged in Trade or Business in the US (having employees/dependent agents in the US)
- The income and expenses of your LLC will be reported on your US federal income tax return using Form 1040NR.
- Additionally, you must file Form 5472 with the US IRS. Failure to file Form 5472 or filing it incorrectly can result in severe penalties, including a $25,000 fine.
- If the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year, you must also file Form FBAR (Report of Foreign Bank and Financial Accounts). The penalty for failing to file is $100,000 or 50% of the account balance at the time of the violation, whichever is higher.
Category 5: Non-US Resident – C-Corporation – Online Business
- You must file Form 1120 with the IRS for your C-Corporation, even if your taxable income in the US is zero or there has been no activity throughout the year.
- Additionally, you need to file Form 5472 with the US IRS. Failing to file Form 5472 or filing it incorrectly can result in severe penalties, including a $25,000 fine.
- If the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year, you must also file Form FBAR (Report of Foreign Bank and Financial Accounts). The penalty for failing to file is $100,000 or 50% of the account balance at the time of the violation, whichever is higher.
Category 6: Non-US Resident – C-Corporation – Engaged in Trade or Business in the US (having employees/dependent agents in the US)
- You’re required to file Form 1120 with the IRS for your C-Corporation, even if your taxable income in the US is zero or if there’s been no activity throughout the year.
- The income from your C-Corporation will be reported on your US federal income tax return using Form 1040NR.
- Next, ensure to file Form 5472 with the US IRS. Failure to file or filing it incorrectly can result in significant penalties, such as a $25,000 fine.
- Additionally, you might need to submit Form FBAR (Report of Foreign Bank and Financial Accounts) if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the year. Failure to file could lead to a penalty of $100,000 or 50% of the account balance at the time of the violation, whichever is higher.
Depending on your business activity and volume throughout the year, there may be additional compliance requirements beyond those mentioned above.
US tax compliance can be daunting, with numerous forms and categories to consider. Let Startxpress simplify the process for you. Our experts will ensure that you meet all requirements with ease, helping your business thrive.
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For further insights, explore the Startxpress Help Center and Blog. If you have questions or need support, reach out anytime at support@startxpress.io!
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