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Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have a two-part question on a related subject. An individual

Resolved Question:

I have a two-part question on a related subject.

An individual living abroad wants to buy rental property in US for investment purposes and forms an LLC. Since he does not file any US tax return what Form of tax return will have to file to pay taxes on the income of the rental properties?

Same question for an individual who works and lives abroad and does not file any US tax return wants to open an LLC to report income from consulting with US companies / individuals in how to develop markets abroad. Thanks.
Submitted: 5 years ago.
Category: Tax
Expert:  PaulmoJD replied 5 years ago.
Even if the investor is from abroad and forms a US LLC, they would have to pay income taxes on any money they make from the property in the US and they would have to file taxes as a foreign owned business entity operating in the US. Same goes for a foreign national who opens a US LLC and consults with US companies, you would have to file and pay taxes on any money made in the US.

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Customer: replied 5 years ago.

Thanks for the prompt response. I am afraid I don't have my answer. I know the two individuals in my example will have to pay US taxes, the question is what Form will they have to file if this is the only income they have? It could be 1065 or 1040 if SMLLC. But if SMLLC would that afford the same asset protection as a MMLLC? I am sorry if I was not clear in my question.

 

Expert:  PaulmoJD replied 5 years ago.
I am sorry, this is going to have to be sent to our tax experts for advice on which specific forms to file. Please be patient and do not respond to me and I will have it transferred to a tax expert.
Expert:  Merlo replied 5 years ago.

Hello apple,

 

Your question has been transferred to the tax forum to be addressed.

 

In both cases described, you will file only Form 1040NR. Single member LLC's do not file Form 1065.

 

A single member LLC offers the same layer of legal protection as a multi member LLC. The only difference is in the tax forms they file.

 

If this was helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you apple.

 

 

Customer: replied 5 years ago.
Please verify that in case of rental income 1040 NR, schedule E will be filed and in case of consulting income 1040 NR schedule C will be filed. Thanks.
Expert:  Merlo replied 5 years ago.

Hello again apple,

 

Yes, you are exactly correct on both points. The Form 1040NR will be the master form that is filed in either case.

 

Rental income and expenses are reported on Schedule E and consutling income is reported on Schedule C. The income from both of those schedules then transfers over to the Form 1040NR.

 

If this was helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you apple

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you
Customer: replied 5 years ago.
Thank you.
Expert:  Merlo replied 5 years ago.

Thank you apple and let me know if you have more questions.

 

 

Customer: replied 5 years ago.

Merlo,

Sorry to bother you again but in a community property State like Texas an LLC set up under husband and wife as equal partners considered single member or multi member requiring a 1065. Thanks.

Expert:  Merlo replied 5 years ago.

Hello again apple,

 

If the husband and wife are the only two members, it is still treated as a single member LLC, regardless of whether or not it is organized in a community property state. Any other members other than husband and wife would be considered a partnership.

 

If this was helpful please press the Accept button.

 

Thank you apple

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you

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25+ years tax consulting. Specializing in returns for US citizens living abroad