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You say you incorporated, but are not a C-Corp ... this means you must be an S-CORP? (or are you referring to setting up an LLC)?
If you are an LLC and only one member the LLC IS a disregarded entity
If, however, you actually incorporated as an S-Corp, the S-Corp will have to file an 1120_s
Everything is mentioned in my question and I think you have no expertise in this field
Either Way, if have income, you will have to file (either as the individual that does a schedule C to report the income from his disregarded entity OR as an s-corp shareholder, by taking the K-1 form that the S-Corp must issue and transferring that to the person return as well
NO you said INCORPORATED, but then used the word disregarded entity
the two are mutually exclusive
ONly sole proprietors, LLSs care disregarded entities
Are These Business Types Disregarded Entities?Businesses are set up under state regulations, through the secretary of state for each state, and no state recognizes a "disregarded entity" as a business type. Look at each of the legal types of business to see how it compares to the requirements for a disregarded entity:
You said you incorporated
Disregarded entity DOES NOT mean that you don't have to file ... it just means that the income is reported from the individual rather than the single member LLC or the Sole proprietorship --- meaning that the ENTITY is disregarded, as a separate taxpayer
Going back the original question ... if you mean to say that you SET UP a single member LLC and did not form a corporation (again a singlemember LLC is a hybrid between partnership and corporation) but NOT an actual corporation so you DID NOT incorporate ... then yes, the LLC WOULD BE a disregarded entity
when you say it was recently incorporated, that implies that you have ALREADY either filed and 8832 or a 2553 to elect corporate tax treatment ... as eithe a or S, respectively
It is not a corporation
It is a LLC
THen as a single member LLS it IS a disregarded entity
THis DOES NOT, however, mean tat no retirn is to be file ... it just means that the LLC itself doesn't file
Yes I know that but what about non resident aliens?
An alien is any individual who is not a U.S. citizen or U.S. national. A nonresident alien is an alien who has not passed the green card test or the substantial presence test.
If you are any of the following, you must file a return:
NOTE: If you were a nonresident alien student, teacher, or trainee who was temporarily present in the United States on an "F,""J,""M," or "Q" visa, you are considered engaged in a trade or business in the United States. You must file Form 1040NR (or Form 1040NR-EZ) only if you have income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. Refer toForeign Students and Scholars for more information.
You must also file an income tax return if you want to:
A nonresident alien's income that is subject to U.S. income tax must generally be divided into two categories:
Effectively Connected Income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents. FDAP income generally consists of passive investment income; however, in theory, it could consist of almost any sort of income. FDAP income is taxed at a flat 30 percent (or lower treaty rate) and no deductions are allowed against such income. Effectively Connected Income should be reported on page one of Form 1040NR. FDAP income should be reported on page four of Form 1040NR.
Nonresident aliens who are required to file an income tax return must use:
Is it true Delware LLC owned by non resident aliens can't be a disregarded entity
YOu, as a non-resident alien, will have ECI ... income effectively connected to a business in the US, which means that you will need to file, as outlined above
Let me check on that one ... going to both tax code and Del bus code now .... were you given any sort of citation on that (I DO NOT know that to be trus) Have to wonder if they were just saying that you will have to file
If I opt to file the f8832 to elect it as C-Corp immediately after forming the LLC or at the time of filing returns.
That will simply mean that (the C-Corp) will file it's own tax form 1120, and if you want to leave the money INSIDE the corp you can ... BUT if you either take salary or dividends, we're back t your having to file as a non-re alien having ECI
what I own is not a C corp
if you file the 8832 it will be
we have 2 different questons goin on here (1) can non-res alien own a disregarded entity (and I think they can ... with check that for you) and (2) the C-corp questions you just asked about
ON the first question... YES you can own a disregarded entity (single member llc) See THIS:
Owning the Property as an Individual or Single Member LLC (SMLLC): An SMLLC is a limited liability company with only one member, the nonresident alien for purposes of this article. The SMLLC is beneficial because it provides a layer of liability protection for the nonresident alien from lawsuits from tenants. Additionally, we generally believe it is good practice to keep the bank account and assets related to the investment property separate from personal bank accounts and assets. The single member LLC approach allows for a clean and clear separation. This approach may require a little more upfront documentation, but does not complicate tax matters, because the owner may elect to complete his income tax return in the same manner as if the LLC did not exist. Although the SMLLC keeps the individual separate from the entity for legal purposes, the SMLLC is a 'disregarded entity' for tax purposes, unless the owners elects to be treated as a corporation. As a disregarded entity, the IRS looks through to the owner of the LLC to determine tax treatment of payments of income, withholding, etc. Any income received by the LLC will be reported by the owner, on his annual individual income tax return.
If someone owns a Delware LLC the tax is passed on to the owners but for non resident alien doesn't have SSN or ITIN(in my case)
I see you're still typing I'll wait... :) (or if you want a response here let me know)
so how is it possible to file the returns ? getting a ITIN is not a viable option for me
Then you are truly stuck here ... IRS requires the filing of a return (if there is a profit), because you will have ECI (Effectively Connected Income) to a US based corp... you CAN SHOW DOCUMENTS and use form W-& without being resident
NOW... if you have a way of getting to the money... and you are outside a place where IRS has information sharing or tax treaties... then they may neve be able to enfore
BUT I wouldn't be doing my job if I didn't tell you that THEY (IRS) say you'll need to file, IF you have that income
Here's the IRS guidance on that: http://www.irs.gov/Individuals/International-Taxpayers/Taxation-of-Nonresident-Aliens
Depending on the NATURE of your business, if you are distributing or working through some other US company they MAY simply WITHHOLD taxes from the money they send you
THIS would get it done (although you may end up paying more that way, because after filing you would probably find that a base level of that income is below taxation threshhold AND that you would be able to deduct business expenses) IF you can find a way to file W-7 and gete ITIN, you'll only have to pay tax on PROFITS
let me rephrase it
If I opt to file the f8832 to elect it as C-Corp, should I file f8832 immediately after forming the LLC or at the time of filing returns.
I think the effect would be the same AS long as you file the 8832 DURING the first tax year of operation (so that by year-end you have a c-Corp) ... and actually this would be before filing of returns (which would be APR of the following year if an individual - through disregarded entity - or March 15, if a corporation ... BUT let me look at the form ... juuust a second
OK... see this, (the deadline date is not there, bit I'll get that from the instructions in a minute) ... the problem I see here is what's required on the n8832 itself ... see this:
LLC Taxed as Corporation An LLC can also elect to pay income tax as what the IRS calls "an association taxable as a corporation." This election is made on IRS Form 8832. Here are some things you need to know about this election:
That last bullet point there gets you again, doesn't it?
Ahh, and here is the WHEN to FILE 8832 part:
When to FileThe election to be taxed as the new entity will be in effect on the date the LLC enters on line 8 of Form 8832. The election cannot take effect more than 75 days before he date the election is filed, nor can it take effect later than 12 months after the date the election is filed. There are other rules for filing this form for new businesses; check with your tax adviser for the timing of this filing.
Have you look at the W-7 info? I'm not so sure that you cannot get an ITIN (although I don't know all of your situation) ...the w-7 would not need to be sent in until it's time to send in that first 1040NR individual tax return (which would be the situation is you go the disregarded entity route) ... and only then when there is enough profit to put you above the filing thresshold
sorry "IF" you go the disregarded entity route...
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
Please let me know if you have any questions as all ... I'd like to continue to work with you on this .. There SHOULD be a way to get this done.
Let me know …
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I am a non resident alien andI don't have any visa.
I am not residing in US and I don't have any visa but I have formed a LLC in Delaware.
Though the type of business is really doesn't matter here I am including the answers for your questions.
Incorporating in Delaware is easier and has various advantages.
Being a US company it will be lot more easier to get a merchant account and US paypal account which has lower fee and it can be enrolled to BBB.
Business is Web Designing( internet based)
These are not relevant to my questions. I have thoroughly researched other factors before forming the LLC.
Since you are single member LLC, and you are a foreign person for US tax purposes, then the income earned is treated as earned directly by the foreign person. Such income is not subject to U.S. taxation so long as the foreign person did not perform his services or sales activity in the U.S. himself or thru an employee or agent.
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