First and foremost, when there is a foreign partner in an LLC, the person has to get a Taxpayer Identification Number (“ITIN”).
This must be obtained if the LLC is engaged in a US
trade or business (i.e., if it will make money).
The foreign partner of the LLC will be deemed to be engaged in a US trade or business and the LLC must withhold 35% of its profits for taxes, paid and filed on a quarterly
basis to the IRS
. (this is PROFITS of course, not gross income
United States Tax laws
require that foreigners pay taxes on any earnings made in the United States. Regardless of immigration status, the United States will allow foreigners to form
a company as long as they have registered for a Taxpayer Identification Number.
THe the partner can report using the 1040NR (NR standing for non-resident status) and because the tax is graduated and there will be an exemption his ACTUAL tax rate
may not be that high and would get a refund.
Let me know what other questions you have...