Income Tax Returns for Foreign Limited Companies with US Owners
US citizens and residents who directly, indirectly or constructively own 10% or more interest in an entity organized in a foreign country are required to file an information return with the IRS on an annual basis. The type of information return varies depending on the entity's classification for federal tax purposes as either disregarded, partnership or corporation. Once the correct information return is prepared, it is attached to the federal tax return of the US owner of the foreign-based entity.
- Form 5471 must be filed if the foreign company is treated as corporation for federal tax purposes;
- Form 8865 applies to foreign companies treated as partnerships for federal tax purposes;
- Form 8858 is required if the foreign entity is a disregarded entity, including foreign companies with a single owner that elected to be treated as disregarded under the "check-the-box" rules;
- Form 5472 must be filed if a foreign corporation is engaged in a US trade or business and certain related-party transactions occurred during the year;
The proper interpretation of cross-border transactions, the transition from international accounting standards to the US GAAP, and the conversion of functional currency to US dollar are essential for the information return preparation and the subsequent allocation of earnings and profits. Additional requirements and complex rules apply to foreign companies classified as Controlled Foreign Corporations (CFC) or Passive Foreign Investment Companies (PFIC). Our CPAs and IRS Enrolled Agent will assist you fulfilling your tax return filing obligations through a combination of streamlined tax services and more than ten years of experience in international tax law. We are experts in
- Tax returns for cross-border partnerships, including Form 8865 and all related schedules
- Tax returns for foreign-based corporations with US owners, preparation of Form 5471, and consolidated tax returns
- Tax returns for foreign disregarded entities, including Form 8858 and related schedules
- Advisory on and preparation of Form 926 required for certain transfers to foreign corporations
- Tax advisory on Controlled Foreign Corporation (CFC), Passive Foreign Investment Company (PFIC), and QEF elections.
- Foreign source income determination and foreign tax credits on Forms 1116 and 1118
- Application and interpretations of double taxation avoidance agreements, including the US, the UN, and the OECD Model Tax Treaties
- Assistance with and filing of Form 8832 "Entity Classification Election"
- Federal and State EIN applications for foreign entities
- Accounting and bookkeeping services
- Various tax compliance services
Income Tax Returns for US Limited Liability Companies with Foreign Owners
Are you a foreign owner of a US based Limited Liability Company? If so, regardless of whether you have set up your company in Delaware, Nevada, Wyoming or any other state, your federal tax obligations are substantially the same. As a rule of the thumb, you are required to operate your company in a business-like manner and to keep a complete set of books and records that clearly reflect your assets, liabilities, equity, income, and deductions.
Long before your activities in the USA rise to a trade or business level, you will need to consider the most appropriate form of entry. Tax planning is also required to reflect permanent establishments, Branch Profit Taxes and transfer pricing issues. You should also consider the tax implications in your country of residency and your options to avoid the double taxation of income.
Though some states do not impose an income tax on LLCs, federal taxes will apply to income effectively connected with a US trade or business and US source FDAP income. Besides, the classification of the LLC as a disregarded entity, partnership, or corporation is a leading factor that influences your future tax liability.
Taxtake's professional tax preparation and consultancy services address the issues that apply to foreign owners of US-based LLCs. Our CPAs and Enrolled Agents are experts in US cross-border taxation and will assist you with
- Preparation of all income tax returns including 1120, 1065 or 1040NR depending on the classification of the entity
- Completion of all required State income tax returns
- Preparation of From 5472 for 25% or more foreign-owned US corporations
- Refunds of over collected income taxes
- Schedule C and Schedule K-1 preparation
- Permanent Establishments and Transfer Pricing Issues
- Accounting and bookkeeping services
- ITIN and EIN applications
- Tax planning and advice
- Assistance with Franchise Tax Returns
- Interpretation and application of double taxation avoidance agreements, including the US, the UN, and the OECD Model Tax Treaties
Should you wish to register for our LLC tax services, you may do so at any time. Did not find what you were looking for? Ask your questions and get a free quote with more information about how we can assist you further. You may also contact us directly.