Real Tax Questions, Expert Answers
Get answers to your foreign-owned LLC tax questions from ForeignLLCTax. Every answer includes IRS source citations and step-by-step guidance.
Can I use First-Time Abatement and reasonable cause together on the same late LLC filing?
My foreign-owned LLC filed its pro forma Form 1120 plus Form 5472 late for one year, and the IRS hit me with penalties. I have a clean history. Can I claim First-Time Abatement AND reasonable cause fo...
If I don't resolve my CP2000, when does the 90-day Tax Court deadline start?
I'm going back and forth with the IRS on a CP2000 and worried about deadlines. People keep mentioning a 90-day Tax Court window. Does that 90 days start from the CP2000 date? And does living abroad ch...
Can I just file a W-8ECI to skip the 30% withholding on my creator income?
Someone in a forum said that if I file Form W-8ECI instead of W-8BEN-E, platforms won't withhold the 30% at source. That sounds like an easy win. Can I treat W-8ECI as a switch to stop withholding on ...
Amazon and Etsy collect sales tax for me — why isn't Shopify doing the same for my store?
On Amazon and Etsy the platform charges and remits the sales tax automatically, so I assumed my Shopify store would too. But it looks like I'm responsible for sales tax on my own Shopify storefront. W...
I picked an AFR rate for my owner loan — but could the IRS still say it's really equity, and does section 163(j) limit my interest deduction?
I set my owner-loan interest inside the AFR safe-haven, so I assumed the interest question was settled. Then I read that even with a good rate the IRS can recharacterize the 'loan' as equity, and that...
Should I file a protective Form 1120-F if a treaty means $0 US tax?
My foreign corporation has very limited US activity, and I'm fairly confident a treaty means we owe $0 US tax (no permanent establishment). Filing a full 1120-F sounds like a lot of work for a zero re...
After Bittner, is the non-willful FBAR penalty per account or per year?
I had several foreign accounts and missed a few years of FBARs. I've read scary things about $10,000 per account adding up fast. Did the Bittner Supreme Court case change that for non-willful cases, a...
I'm Canadian (or UK / French / German) — does a treaty lower the US estate tax on my US assets?
I'm a Canadian citizen with a US brokerage account and some US shares. I've heard there are estate-tax treaties that give nonresidents a bigger credit than the default $13,000. Does the Canada treaty ...
I couldn't use all my foreign tax credit this year — can I carry it forward?
My foreign tax was higher than the Form 1116 limitation allowed, so part of my credit went unused. Is that lost, or can I carry it to another year? And how long do I have to use it?
My LLC's books are in euros — how do I reconcile that with a US-dollar Form 5472, and what are sections 985-988 about?
My single-member LLC bills clients in euros and my accounting software is denominated in euros. Form 5472 obviously wants US dollars. Can I even keep my books in a foreign currency? How do I bridge to...
My LLC is disregarded — does the W-8BEN-E go in the LLC's name or mine as the foreign owner?
I have a US single-member LLC that's disregarded for tax, and I'm the foreign owner. A platform wants a W-8BEN-E. Do I put the LLC as the beneficial owner because the LLC has the EIN and gets paid, or...
I elected corporate status two years ago and regret it — can I change my LLC's classification back?
About two years ago my US LLC filed Form 8832 to be taxed as a corporation. It hasn't worked out and I want to go back to pass-through. Can I just file a new Form 8832, or is there a waiting period? W...
I missed Form 5472 for my foreign-owned LLC for years — can Streamlined fix that too?
My single-member US LLC is owned by me, a non-resident. I never filed Form 5472 with the pro forma 1120. I'm also behind on FBARs. Can I bundle the missing 5472s into a Streamlined submission, or is t...
A CP2000 reported income that isn't mine — it was issued to the wrong TIN. How do I fix it?
I got a CP2000 for income I never received. It looks like a payer issued a 1099 to my ITIN by mistake — the money actually went to a different person/entity. How do I tell the IRS this income isn't mi...
I got an IRS penalty notice on my LLC — is it a CP15 or a CP215, and how do I respond?
My foreign-owned LLC just got an IRS notice assessing a penalty tied to Form 5472. A forum post called it a CP15, but my notice header looks different. Does the notice type actually matter, and what i...
Does the FIRPTA buyer really withhold 15% of the whole price at the first payment?
I'm selling US real estate to a US buyer on installments. My buyer's attorney says they have to withhold 15% of the entire sale price out of the first payment, but my down payment is small and that wi...
How do the $25,000 + $25,000-per-30-day section 6038A penalties for failing to keep records actually work?
I understand the famous $25,000 Form 5472 penalty, but I'm fuzzy on how it stacks when the problem is recordkeeping rather than a missed form, and how the extra per-period penalty kicks in. Is failing...
My foreign-owned US LLC missed FBARs — who is even supposed to file, me or the LLC?
I'm a non-resident and my single-member US LLC opened a business account abroad that went over $10,000. We never filed FBARs. I'm confused about who the filer is — the LLC, me personally, or both? I'm...
What are the economic-nexus thresholds, and when exactly do I have to register?
I keep seeing '$100,000 or 200 transactions' for sales tax economic nexus. Is that the rule everywhere? My foreign-owned LLC's US sales are growing and I want to know the actual numbers and the moment...
What is the branch profits tax and will my foreign corporation owe it?
I keep seeing 'branch profits tax' mentioned for foreign corporations operating in the US. I run my US business directly through my foreign corporation (no US subsidiary). What is this tax, how is it ...
YouTube is taking 24% of my worldwide earnings — how do I stop the backup withholding?
Something is wrong: YouTube is withholding 24% on my entire global channel revenue, not just the US-viewer part. I'm a foreign creator with a foreign-owned US LLC. This feels like way too much. How do...
Can my foreign parent charge my US LLC a 'management fee' for oversight and governance — or is some of that not chargeable at all?
My overseas holding company wants to bill my US LLC a flat annual 'management fee' that covers, among other things, my own time overseeing the investment, parent-level governance, and some legal/regul...
Does electing C-corp on Form 8832 help or hurt my tax treaty benefits as a foreign owner?
I'm a foreign owner of a US LLC in a country with a US tax treaty. Someone suggested electing C-corp status to 'use the treaty.' Does becoming a corporation actually help my treaty position, or could ...
How is the 5% Streamlined (SDOP) penalty actually calculated?
I think I fall under SDOP. People keep saying '5% penalty' but 5% of what, exactly? Is it 5% of every year's balance added together, or 5% of the highest balance I ever had? I want to estimate the cos...
If I can't produce my records in an IRS exam, can they really disallow my deductions and cost of goods sold?
I've always thought the worst case for a missing Form 5472 or bad records was the $25,000 penalty. But a friend said the IRS can actually throw out my deductions and even my cost of goods sold if I ca...
A foreign country withheld more than the treaty rate — can I credit the full amount?
A foreign payer withheld 25% on a royalty paid to me, but the tax treaty rate should have been 10%. I never claimed the treaty rate or asked for a refund. Can I just take a foreign tax credit for the ...
Does holding US property through an LLC protect me from estate tax?
I keep reading that a US LLC gives liability protection. If I move my US real estate into a single-member LLC, or into a multi-member LLC with a partner, does that take it out of the US estate-tax net...
Best state for a foreign-owned holding company: New Mexico or Wyoming?
I want to set up a passive holding LLC to hold equity in two of my operating businesses. I want the cheapest recurring cost while keeping privacy. New Mexico looks like the obvious pick at $50 to form...
Best state for a foreign-owned bootstrapped SaaS — Wyoming or Delaware?
I'm a non-resident planning to launch a B2B SaaS product. I'm bootstrapping — no investor plans, just product revenue. Should I form in Delaware to look professional to US customers, or in Wyoming for...
New Mexico LLC — when is the $20 triennial report actually due?
I keep reading that New Mexico LLCs have no annual report, then I read that they have a $20 triennial report under the revised act. I formed my New Mexico LLC in February 2024. When is my first report...
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