Do I need to file Virginia state taxes for my foreign-owned LLC with Virginia clients?

Virginia imposes a personal income tax on nonresidents who earn income from Virginia sources. The rates are progressive: 2% on the first $3,000, 3% on $3,001-$5,000, 5% on $5,001-$17,000, and 5.75% on income over $17,000.

For a single-member LLC, the income passes through to the owner. With $120,000 in Virginia-source income, most of your income falls in the 5.75% bracket. Your approximate Virginia tax liability would be around $6,700.

You would file Form 763 (Virginia Nonresident Individual Income Tax Return). Virginia follows the same April 15 filing deadline as the federal government.

Virginia requires estimated tax payments if you expect to owe more than $150 in Virginia tax. Given your income level, quarterly estimated payments are definitely required. Estimated payments are due May 1, June 15, September 15, and January 15.

Virginia provides an electronic filing system through the Virginia Tax Online Services portal.

Virginia offers an optional pass-through entity tax (PTET) that allows LLCs to pay state income tax at the entity level. The tax rate is 5.75%.

The advantage of the PTET is that it can provide a federal tax deduction that individual owners cannot claim due to the $10,000 SALT deduction cap. However, for nonresident alien LLC owners, the SALT deduction cap may be less relevant since you may not be filing a U.S. individual return (depending on your tax situation).

This election is made on Form 502PTET and the tax is paid at the entity level. Consult with a tax professional to determine if this election benefits your specific situation.

Having a Virginia client for IT consulting services clearly creates Virginia-source income. The question of whether a tax treaty can reduce your Virginia tax obligation depends on the specific treaty between the U.S. and Ukraine.

Virginia generally follows federal treaty provisions for determining taxable income. If a treaty exempts your income from federal taxation (e.g., under the business profits article if you lack a permanent establishment), Virginia would typically follow that treatment.

However, Virginia can assert its own nexus standards independently of federal treaty positions. Consult with a tax professional who understands both international tax treaties and Virginia state tax law.