Originally Posted by Samy
What would be Tax liability for WY LLC owned by Non-US resident. Source of Income providing service to US & Canadian clients, although there is tax treaty with our country.
Its 2 member LLC(both aliens).
As biz entities are always formed under the state law instead of federal law, and each state makes its own laws, the specific rules and requirements are different from state to state. Members of your LLC are taxed on the earnings of the LLC thru SCh k1 of 1065. The treatment of the recipient varies depending on the tax treaty between the US and the country of your domicile. Basically, you must file a return aslongas , you, as a nonresident alien individual, are engaged or considered to be engaged in a trade or business in the US during the year. Generally, when a foreign person engages in a trade or business in the US, all income from sources within the US connected with the conduct of that trade or business is considered to be Effectively Connected Income . This applies whether or not there is any connection between the income, and the trade or business being carried on in the US, during the tax year.Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as ECI. You usually are considered to be engaged in a U.S. trade or business when you perform personal services in the US even though you are NOT physically present inUS. Whether you are engaged in a trade or business in the US depends on the nature of your activities. Deductions are allowed against ECI, and it is taxed at the graduated rates or lesser rate under a tax treaty between US and your country.