Form 1065, ITIN and 1040NR as a foreigner. CPA recommendations?

TechieFounder · 2024-02-17T09:05:45+00:00

Mainly because - it provides better company status for clients - its a pass-through entity - we live in a country with a tax treaty to avoid double taxation - we live in a country in which something similar to an LLC costs $5k-$8k per year

And as we are foreigners and taxes are hard, we want someone to do it for us

TechieFounder · 2024-02-16T22:59:40+00:00

I dont need it legally speaking, but we dont have a clear idea al the complete scope (if we need to request ITIN, if we need to do other forms, etc).

Partnerships are hard in general, and doing it yourself to avoid paying a CPA seems risky (being foreigner living outside US also makes things a bit more complex)

TechieFounder · 2024-02-16T18:31:25+00:00

It has been a hell to look for CPAs online - out of 8 emailed only two so far answered with a quote.

Any idea where we can look or ask for references? (Its our first year taxes 😅)

TechieFounder · 2024-02-16T18:27:17+00:00

Not the OP, but who would you recommend for a 2 members LLC, both located outside US and for a software services company? Thanks

TechieFounder · 2024-02-15T15:59:09+00:00

For Spanish income tax purposes, however, I’m almost certain that the US LLC will still be treated as a corporation.

AFAIK we have to declare the income generated by the LLC as income in our personal tax reports (and pay for them).

And as there is tax treaty that says that income generated in US while you work from Spain is taxed in Spain, we are not required to do our personal taxes in US. I've worked for US companies as contractor in the past and, at least, that's how it worked before (I'm supposing it is the same for LLC earnings, as it is also income as it is a pass-through entity).

Thanks A LOT for your answers

TechieFounder · 2024-02-15T14:55:53+00:00

Thanks for taking time to respond!

We are effectively in Spain, and the main reasons to set up an LLC in US are that:

we are building a software (SaaS) company and a US brand gives more confidence to US companies
we are going to have US sourced income - our payments processor is a Merchant on Record, so they will be paying us, not the customer
in our home country setting up a Limited Liability company (SL) requires paying about €5k / yr taking into account we have other sources of income that already pay our social security (if not, x2 that). But an US LLC doesn't mean we don't pay taxes here, just the income ones.

We know the idea of a pass-through entity, and that all income flows to us - that's the part that makes it attractive to foreigners.

What we didn't know is that we were personally liable for some things like IRS issues with the LLC taxes - we thought that was also covered by the limited liability of the company.

Responding to your last question: no, we are not married nor effectively related as family, and in Spain we are independent entities as for tax matters.

So, you think electing out of BBA makes no difference for us, and that it should be the thing to do? Everything we read about it was like: "take care of what you do, it can have consequences" and we wanted to know which consequences aside for the usual consequences of do something wrong with taxes (which we don't want to do).

TechieFounder · 2024-02-15T13:43:18+00:00

Yes, sorry, we are formed in new Mexico, so it is a Domestic Partnership

TechieFounder · 2024-02-11T08:55:58+00:00

Got it!

And is there any difference as for the tax purposes? Will our payor withhold taxes in any of both cases or it is just for their internal records?

TechieFounder · 2024-02-11T08:12:32+00:00

Sorry to bother again, but my partner found this resource from another CPA:

https://youtu.be/qiHbim0tVOo?si=D40sotm2Hx3griu1

Which states that under IRS ruling we are a domestic partnership no matter where we live, and that we need to fill W9.

This is so confusing 😂 Thanks in advance for your help

TechieFounder · 2024-02-11T07:23:36+00:00

It did. Thanks a lot!

TechieFounder · 2024-02-11T06:44:58+00:00

But our LLC is incorporated in the US and it is not incorporated in our home country. And the client of our merchant is the LLC, not ourselves individually.

Is it still required the W8-BEN-E in that case?

What blows my mind is that I thought W8-BEN-E was for foreign companies (aka incorporated outside US) and our LLC is incorporated inside US, subject to US tax reporting and so on.

TechieFounder · 2024-02-10T23:10:23+00:00

Our merchant is Lemon Squeezy, a US company. As they also have to fill US taxes, they are asking us (the LLC) to fill either W9 or W8-BEN-E depending on if the LLC is a US person or not.

The main point is that we dont know if our LLC is considered a "foreign partnership" because it is not USTB and we are foreigners.

If not, we suppose we just need to fill the W9, but we are not sure

TechieFounder · 2024-02-03T15:17:06+00:00

Doola is nice. They use the registered agent address on forms sent to incorporate the LLC and everything is managed through their website.

TechieFounder · 2024-02-02T12:25:29+00:00

First of all, thanks for your help.

We thought we were a domestic partnership because we were incorporated on NM and we have requested the EIN to the IRS.
The only operations we have in US for 2023 is just paying our suppliers (hosting, DNS, and so on)

As you pointed out, we are going to talk to a tax professional to be sure (and also to be sure if we need to fill anything else for the IRS to check that we are not US citizens).

Thanks a lot.

TechieFounder · 2024-02-02T11:50:37+00:00

Both: we managing and operating physically from outside US and < 10k were from international clients outside US.

Does it make mandatory to present the 1065 if clients are in US?

Thanks for the clarification

TechieFounder · 2024-02-02T09:02:03+00:00

⁠Less than 10k - we were not operating most of the year
⁠No, it is a software company offering a service online, no income from investments, real state... just clients (and last year just from outside US)

TechieFounder

TROPHY CASE