Every person whether a resident or a non resident is required to pay taxes on the earned and unearned income in the USA.
How does a Non US Resident file taxes for a corporation?
A Non US resident withdraws a salary to wipe off the profit in the company. An ITIN (Individual Taxpayer Identification Number) is obtained from the Internal Revenue Service to pull out the salary from a US corporation.
Generally, an ITIN is applied end of the year with the income tax returns, but for the payroll purpose a bank letter is attached with the IRS Form W-7 to apply for an ITIN. A Non US resident is exempted to contribute FICA, which is a combination of social security and Medicare. A Non US person pays only Federal, State, and city taxes if applicable.
Any leftover profit in the corporation is taken away as a dividend and report on the Income Tax form 1040NR along with the wages. The dividend is not recommended because, it lets pay a person's tax twice on the same income.
"Transferring money over $10,000.00 to overseas must be reported to the IRS to avoid penalty and prison"
How does a Non US Resident file taxes for a limited liability company?
A limited liability company (LLC) is a pass through entity where a taxpayer pay taxes on the personal level. An LLC has the following tax characteristics.
- A member of an LLC is not allowed to withdraw payroll, instead an owner of the company is forced by the taxation department to pull out as a profit and report on the income tax.
- A member of an LLC has an option to file an election with the IRS to treat it as a corporation to withdraw salary from an LLC.
- A Non US resident files a form 1040NR to report income incurred by the business.
