Tax season is officially upon us, and this means it’s time to start thinking about how you’re going to prepare for the return process. Whether you’re a non-US resident entrepreneur or a foreign company wanting to do business in the US, there are a few things you’ll need to do in order to get your taxes done on time.
One of the most important things to do during tax season is to start preparing your returns as early as possible. The earlier you get your taxes done, the less stress you’ll have in filing them, and the better chance you have of getting them done on time. If you’re filing your taxes on your own, there are a few things you’ll need to do in order to make the process as smooth as possible during the 2023 tax season.
When does the 2023 tax season start and end?
The 2023 tax season in the United States will start on January 23 and end on December 31, 2023. If you are a foreign entrepreneur that does not withhold or pay taxes to the US government, you may also need to file estimated quarterly payments. Tax payments can be estimated and paid before or on the following dates.
April 18, 2023 – The due date for individual returns for the 2022 tax year is April 18, 2023. In 2023, April 15th is a Saturday and a holiday in places like Washington DC, which is why the due date extends to April 18th, 2023. This means you have an extension to file and pay your taxes. However, interest and penalties will start accruing for any tax you owe after this date, even if you file an extension. To avoid interest, you should make an estimated payment by April 18 if you can’t file by that date. Self-employed foreign nationals, small businesses operating from outside the US, and LLCs are entitled to an automatic extension until June 15th.
June 15, 2023 – Individuals can file their returns on this date if they reside outside the US.
October 16, 2023 – This is the final deadline for an individual to file their returns after making their request for an extension.
Does an LLC file a tax return?
As a sole proprietor, you are considered a pass-through entity if your business is set up as an LLC or some other type of business. This means you will be required to pay a self-employment tax on your income. When you file your US tax return as an individual, you will be able to claim your business income and deduct any losses.
Filing your US tax return as a sole proprietor is the best way to go about it if you want to be able to claim your business income and deduct any losses. This is because you will be considered a pass-through entity and will have to pay a self-employment tax on your income.
How are LLCs taxed?
Foreign LLCs are taxed in the US in a similar way to domestic LLCs. They are taxed as corporations, and their income and losses are reported on their personal tax returns. They are also subject to US taxes on their foreign profits. The main difference between foreign LLCs and domestic LLCs is that foreign LLCs are not subject to US taxes on their earnings until they repatriate them. This means that foreign LLCs can defer US taxes on their profits until they bring the money back to the US.
Complex LLC tax process offers many tax advantages
The process of filing the waiver application can be complex, but it is worth it for foreign LLCs wishing to defer US taxes on their profits. The process allows foreign LLCs to operate in the US as corporations, and it shields the LLC from US taxation on its profits.
An LLC provides the means for international entrepreneurs who operate from outside the US to avail themselves of many tax advantages. For example, when an LLC pays taxes, it can often reduce the amount of taxes an owner pays overall. Additionally, if the LLC owns foreign assets, its owners may be able to take advantage of special tax treatment for these assets.
The US can be considered one of the biggest tax havens in the world, as non-US citizens can oftentimes avoid paying taxes on their income by opening an LLC in the US. However, if your LLC does business in the US, you are considered to be engaged in a trade or business in the US and are therefore subject to US taxes during tax season.
Foreigners are only subject to US taxes if they are “engaged in a trade or business in the United States.” If your business is not engaged in such activity, then any income earned in the US from that business is not subject to taxation in the United States.
How to file taxes for LLCs in the 2023 tax season
Starting in 2017, all foreign individuals who own a US LLC must file a Form 5472 and Form 1120 US tax return for disclosure purposes, even if they do not owe taxes in the US. In addition, foreign owners should check with their local tax authorities about the income from their US LLC, as it may still be taxed in the country of residence. A multi-member LLC that is taxed as a corporation and has at least one foreign owner who owns 25% or more of the LLC must also file Form 5472 and Form 1120 when the foreign owner is a resident of a country other than the US.
When it comes to filing your tax extension, there are a few things to keep in mind.
- You have until October 16, 2023 to file your taxes. If you are due a tax refund, you have until February 15, 2024 to receive it. However, if you are due taxes, you have until October 16, 2023 to file your taxes.
- If you are an LLC, the process for filing your tax extension is a little different. To file your tax extension, you will first need to determine your tax liability. This can be done by looking at your annual income and filing taxes based on that information.
How to file a tax extension in 2023
If you want to file your business income tax information digitally, you can apply for an automatic extension of time to file. When you request an extension, your LLC will get an automatic five-month extension to file Form 7004. On the other hand, single-member LLCs must file Form 4868.
Let Workhy form your company and file your tax returns
Workhy is an online company formation service provider that helps entrepreneurs from all over the world establish their businesses without having to travel to the United States. Workhy also files tax returns for LLCs on their customers’ behalf during tax season, manages financial processes, applies for EIN & ITIN, opens online bank accounts, and appoints registered agents. Click here to learn more about Workhy.