Hi,
me and my partner are considering forming an LLC in Virginia. He is a state resident, I am a non-resident alien. We were wondering about the following taxation issues.
And we can handle a lot of state income tax questions too.
Katie in San Diego.
Both. In fact, he will pay state income taxes to every state where the LLC provides services, assuming someone physically goes to the other state to provide the services. Virginia will tax 100% of his income from the LLC, and will give him credit for the taxes he pays to the other states (with some exceptions).
Yes, both, and to all states where the LLC provides services. You will have income effectively connected with a U.S. trade or business, and income with a source in all the states where the LLC's activities are taxable. Your home country may give you credit for the U.S. federal income tax.
Oh, yes, it matters. If all of the services are actually performed in Virginia or in a foreign country, then Virginia will be the only state that can tax any of your distributive share of the income. The LLC, and its members, will be taxable in every state where its members, employees or representatives perform services. Katie in San Diego
We??? Ha! You handle the interstate income tax questions practically single handed. And do a great job of it, too. Stu
Would a "foreign earned income" exclusion via form 2555 apply to me? In a recent thread ("Schedule C Earned Income - Excluded as Foreign Earned Income"), the general consensus was that the OP (american citizen living in Japan and running his Delaware-based LLC from over there) would be entitled to a federal tax break. Would the same apply to a non-US citizen living abroad and partnering in a US LLC? Thanks again,
Nikolas
Schedule C Earned Income - Excluded as Foreign Earned Income
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