Nonresident Tax Issues

Hi Simo,

Hope you're doing well.

Whether federal tax applies depends on whether the income earned by your Wyoming LLC is treated as effectively connected income (ECI) with the United States. If the activity is considered ECI, federal tax would generally apply and a Form 1040-NR filing would be required. If it is not ECI, the U.S. may still have other reporting requirements depending on the nature of the income and where the services are performed, but federal income tax may not be triggered.

Let me know if you’d like a detailed review of your specific situation.

Regards,

Alfaisal

Hi Laura-

This is not a simple question but I will give you the basics. However, I recommend that you get further advice beyond here. In general, if you have a rental property in the US, you will need to file as a non-resident. Florida does not have a state income tax but you would need to research whether they have any Franchise Taxes or Lodging Taxes that your property would be subject to. Hope this is helpful. Jackie

Hi Marcus,

Choosing the appropriate legal entity depends on many factors including the type of business, types of services, future operational expectations, etc.  Most people that are starting a business will either choose to be a Sole Proprietor or and LLC; however, in some circumstances, starting as an S-Corp or C-Corp make the most sense.  If your business has some risk that you would like to separate from your personal finances, you may want to start out as an LLC.

To answer the question based on your current situation, since your business has zero income and expenses, there will be no tax impact since there will be nothing being passed on to you to be taxed. 

If you are a U.S. citizen or Resident Alien and also a bona fide resident of Puerto Rico during the entire tax year, you generally must file:,br> A Puerto Rican tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rican tax return, you can claim a credit against your Puerto Rican tax, up to the amount allowable for income taxes paid to the United States.
A U.S. tax return reporting income from worldwide sources, but Excluding Puerto Rican source income. If you are excluding Puerto Rican income on your U.S. tax return, you will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income.
If all your income is from Puerto Rican sources, you are not required to file a U.S. tax return.

If you are a bona fide resident of Puerto Rico during the entire tax year and a nonresident alien of the U.S., you generally must file:,br> A Puerto Rican tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rican tax return, you can claim a credit against your Puerto Rican tax, up to the amount allowable for income taxes paid to the United States.
A U.S. tax return (Form 1040) reporting income from worldwide sources, but Excluding Puerto Rican source income other than amounts for services performed as an employee of the U.S. or any of its agencies.
For tax purposes other than reporting income, you will be treated as a nonresident alien individual with its associated limitations.

Generally, you are a bona fide resident of Puerto Rico if during the year you meet the presence test, do not have a tax home outside of Puerto Rico and do not have a closer connection to the U.S. or to a foreign country than to Puerto Rico.

If you are a U.S. citizen or resident alien you will satisfy the presence test for the entire year if you meet one of the following conditions.
You were present in Puerto Rico for at least 183 days during the tax year.
You were present in Puerto Rico for at least 549 days during the 3 year period that includes the current year and the 2 immediately preceding tax years. During each year of the 3 year period you must be present in Puerto Rico for at least 60 days
You were present in the United States for no more than 90 days during the year. You had earned income in the U.S. of no more than $3,000 and were present for more days in Puerto Rico than in the U.S. during the year.
You had no significant connection to the United States during the tax year.

Phone number for information outside of Puerto Rico is 787-721-2020 Extension 3611
Within Puerto Rico call 1-800 981-9236
The Puerto Rican website is www.hacienda.gobierno.pr or email questions to infoserv@hacienda.gobierno.pr

If you have no U.S. filing requirements but have income that is effectively connected with a trade or business in Puerto Rico, you must file Form 1040-SS or Form 1040-PR with the United States to report your self-employment income and if necessary pay self-employment tax.