Tax Reporting For Nonresident Alien LLC Members
A limited liability company (LLC) is a popular choice of entity for conducting business or holding rental real estate in the United States. It is a business structure you can form in any one of the fifty states.
An LLC is designed to protect the personal assets of its owners, similar to a corporation, but you have flexibility in how your business or rental activities are reported for tax purposes. Personal use assets, like a vacation residence, can also be held in an LLC.
For information on the best state statutes for LLCs, and specifically how to form an LLC in each state, see LLC University.
Single-Member LLC
You must treat your single-member LLC as a disregarded entity for tax purposes unless you elect to treat it as a corporation. That means if you are a nonresident alien individual, you report the business or rental activity of the LLC on Form 1040NR (U.S. Nonresident Alien Income Tax Return). There is only a single level of taxation.
You are not required to file Form 1040NR if your LLC owns only personal use property that does not generate revenue. However, whether or not you have a Form 1040NR filing requirement, under special reporting requirements beginning in 2017, you are required to file Form 5472 with a pro-forma Form 1120. This requirement is explained in detail below.
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