Paying Taxes from Abroad

An LLC in Texas

[fischermx]

(Already asking to an accountant, he's researching).

Say you are from India, or pick another country. Mexico in my case. You setup an Inc or an LLC in some state. In my case an LLC in Texas. I got an EIN for the company.
All my income was made being here, not in the USA.
The nice guys in the TX department already told me I should not pay Texas state taxes (they don't have I think), but a Franchise tax which is very small percentage and I'm not even the the initial bracket, so I don't pay. I have to, however, present some forms even if I don't pay.
But what about Federal Taxes!?
Do I still have to send some forms, even if blank?
Could you share an opinion in your experience?

[fischermx]

There's really nobody in this situation?

BTW, it's abroad, right? :) Sorry

[DXL]

If your income is generated in a country outside of the United States, what was the purpose of incorporating a business in Texas? If you're soliciting clients in the U.S. but then outsourcing that work to a Mexican company that you own, and then having the cut check to them, it would look a little like tax evasion if you didn't at least declare your personal income.

I'm driving distance from Mexico, my overhead would be relatively nonexistent if I operated my company from there, but I wouldn't even consider doing so without talking to a lawyer and account first.

[fischermx]

Thanks for your answer.

I'am paying taxes for my personal income to the mexican IRS-equivalent called SHCP. I am properly setup with the SHCP here. The company has its own RFC(EIN-equivalent).

Respecting outsourcing to Mexico, no, please, read, I'm Mexican and single owner.

Respecting why incorporate on US, well because US companies have more credibility than companies from many other countries.

Driving distance? Where exactly?

[BananaFish]

You're in luck, Texas has no state income tax. But it would make sense that if you have a US based company, that you'd have to pay federal taxes in the US. But making sense is something that rarely applies to tax laws.

[fischermx]

It was no luck. I chose Texas because it is at driving distance from my city, Monterrey, too.

When I first went to USA to get my bank account, I had to go to the Comptroller of Public Accounts office to get certain paper (Status of Account). I have no idea how does the Indians/Ukrainians that incorporate in Delaware does that.

There's a treaty between Mexico and USA that basically goes saying that for LLC, whichever taxes is lower that's what you pay in your country of residence, something like that. Just a handful of accountants are aware of this, and I can't find one yet. Nor my Mexican accountant which I instructed to sub-hire a US CPA has found one either and his English is worse than mine, so I'm toast.

[bweebco]

I recommend talking to an accountant and making sure, there are a lot of rules and filings for this type of stuff.

[fischermx]

I finally found a list of Accountants with email contacts in Texas. I emailed like 15 of them with my case.
Just five responded. Four told my only obligations are with the state of Texas, no federal texas. One told I must pay federal taxes.
Score 4-1.

[percentages]

>Four told my only obligations are with the state of Texas, no federal texas. One told I must pay federal taxes. Score 4-1.

Why don't you just call the IRS in the USA and ask them?

I don't think you are liable for USA tax (given you do it right), but, that is just my opinion and you should take it with the 2 cents it is worth!

The easy solution is to call the IRS and get them to agree that your sole tax liability is to Mexico :)

These things are complex.....get a written statement from the IRS.....then you can sleep comfortably :)

[plumsauce]

A LLC is a flow through entity with unique characteristics.

The income of a LLC is taxed in the hands of the member(s).

Banking incidental to the business is not considered a business activity of the LLC. Therefore, the income of the LLC is taxable in the hands of the member(s) in the country of origin of the income, in Mexico in this particular case.

[fischermx]

percentages:
My accountant tried it once, but he is not fluent in english and could not make it. He was told he needed to call the IRS puerto rico to get spanish help.

plumsauce:
Yes, that's exactly the logic here.

[percentages]

fischermx,

You seem to be very fluent in English....

Why not give the IRS a call, or write them a letter yourself. As a business owner I always like to hear it personally "from the horse's mouth".

Obtain a written statement from the IRS and then hand it to your Accountant. I'm sure your Accountant will be grateful that you did this yourself :)

You'll feel comfortable, your Accountant should be grateful and the IRS should have a record that you attempted to "do the right thing"!

Everyone is happy and on the record :)