In the United States, every business and every individual must file an income tax return annually. The requirement applies universally, regardless of the composition of the company. It extends to companies with foreign partners.
Income tax is computed based on a company's net profit throughout its fiscal year. The declaration dates and rates change by entity type, by tax residency of the partners, and by the form used. Our team has filed for thousands of LLCs and Corporations across all 50 states, and we tailor every return to the entity's structure: domestic, foreign-owned, single-member, partnership, or corporate.
By engaging Prodezk with your income tax filing, you secure confidence not only in fulfilling your regulatory obligations but also in understanding the tax laws around them. Our team handles the documentation and the strategic planning, which lets you keep your focus on the parts of the business only you can do.
C-Corporations.
C-Corporations are obligated to file and remit taxes as a corporate entity. The tax liability is determined by applying a fixed rate of 21% to the net profit earned by the company during its preceding fiscal year.
When a C-Corporation distributes dividends, it assumes the responsibility of withholding tax on a portion of the dividend amount and remitting it to the IRS. Withholding rates depend on the tax residency of the recipients and whether their country has a double taxation agreement with the US.
For non-US residents and individuals residing in countries without a double taxation agreement, the withholding rate is 30% of the declared dividends. For residents, corporations, and non-residents from countries with a double taxation agreement in place, the withholding rate is 21%.
Foreign individuals receiving income exclusively from dividends are not required to file a personal tax return, provided dividends are the sole source of income during the relevant tax period.
Flat federal rate for C-Corporations
S-Corporations.
S-Corporations are taxed on a personal basis. The individual partners are responsible for the company's taxes, similar to how a Limited Liability Company is treated.
By law, every business and every individual files an income tax return. The only question is which form, and by what date.
Varying percentages from 10% to 37% are applied to the global profit generated by the S-Corp. The percentages are determined based on the overall value of the company's profits.
Eligibility for partnership in an S-Corp is restricted to American residents only. Citizens or residents of the United States are the only individuals who can become partners and share in the tax responsibilities.
LLCs.
Limited Liability Companies operate under a unique tax structure with a personal touch. The responsibility for taxes lies with the individual partner who owns the company, not with the entity itself.
Different percentages from 10% to 37% are applied to the global profit generated by the LLC. The structure aligns the tax burden with the individual partners' financial interests.
Foreign partners must obtain an Individual Taxpayer Identification Number (ITIN) to fulfill personal tax declarations. In the case of LLCs with two or more members, the entity is taxed as an LLC partnership. For foreign partners, a 37% retention is applied to their share of the global profit, which can later be deducted in the personal tax return.
Top withholding for foreign LLC partners
Tax forms by entity type.
Tax forms in the United States play a key role in the system. The form you use depends on the structure of your business.
- Form 1120: corporate (C-Corp) tax return. Taxes are paid at the entity level.
- Form 1040: individual personal tax return. Single-member LLCs report income on the owner's personal 1040.
- Form 1040NR: for non-US resident individuals. Foreign LLC partners use this to report and pay tax on LLC income.
- Form 1065: partnership return for LLCs with two or more members. Income is reported here, then distributed to partners.
- Form 5472: required to report transactions between foreign entities and US corporations. Critical for foreign-owned businesses.
- Form 1120F: for foreign corporations operating in the US.
The choice of form is rarely obvious. We determine the correct one for your structure, prepare the return around it, and explain the reasoning so the decision is yours to understand, not merely to sign.
Important filing dates.
Knowing your obligations in the United States reduces the risk of incurring penalties and interest. These are the dates to keep in mind to keep your company in order.
Each return has its own form and rules. We confirm yours and prepare it on your behalf, ahead of the deadline that applies.
Income tax calculator.
We also publish an estimator, so you can gauge the tax rate that attaches to your company's projected profits well before filing time.
For an LLC-Partnership, you enter your ownership percentage and the company's profit. The result is an estimate, not the exact figure. Withholding applies only to foreign members, whether individuals or companies. Speak with us for a precise calculation tied to your specific entity and state.