Confusion about USA LLC and Taxation

[troubled soul]

To keep your LLC tax free you need to always maintain the following conditions:

❖ You are not a US citizen
❖ You are not a US permanent resident (i.e. “green card holder”)
❖ You did not reside in the US for over 120 days per year during the last 3 years (do not pass the “substantial presence test.”).
❖ You do not hire any "dependent agent", any employees, or companies that work exclusively for you and does something substantial to further your business in the US.
❖ Do not operate in the US through “permanent establishment” if you want to benefit from a tax treaty.
❖ Do not have any Fixed or Determinable, Annual or Periodical (FDAP) income from the US such as dividends, interest, wages, rent, salary, premiums, annuities, remunerations, alimony, lottery winnings, lottery or slot machine winnings, and other FDAP profits or gains.

I am confuse regarding last clause......
Now My question If someone own USA LLC and buy USA ETF using person name....Do this consider as a FDAP income and USA LLC subjected to tax ?

Thanks

 

[bnpsu]

To keep your LLC tax free you need to always maintain the following conditions:

❖ You are not a US citizen
❖ You are not a US permanent resident (i.e. “green card holder”)
❖ You did not reside in the US for over 120 days per year during the last 3 years (do not pass the “substantial presence test.”).
❖ You do not hire any "dependent agent", any employees, or companies that work exclusively for you and does something substantial to further your business in the US.
❖ Do not operate in the US through “permanent establishment” if you want to benefit from a tax treaty.
❖ Do not have any Fixed or Determinable, Annual or Periodical (FDAP) income from the US such as dividends, interest, wages, rent, salary, premiums, annuities, remunerations, alimony, lottery winnings, lottery or slot machine winnings, and other FDAP profits or gains.

I am confuse regarding last clause......
Now My question If someone own USA LLC and buy USA ETF using person name....Do this consider as a FDAP income and USA LLC subjected to tax ?

Thanks

I believe the dividends have a withholding tax, usually done automatically by the broker. Capital gains not.

 

[JackAlabama]

I believe the dividends have a withholding tax, usually done automatically by the broker. Capital gains not.

yeah, been told thats fine, since the wht is the same where you are residing. So thats paid. While cap gains are by no means predictable.
You can also have us clients for example for consulting services performed from abroad. Where its tricky is if you ship from within us (ecom), but idk this since its not my field.

 

[darkred]

Yes, dividens are FDAP.

Fixed, Determinable, Annual, Periodical (FDAP) Income | Internal Revenue Service

This section defines FDAP income and discusses its tax treatment.

www.irs.gov

The broker with withold 30% of the dividends and that's it.

 

[Marzio]

The broker with withold 30% of the dividends and that's it.

Unless there is a double tax treaty in place, if yes WHT could be lowered to 15%

 

[bnpsu]

Unless there is a double tax treaty in place, if yes WHT could be lowered to 15%

Yes, for things like S&P you can get a ticker domiciled in Ireland to get it down to 15%

 

[mausamKonwar]

To keep your LLC tax free you need to always maintain the following conditions:

❖ You are not a US citizen
❖ You are not a US permanent resident (i.e. “green card holder”)
❖ You did not reside in the US for over 120 days per year during the last 3 years (do not pass the “substantial presence test.”).
❖ You do not hire any "dependent agent", any employees, or companies that work exclusively for you and does something substantial to further your business in the US.
❖ Do not operate in the US through “permanent establishment” if you want to benefit from a tax treaty.
❖ Do not have any Fixed or Determinable, Annual or Periodical (FDAP) income from the US such as dividends, interest, wages, rent, salary, premiums, annuities, remunerations, alimony, lottery winnings, lottery or slot machine winnings, and other FDAP profits or gains.

I am confuse regarding last clause......
Now My question If someone own USA LLC and buy USA ETF using person name....Do this consider as a FDAP income and USA LLC subjected to tax ?

Thanks

foreigners are only subject to US tax if they are “engaged in a trade or business in the United States