Will an LLC's income show on my personal tax return if the LLC files as a C-corp?

[jeuisomega123]

I know the LLC income won't impact my personal income in this case. But I am asking from a pure privacy point of view. Will someone who has access to my personal tax return know that I have this LLC? 

[Anonymous_ · Accepted solution]

The income will be reported on Form 1120 so it will not appear on your 1040 directly.

However, if the corporation pays you a salary or dividend, those income items will appear on your 1040.

Further, state records may reveal information about your interest (or position) in the LLC (depending on the state in which the LLC is organized or registered to do business).

[jeuisomega123]

Thanks for the spot-on answer.  Follow up question. 

1- I am a non Resident. So I plan to take a salary from the company for managing the organization. I believe this salary to the owner/member is not allowed in a typical LLC, but I am finding that it is permitted in an LLC filing as a Corp? Is that accurate?

2- Even in the case of a dividend, it will not show that it is from this LLC, particularly that I own. 100% of. But rather clubbed with the dividend income from all the other publicly traded stocks I hold. Is that accurate?

[Anonymous_]

A salary is not allowed to be paid to the sole member of a single-member LLC but you can be compensated for services performed for the C corporation.

LLCs do not pay dividends, but C corporations do and any amount paid will appear the same as would dividends paid by other C corporations.

[jeuisomega123]

Thanks. You specifically say 'single member LLC' . In my case it will be a 2/3 member LLC. Are there any additional restrictions/relaxations around the members getting compensated for offering specific services to the company?

[Anonymous_]

Your LLC will have two or three members?

If so, the default treatment (for federal income tax purposes) would be a partnership. Partners are not employees of the partnership, but they can receive guaranteed payments.

See https://www.irs.gov/publications/p541#en_US_202203_publink1000104261

[Critter-3]

Taxation of a multi member LLC will default to a partnership however if you chose to be taxed as a Corporation then it defaults to a C corporation unless you make the S Corporation election.

[jeuisomega123]

You sent me on an excellent research path thanks. Now after processing this I see that even if I take the Guaranteed payment route, it would rather be difficult for me to estimate the guaranteed payment to be precisely accurate to be available profit from the Partnership, even if I did, it would be weird.  If I didn't, there would be a surplus payout from the LLC which would eventually show up on my personal tax return and that defeats the original purpose of my quest which is to prevent the LLC from showing up on my personal tax return.

Not sure if I explained it clearly above.  Given my focus on privacy wouldn't it be better if I files the LLC as corp, paid myself for administrative services which show as a pretax expense on the LLC's books and I pay the corp tax rate on the remaining and keep the balance in the LLCs account to be used for future payouts to myself as and when I render services? This way the LLC's name stays out of my personal tax return?

[Critter-3]

The LLC is a state designation not a federal one. So if you’re just setting up the company now and you don’t want anything to show up on the personal return then just incorporate to start with. A C corporation is its own entity and files its own return. If you work for the corporation you should get a W-2 on the wages you get paid and you may even issue dividends to all the owners.  Please take the time to make the best choice for you and talk to a local tax pro to get educated on these choices/options.