How can a single member LLC owner, nonresident alien file a tax return without SSN and ITIN?

[Puduhepa]

It is going to be the first tax return filing of my LLC.

[pk]

@Puduhepa , when did you enter the country, are you still here, under what visa. which country are you from, what kind of business/LLC ( brick and mortar or on-line presence only)

Cannot answer without these specifics

[Puduhepa]

I have not entered to US for this purpose and I am not in US. I am from Turkey. I do online marketing so it is an online business.

[pk]

@Puduhepa  are you saying that you have established a LLC  in the USA   ( which state, since LLC s are under state laws -- is it Delaware, Nevada, California or which).  You do have a US address  and a representative or is it on Amazon storefront or what?

The reason I ask is that you first have to establish that this business is an US entity (  States  usually issue you a business ID number).

If indeed  you are US entity being treated as a dis-regarded entity ( most single member LLCs choose this ) then you need an ITIN to be able to file.

[Puduhepa]

Yes, in Delaware. Yes I sell on major marketplaces such as Amazon. I've called IRS and they told me that I do not need to file for Federal Tax return if I do not have interest or rental income on the other hand the IRS agent said that I could apply for an ITIN when I file for first tax return. This is also said on IRS webpage (https://www.irs.gov/credits-deductions/individuals/how-do-i-apply-for-an-itin) that I need to file tax return to IRS's Texas address to get an ITIN. TurboTax did not allow me to file tax return without an ITIN.

I am not sure if I can print the form that it is prepared on Turbotax or not?

Apparently, I need to fill a form to file tax return and post to IRS's Austin,TX address together with W-7 form.

[pk]

@Puduhepa , I agree with the IRS that  (a) your entity / LLC  is only a name for US tax purposes. In needs to have  physical presence to become a taxable entity; (b)  selling product  to US customers, as an on-line trader  you are a not US taxpayer and the income  is taxable ONLY  where you are resident i.e. your home country ( generally);  (c) you are correct that if you indeed had  passive incomes like interest paid by US banks, rental income etc. , US would consider those as US sourced income and you will have to file a return and pay taxes  on the income ( at quite a high rate though ).

Also if you indeed had to file return, you would need an ITIN.  For that the easiest is to  file a return , sign/date the paperfile and include with it  the fully filled out form W-7 ( request for ITIN ) and include original documents like your passport (or certified copies of the same  working through professional agents whom have been certified by the IRS -- most countries have multiple of these agents, especially in the big cities ).  So unless you need the ITIN  ( it can ONLY be used for tax filing ), perhaps you should not follow through on this.

Is there more I can do for you ?

[Puduhepa]

Which paperfile/form should I fill? 1040-NR? 

[Opus 17]

Do you have US taxable income?  I don’t think you ever said.

If you don’t have US taxable income, then you don’t file any tax return and you don’t need an ITIN.  The IRS probably won’t even issue an ITIN if you applied for one.

If you do have US taxable income, then you will file a 1040-NR. This form is not supported by TurboTax, you will need to find another tax provider. You will also need to apply for an ITIN using form W-7.  Download and print the form W-7 and its instructions. Mail the completed 1040-NR, the W-7, and any proof of identity required according to the W-7 instructions, all to the address for processing W-7 applications. After the IRS issues the ITIN, they will process your tax return.

[pk]

@Puduhepa , agreeing with @Opus 17 , like to point out   -- (a) you need US sourced/connected income and not   "taxable income" to file -- Taxable income is Gross Income Less adjustments and deductions.  ;  (b) as mentioned earlier  ITIN are issued only for purposes of filing  federal tax returns  ( and also used for  state returns) and is in lieu of Social Security Number.  However unlike Social Security Number , it must be renewed every three years;  (c) if you expect to have US sourced/connected  income  in 2010, you can apply and  indeed an get an ITIN if the IRS is assured that you have a need for it;  (d) if you are planning to have employees ,as a business  you can get an EIN  Entity Identification Number and indeed you can file returns with that number.

After all that, I am not sure I understand  your need for filing if you do NOT have  US sourced / connected income. What are you trying to achieve / do ?  As I said your on-line business  income is not US sourced income for US tax purposes  ( even the IRS told you the same  ).  Perhaps  you need to have a discussion ( preferable face to face ) with a tax professional ( familiar with international filings  ) or a tax attorney.

Good Luck

[Puduhepa]

I am afraid I could not understand what you mean by US sourced/connected income.

I do online sales to worldwide. So there are also buyers from US, infact most of the buyers are from US. I do dropshipping so the items are shipped from outside US, no production in US, just the marketing. Besides, the marketplaces which I sale products, collect the States' VATs (where applicable) from me.

I pay VATs and fees to the marketplaces for each sales.

Since, I have a LLC formed in US, I believe that I have a US sourced/connected income.

By the way, EIN was given while I was forming my LLC although I do not have any employee. How can I file returns with the EIN? 

[pk]

@Puduhepa , US sourced  earnings  are  incomes  that come from US sources and are taxable by the USA --- wages  for work performed  at  US tax home  ( i.e. when the  work function is  done in the USA), self-employment income where again the tax home is USA; dis-regarded entity, like single member llc  income  where the the entity has  a physical presence in the USA ( a mere registered name is not sufficient ); passive incomes like rental income from US real-estate, interest income from US banks,  etc.  etc. -- in all cases the common thread is tax home being US or the asset is located in the USA.  Mere US customers  paying  for the product  does not make the source as USA

US connected is usually income from businesses where the entity is US based   for example  dividend  from stocks of US entities is US  connected / sourced.  Connected generally looks as "closer " connection. For example, if an employee of a German entity came to the USA and worked  here  for   three months  on installing and bringing "on-stream" machinery  bought by an American entity from the German entity,  this employee's  earning while in the USA would not be US sourced ( work was done in the USA )  because the employee's tax home is Germany , his family lives in Germany, he intended to return to Germany at the end of his work stay, his bank is in Germany, his children go to school in Germany etc. etc. ----- i.e. he had a closer connection to Germany

Most of these sourcing conventions are based on Tax Treaty agreement -- and these are common for all  US-X tax treaties.

VAT or sales taxes collected   at point of sales is a tax on the consumer and therefore  your  "sales agent" like Amazon collect these fees and have nothing to do with your own income ( from sales ) or your entity's ( LLC ) income for US tax purposes.

As has been said before  and what you have heard from the IRS, the income from your LLC is NOT US sourced/Connected.  Thus I am at a loss to understand why you want to file a US tax return -- what are you trying to achieve ?

I do not believe I can help you more  on this.  Perhaps you should consider consulting a tax professional  or an attorney familiar with international tax filing

stay safe

[Puduhepa]

First of all I would like to thank you very much for your detailed explanation.

Secondly, the problem is although IRS said that I did not need to fill federal tax return PayPal wants my ITIN to keep me using PayPal account. 

So, I am really confused. I am going to apply to IRS to get an ITIN. Let's see what will be their reply.

Thanks again I really appreciated your efforts.

Have a great day and stay safe. 

[pk]

you are very welcome.  stay safe --pk

[wilsongangmei]

@Puduhepa : This is a very old post and I wonder if you'll still read this post or not. However, I noticed you said you were provided with EIN when your LLC was formed. I am also planning to form LLC in the US and wanted to know from which Registered Agent/Firm did you get your LLC registered? I will be much obliged and grateful if you can kindly respond. Thank you in anticipation.

[Opus 17]

@wilsongangmei 

You get a tax ID number for your LLC from the IRS web site for free.

https://www.irs.gov/businesses/small-businesses-self-employed/get-an-employer-identification-number

LLCs are created under state laws, so the benefits of having an LLC, and the cost and other requirements, vary from state to state.  If you want to organize your business as an LLC, you need to decide which state you want to organize in (usually the state where you live, or the state where you will be doing most of the business activities) and then contact an attorney or other expert in that state.