Alaska Corporation Net Income Tax Return: Fill & Download for Free

Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not impose an income tax on their residents. New Hampshire and Tennessee will be joining those seven states by 2025.For states without income taxes, revenues are generated from other types of taxes, like property taxes, tourism taxes and “sin” taxes. States need income to be able to pay for services provided to their residents and taxation is the only way to get it.Some states limit the amount of services they provide (like Alaska, with three state-run universities and a Governor who just called for a 41% reduction in higher education spending vs. California, who finances 32 state-run universities, including UCLA and UC Berkeley), or pay their employees markedly less than they’re worth (for example, only two of the seven states pay their teachers more than the national average, Washington and Alaska, while two are ranked in the bottom five states for teacher compensation, South Dakota and Florida, 46th and 47th, respectively).Budgeting is a tough game. We all want stuff and somehow it needs to get paid for. We want our food to be safe, there to be parks we can recreate at, our kids to get educations, and roads to drive on. We want to make sure buildings are structurally sound and power plants aren’t built next to elementary schools. We want there to be a safety net for people down on their luck and we want there to be justice, which requires a whole gang of people from the legal profession to prosecute and defend criminals. We also want to house criminals away from the general population and sometimes, we want to kill criminals, which is oddly an expensive endeavor. We want firefighters to protect us and our property from destruction and law enforcers to maintain public order. We want healthcare when we’re sick or injured and we want the dead to be processed humanely, with care.ALL of these services (and oh so many more) cost money and the only way governments can make money is to tax us. Now, its my personal opinion that corporate taxes should be more on the level with income taxes, both locally and federally, especially now that corporations desire to be considered legal persons. If taxation was spread out more equally between individuals and business, there’d be more money for BOTH to enjoy in return as services. As it stands, however, individuals throughout the US bear most of the burden for taxation and yet corporations benefit as much from that taxation as individuals do.I think it’s high time for the US to abandon the theory of “trickle-down economics” and increase corporate tax rates. The fact that most individuals pay more in income tax than Verizon, GE, Honeywell, Wells Fargo, Boeing, Dupont and PG&E, combined, should be enough to motivate citizens to reconsider their generosity to the corporate world.

In one way, the Navajo and in another way the Southern Ute are examples of tribes who have done well.After the Long Walk the Navajo succeeded again and again in getting their land base expanded. Most tribes lost much or all of their treaty lands between 1868 and 1960. This did not happen for the Navajo. Time and again their culture, strategies and leaders found allies in the US government and out of it who applied pressure. The first reservation boundaries were in 1868. The US government had wanted to force all the Navajo to move to Oklahoma, then known as Indian Territory. The Navajo leaders said they would rather die. The large number of deaths and corruption at the interment camps that had held the 9,000 Navajo for 4 years had become a scandal. A number of Anglos were very taken with Navajo culture and argued their case. The first reservation in 1868 was a small part of their original land centered on Canyon de Chelly.The first expansion was in 1878. It was expanded about 13 or 14 times. The last major expansion was in 1930s. In recent years they have been buying land as well. Here is the map of land additions.In 1887 the Navajo lost some land in the eastern New Mexico area. Powerful New Mexico political interested opposed the land given to them in the area. Some areas were rescinded. The Dawes Act passed and land was allotted to some families there. The government said that land "left over" after all members had received allotments was to be considered "surplus". This was sold to non Navajo or given to state or BLM or other uses. Some places the subsurface and surface rights are owned by different entities. The allotment program continued until 1934. The eastern part is today called the “Checkerboard Rez”.Here is the map of today’s reservation. The area that is tan in the lower left is not Navajo land but the Hopi reservation. The Navajo Nations today is the size of Holland and Belgium combined or the states of Mass, Conn, VT, NH, and RI combined.With that expansion of land base into a portion of their original territory came some natural resources. For the time from 1868 to about 1970 they could not negotiate royalties on their own. Many disgraceful deals were made by the US Secretary of the Interior and the BIA. What money that was collected as royalties was often mismanaged or lost. The courts finally recognized this and a portion of those funds that should have been in trust have been returned under the Cobell settlement in 2009. The tribe is using some of that money to buy back land. The tribe has over time been able to strike better deals for its coal, oil and natural gas. It now has the largest contiguous irrigated farm in the US. Navajo Agricultural Products IndustryThe Navajo have also grown in population. After the Long Walk the population was about 11,000 people. Around 1908 they had grown to 29,000. Today there are 332,129 enrolled members in 2010. About 160,000 to 200,000 live on the reservation or right near it. The Navajo language is still spoken by about 60% of the population and one can hear it everywhere. Traditional religion is still practiced by at least 1/3 of the population. They now have full control of their government. The new religion (for the Navajo since the 30s) of Native American Church (NAC) is practiced by many as well. Navajo art and culture are alive and thriving. There is modern Navajo bands and music and art as well. They have a regular justice department but have also developed an alternative court system based on traditional values. They have radio and a newspaper. They run schools and have a tribal college, Dine College, which was the first tribal college in the country in 1968. They also have Navajo Technical University in 3 locations.The other tribe that has done very well are the Southern Ute. https://www.southernute-nsn.gov/ They gained control over their gas resources in the 1970s. They built their own companies in the 1990s. They created a sovereign wealth Permanent Fund and other investments. Southern Ute Indian Tribe As late as the 1950s, many Southern Ute had no running water or income. Today tribal businesses are in 14 states and range from Gulf crude to upscale San Diego real estate. The 1,400 or so tribal members are, collectively, worth billions. Up into the 1960s because of bad federal policy and poor oversight, many Southwestern tribes, got bad deals. When a company wanted to gouge a reservation's land for coal, or drill for oil and gas, it would negotiate not with the tribe, but with the Department of Interior, which leased the land to the highest bidder. The tribes had to approve the leases but were otherwise powerless, and they generally lacked the expertise and data to make good energy decisions. The federal government managed, audited and collected royalties on the leases. Much of that was not collected as it should have been and what was collected was mismanaged. This was later the subject of the Cobell suit and other cases against the US.In the 1960s the tribe received less than $500,000 per year in royalties. This was a small fraction of what the oil companies were making and far less than it was owed. In the late 1960 through the 70s laws changed. The Southern Utes joined 24 other tribal leaders to form the Council of Energy Resource Tribes, or CERT, modeled after the international OPEC cartel, to consolidate their political power. In 1982, in an effort to improve oversight, Congress created the Minerals Management Service and passed the Indian Mineral Development Act, which gave tribes the power to negotiate mineral leases. That same year, the U.S. Supreme Court made a favorable ruling in a case involving the Apaches, saying that tribes could levy a severance tax on oil and gas produced on their lands. The Southern Ute started auditing their own gas. Even today the oil companies try to cheat. In 2010,based on information from Southern Ute auditors, the feds fined BP America $5.2 million for underreporting the amount of gas it had been producing on Southern Ute lands.“The Tribe’s business portfolio originated with the formation of Red Willow Production Company in 1992 and the purchase of Red Cedar Gathering Company in 1994. Red Willow was originally formed to buy back natural gas leases and to upgrade the performance of gas wells on the Reservation. However, Red Willow could not convince local gathering companies to increase their capacity to transport the Tribe’s new volumes of gas to the interstate pipelines. To solve this problem, the Tribe partnered with the Stephens Group in 1994, and purchased Red Cedar to gather, process and transport natural gas from the Reservation”When Red Willow took over 54 gas wells in 1995, it quadrupled their production within nine months.….The Growth Fund’s business portfolio initially contained only Red Willow, Red Cedar and a few small Tribal Organizations: Department of Energy, Utilities Division and the Sky Ute Fairgrounds….Tribal Council instructed the Growth Fund to diversify operations off of the Reservation and into other ventures and investments. Since 2001, Red Willow has expanded its operations into nine states and the Gulf of Mexico, and Aka Energy was created to gather and treat natural gas off of the Reservation…..the Tribe established the Tierra Group to manage the Tribe’s real estate portfolio. Later, GF Properties Group was formed and Tierra folded under GF Properties which now manages the Tribe’s commercial/office, apartment, industrial, hotel, mixed-use and master planned communities. GF Private Equity Group was formed to invest in private equity funds and businesses.The Permanent Fund and the Growth Fund: The Permanent Fund invests energy royalties and casino profits in securities, which generate a steady revenue to pay for government and social services.Other revenue goes into the Growth Fund, which in turn invests in what is now a myriad of companies in energy, real estate and private equity. That fund then distributes dividends to tribal members between the ages of 26 and 59 and retirement benefits to those over 60. The numbers vary year by year. Most yeas is is about $70,000. The tribe's net worth now stands at somewhere between $3.5 billion and $14 billion.How Colorado’s Southern Utes Took Control of Their Economic Destiny - IndianCountryToday.comBusiness Empire Transforms Life for Colorado Ute TribeNB: It has been noted by L. Dale Richesin that there should be a mention of the 13 Alaska Native Regional Corporations. I agree. They are enormous economic players in Alaska and the NW and are diversifying in investments across the country. Here is his list of the top three. Which Native American tribe ended up the best off?The ANCSA Corps were created in the Alaska Settlement Act in 1971. The regional Native corporations and several village corporations employ 58,000 people worldwide, with about 16,000 of those jobs in Alaska. Native corporations are the largest private landowners in Alaska, with title to a total of 44 million acres. The Act gave even more land to the state of Alaska. Most of the land had been considered federal before that. In Alaska, tribal members are shareholders in the Regional Corps. There are also about 198 or so Alaska Village corporations that people are shareholders in as well. Alaska Native Village Corporation Association There is only one small reservation in SE Alaska. The political structure of tribal life for the 229 tribes in Alaska is therefore slightly different. List of Alaska Native tribal entities - WikipediaAlaskan Tribes: By Regional OrganizationsAny tribe that is dong well now however, should be very careful and beware. Two of the most wealthy tribes in the past 100 years lost most of what they had when Anglo Americans decided to change the game and take it from them. In the 1950s the Klamath Tribes of Oregon was the most wealthy in the US. In 1870 they had started n to the lumber business with a sawmill. By 1896 the sale to parties outside of the reservation was estimated at a quarter of a million board feet. In 1911 the rail came and they increased more. They were the only tribe in the United States that paid for all the federal, state and private services used by our members.In 1954, the Klamath Tribes were terminated from federal recognition as a tribe by an act of congress. A report from the Bureau of Indian Affairs (BIA) which concluded that the Klamath Tribes were NOT ready for termination and recommended against it. Despite this consistent official opposition from the Tribes and the BIA, congress adopted the Klamath Termination Act. Powerful politicians did not like Native people doing well. Oregon Senator Richard L. Neuberger, (Democrat) and Oregon Representative Albert Ullman, (Democrat) worked together to try to delay implementation of the Klamath termination law. They failed because of Senator Arthur V. Watkins, a Republican from Utah. He had the belief that Native people should be assimilated and all special status lifted. He worked with William H. Harrison (Wyoming), Orme Lewis of Arizona, EY Berry of SD, Patrick McCarran of Nevada, Karl Mundt of SD, William Langer of ND, and Henry Jackson of Washington. They lost their land base of approximately 1.8 million acres was taken by condemnation and the Klamaths were terminated as a Tribe. They became impoverished. It was not until 1986 that they were successful in restoring of Federal Recognition for the Klamath Tribes.The other large example is the Osage who gained wealth by controlling their oil mineral rights. This was because they owned the land. Oil was discovered in 1897. In 1923 alone the tribe took in more than thirty million dollars, the equivalent today of more than four hundred million dollars. 1921 the United States Congress passed a law requiring that courts appoint guardians for each Osage. Supposedly to “prevent swindles” on the Osage people, the government appointed guardians to the Osage who were deemed “incompetent” to handle their finances. Stories in papers claimed outrage the Native people had wealth and were “wasting it” on fancy cars and nice clothes and trips to Europe. 93 percent of tribal funds held in government trust went toward the costs of administering the guardianship system. A government study estimated that by 1924 nearly 600 guardians had swindled some $8 million in Osage oil funds.If they had been able to invest $8 million even after the Depression they would be very wealthy today. During this time tens of people were murdered for their money. The FBI came in but they did little. The tribe was even charged by the FBI $21,509.19 for the bureau’s investigation (about 300,000 today). In 2000 the Osage Nation filed a suit against the Department of the Interior, alleging that it had not adequately managed the assets and paid people the royalties they were due. The suit was settled in 2011 for $380 million and commitments to improve program management. This was pennies on the dollar. Did You Know?The Osage Murders: Oil Wealth, Betrayal and the FBI’s First Big Case

Quick Comparison: LLC vs. C-CorporationThe entities are taxed differently.By default an LLC is a pass-through tax entity, meaning that the income is not taxed at the company level (however, a Multi-Member LLC is still required to complete a separate tax return). The income or loss as shown on this return is 'passed through' the business entity to the individual members, and is reported on their individual tax returns.C-Corporation is a separately taxable entity, and pays tax on the income prior to any dividend distributions to shareholders. If and when corporate earnings are distributed to shareholders in the form of dividends, the corporation does not receive the reasonable business expense deduction, and dividend income is taxed as regular income to the shareholders.The entities differ in their structure.LLCs are less rigid in their structure than corporations, so you have more flexibility in adapting the LLC to your unique business. The Operating Agreement of an LLC can be structured in a limitless number of ways.Formality:A corporation is a formal entity with officers and directors (at least one of each) required. An LLC, on the other hand, can be 'member managed' and run in a less formal way. For small, start-up businesses, less formality means you can focus on making money rather than administrative work.Quick Comparison: LLC vs. S-CorporationDifference in income allocation:While S-Corporation special tax status eliminates double taxation, it lacks the flexibility of an LLC in allocating income to the owners. An LLC may offer several classes of membership interests, while an S-Corporation may only have one class of stock.Ownership restrictions:Any number of individuals or entities may own interest in an LLC. Also, LLCs are allowed to have subsidiaries without restriction. Ownership interest in an S-Corporation is limited to no more than 100 shareholders. On top of that S-Corporations cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens.Self-Employment Taxes:One advantage of S-Corporation is the way self employment taxes are calculated. S-Corporation owners employed by the company must receive salary, and their self employemnt tax is caluclated based on that salary (this is true with the exception of S-Corporations based in New York City). Owners of LLC, on the other hand, pay self employment taxes based on all member distributions they receive.Quick Comparison: C-Corporation vs. S-CorporationAll corporations start as C-Corporations and are required to pay income tax on taxable income. An C-Corporation becomes a S-Corporation by completing and filing federal form 2553 with the IRS.Taxation:An S-Corporation's net income or loss is 'passed-through' to the shareholders and are included in their personal tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C corporations.Difference in income allocation:Subchapter S-Corporations, as they are also called, are restricted to having no more than 100 shareholders, and cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens.General Taxation QuestionsQ. What are the main types of business taxes in the U.S.?The main two types of taxes a foreign U.S. business owner should be concerned about are income tax and sales tax. Those are two completely different, unrelated taxes.Q. Are there any other taxes I should be concerned about?Some types of products have additional tax (and licensing) requirements, for example liquor and tobacco products, as well as other products. If you are not sure if your product or service has licensing or taxation requirements contact us and we will assist you with the research.Q. How does U.S. income tax work?This is a simple question, however it’s U.S. income tax we are talking about. Technically, each taxpayer must pay tax on the income created in the U.S., and in some cases (such as the case of U.S. citizens or permanent residents) on income created abroad. The income tax is paid to the federal government (IRS), and in many cases to the state of residence, and in some cases even to the local jurisdiction (e.g. New York City).However, we created this article precisely for the reason we cannot just simply answer this otherwise great question - the real answer is “it depends, because it’s complicated”. Keep reading the next items to see if U.S. income tax applies to you, and how.OK - now that we know the difference between sales tax and income tax let’s handle the sales tax portion of U.S. taxation, before diving into the depths of income taxation.Sales Tax QuestionsQ. How does the sales tax work?Sales tax is a tax paid by the end user (consumer) of a tangible product (and in some cases service) sold by a retailer. This tax is paid on a state level (there is currently no national sales tax or VAT).For example, if you own electronics store in NYC, and a customer comes in and buys an item in your store, you would apply 8.875% (as of 2013) tax on top of the price paid by the customer. Then you are responsible to file a sales tax report to NY state and remit (pay) all the tax money collected from the customers.Q. How do I know if I need to apply sales tax on the stuff I sell?Excellent question. Before reaching a conclusion you must answer three questions first:Are you selling to end users, or are you a wholesaler? Only retailers selling to end users are required to collect and remit sales tax.Does your business have nexus in any state that has sales tax? Nexus is physical connection, and we discuss it later in this article. Some states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no sales tax to begin with.Is your product/service taxable to begin with? Keep in mind, most tangible goods are taxable, while most services are not, but each jurisdiction has its own rules, so it’s not that simple.Q. Should I register in a state that has no sales tax, to avoid having to deal with it?Sorry, but it’s not that easy.For example, let’s assume you register in Delaware (that has no sales tax) and you are selling some tangible items by shipping them from China to buyers in the U.S. Since in this case your business only has nexus in Delaware (as state of registration), you will not have to worry about sales tax at all. However, if you are using a U.S. dropshipper that ships the product from warehouses in California, Kentucky and New Jersey, technically you are required to collect sales tax from buyers of your product in all three mentioned states.If you register your company in Wyoming instead of Delaware, you add Wyoming as another state to collect sales tax in. Sounds inconvenient, but only if you assume that a serious number of consumers of your product are roaming the vast stretches of the least populated U.S. state. We are deeply in love with Wyoming, but your chances of selling anything in that state are mostly close to zero, so you might not even need to worry about registering for sales tax there until you make a few Wyoming sales first.How do you register for sales tax in all these states? Read further.Q. If I am registered in one state, but my vendors are drop shipping the stuff I sell in other states - which state do I need to collect sales tax in?As you learned from the previous question, your company nexus spreads to all states where your dropshipper has nexus. So unless your dropshipper processes the payment side of your sales, or unless you make no sales in any of these respective states, you need to obtain permits in each of these states (as well as in your state of registration, if it has sales tax).Q. I know that I need to collect sales tax. How do I register?We can help you with the registration in any state. Depending on the state this permit will be called "sales tax ID", "sales permit", "reseller permit", "vendor ID", or just "tax ID". We have this item both on its own and as part of our LLC/Corporation registration applications.Q. After I register, how do I do reporting and remit sales tax?You will find a good CPA (accountant) who will handle your sales tax filing as well as your income tax filing. You can try doing it on your own, but we don’t recommend it.Q. My business is registered in one state, but my dropshipper is in another. They want me to show sales tax registration in their state - how do I do it?Almost all states have procedures to obtain sales tax permit without having to register the company as "foreign entity". It is usually called "out-of-state vendor ID" or something of the kind. We help with these permits as well.Keep in mind though, if your dropshipper is also the one processing the payment then they will be collecting sales tax and reporting it to the state themselves, so you don’t really need to obtain your own permit in case like this.Q. I want to buy products in the U.S. and sell them in my country - do I need to register for sales tax?Obviously you don’t need to collect sales tax in the U.S. on these sales, but you might need to collect some sort of VAT tax in the country were you sell, so check the rules there.However, the real question is this - can you buy from U.S. vendors without having to pay sales tax on these purchases (in wholesale)? The answer is yes, provided you obtain sales tax ID. That’s why it’s also called "reseller permit" - you want to resell the products you buy at wholesale, to the end users, without being considered end user yourself. Check with a CPA if the state in which you obtain the permit requires you to file zero tax reports.Q. How do I report sales tax in all the states I am registered in?Just as you do in one state - have your CPA file reports in each state you are registered in for sales tax, and cut checks for each state (or pay online, whatever the procedure is).Q. Do I need to register as foreign entity in states where I am registered to collect sales tax?Not necessarily. We distinguish the two cases as "soft nexus" and "hard nexus" (this is not official designation, we just like to call it this way)."Soft nexus" has to do with connection strong enough to require you to register for sales tax (for example, if your have a dropshipper who ships from a specific state), which is usually done with state’s taxation department (or it’s equivalent), but not strong enough for registration with Secretary of State (or whatever authority registering companies in the given state)."Hard nexus" is when you have physical connection to a state, for example if you have an office, warehouse, employees, or if you are managing the business from this state and are physically located there.So register for sales tax only in states where you have “soft nexus”, and register foreign entity and sales tax in states where you have "hard nexus"Ok, the question of sales tax should be more or less clear by now. Let’s proceed to more complex topic of income tax.U.S. Business 100% Owned by Non-U.S. Person(s)Q. I am a single owner of a U.S. LLC, non-U.S. person living abroad. My company provides remote services. Do I need to file tax return and pay income tax?A single member LLC that elected to be a disregarded entity (a default election) would only pay tax based on the tax status of the owner. Since the owner is not physically present in the US and is providing services remotely there would be no income effectively connected to the US. That means the LLC would owe no US tax, except for the annual registration fee in the state of LLC registration, and there would be no US federal tax obligation (in other words there is no requirement to file income tax either).Keep in mind though - you might not technically be producing income in the U.S., but you still could be (and chances are) liable to income tax on this income in your country.Q. What if I import and sell goods in the U.S. - does it change the previous answer?If your business is selling tangible goods in the US, you are required to report the income from this business to the IRS. Non-US residents report their US sourced income on form 1040NR.Don’t try to figure this form out - it is our recommendation to hire a CPA to handle all your U.S. tax issues. You will also need to obtain ITIN, something your CPA will be in the best position to assist you with.Q. What if the LLC has more than one owner? What happens then?LLC that has more than one owner (partnership), or if it is elected to be taxed as S or C Corporation (any number of owners), must file federal tax return, even if it has zero income.Q. Ok, I got the point about LLC. But what if it’s corporation instead?A corporation is a separate tax entity from its owners. That means the corporation files its own tax return and pays its own tax liability. That also means that one cannot freely transfer money between the owners (shareholders) and the corporation. The corporation can reimburse the owners for expenses they pay on behalf of the business, and the corporation can pay owners for services they provide to the corporation, both of which are tax deductions for the business.The only other option for the shareholders to take funds from the business is if the corporation pays them dividends. Dividends are not a tax deduction and are generally taxable income to shareholders as the individuals. As a shareholder, your personal income is subject to the income tax rules in your country of residence.Q. What is the best way to reduce the taxable income of my LLC or Corporation?Most businesses have both revenues and expenses. The IRS keeps a list of eligible business expenses, and it is safe to say that expenses that can are obviously related to maintaining and running the business (e.g. hosting, advertising, salaries of employees, etc.) are considered deductible expenses. Other expenses might be partially deductible, and it is best to have your CPA handle the question which of your expenses are deductible and to what degree.To minimize your tax obligation you would want to report as many eligible expenses as possible, however you should be able to prove these expenses were real, so keeping receipts and/or bank and credit card statements is a must.Q. Ok, let’s talk about wages. Can I pay myself a salary as a corporate officer, this way avoiding double taxation?If you are non-resident alien you probably don’t have work permit, which means you cannot receive a salary as a resident alien or U.S. citizen would. Sorry.You could however provide services, such as management services, to the U.S. company, and receive payment in form of consulting fees. You will then be required to report this income in accordance with your country tax rules.Q. What if we spend all or most of the income of the U.S. company on services provided by our other company, registered in our country?You could do that, provided you can prove services were indeed provided and properly documented. You also want to make sure these services are provided outside of the U.S., in order not to be considered U.S. sourced, and as such subject to 30% withholding requirement (more about it below).Q. What if we retain all the corporate profits in the U.S., pay the corporate income tax, and not distribute it to shareholders? Can we just reinvest this money into the business?Yes, you can.Q. So given all the owners are non-U.S. persons, from income tax point of view is it more beneficial to register LLC or Corporation?Tricky question that depends on lots of factors. Both entities have their pros and cons, so before reaching a conclusion you should analyze your specific situation, make some forecasts on how your business will evolve, and also - consult a CPA, it will help you a lot.Keep in mind, there is not always a “right” and “wrong” answer - often times either entity that you would form for your business would work just fine.Q. How and when do I file tax return?By hiring a knowledgeable U.S. CPA (accountant). The deadline in most cases is or around April 15 (each year can be a bit different). You can file extension by that date, and the new due date is September 15 for companies and October 15 for individuals.Keep in mind, corporations have to file quarterly reports, while LLCs taxed as partnerships file once a year. This could result in slightly higher cost of accounting services for corporations.Q. Do I need an ITIN to file taxes? If yes, how can I get it?Whether you need to obtain an ITIN will depend on if you have US tax reporting obligations due to your US business interests. It is possible that you will need an ITIN if you have membership interest (ownership) in an LLC, but most probably you won’t need one as a shareholder of a corporation.KEEP IN MIND: Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.For more information on ITIN please visit this IRS page.Q. What about state income tax?This tax is only applicable to C Corporations, not LLCs. It applies to income earned by the corporation in the state, unlike federal income that applies to all U.S. sourced income.Even though LLCs don’t pay income tax, it is a good idea to check with your CPA if there are any filing requirements for the LLC in the state of registration.Q. Should I register my company in the state that has no income tax?Again, it doesn’t matter if you choose LLC. For corporations it matters, but only to the extent that you believe you will have lot’s of income in the state of registration. For example, if you have a Delaware Corporation and your business has no income coming from sources in Delaware then you will have no corporate tax to pay to the state of Delaware, only the federal corporate tax.Q. I heard as non-resident alien I need to pay 30% income tax on my U.S. income. Is it true?It is true in certain cases. It is called NRA (non-resident alien) withholding, meaning your payee keeps 30% of the sum they are paying you, and remits this sum to the IRS.According to IRS rules “in order for a payment to be subject to NRA withholding, it must be a payment of FDAP income. FDAP is an acronym for Fixed or Determinable, Annual or Periodic. Some of the more common expenses paid by US withholding agents which would result in FDAP income to their vendors and other service providers are interest, royalties, compensation for personal services, rents, pensions or annuities and gains from the sale or exchange of the patents, copyrights and similar intangibles...”.Here is a key - for FDAP income paid to a foreign person to be subject to NRA reporting and withholding, the payment must be U.S. sourced. So how do you know if your FDAP income is in fact U.S. sourced? Here are some examples:Interest: If the debtor is a U.S. resident, the interest is generally U.S. sourced.Royalties: If the subject property is used in the U.S., the royalty payment is U.S. sourced. Payments made in connection with the sale of certain intangible assets, including copyrights and patents, are generally sourced similar to royalties when the payments are contingent on the productivity, use or disposition of the intangible.Rents: If the rental property is located in the U.S., the rental payment is U.S. sourced.Personal Services: If the services are performed in the U.S., the payment for those services is generally U.S. sourced.Q. What is form W-8BEN, and when do I need to file it?Form W-8BEN is a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. You need to fill this form out and give to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding. In other words, if you have U.S. sourced FDAP income your payer will be responsible to withhold the 30% tax based on the information listed on the W-8BEN.Keep in mind, you need to submit Form W-8BEN when requested by the withholding agent or payer whether or not you are claiming a reduced rate of, or exemption from, withholding.Q. What about tax treaty between U.S. and my country? How does it influence my income tax obligations?If you as foreign vendor are a resident in a country that has a tax treaty with the United States, the 30% rate may be reduced. Each treaty has specific provisions which determine the reduced withholding rate. These provisions reduce the withholding rate based on the type of income and the status of the recipient.To know if your country has tax treaty with the U.S. please visit this page. You can study the text of the treaty to understand how it influences your withholding situation, although I would recommend using the help of a CPA for that as well.U.S. Business Owned by U.S. and Non-U.S. PartnersQ. Is there any disadvantage of having a U.S. partner in the company owned by non-resident aliens?Not that we know of. The rules of taxation apply first on the entity, and only then on each individual partner, based on each partner’s individual tax situation.Q. Since we have a U.S. partner in our corporation, can we elect it to be S Corporation?No. S Corporations cannot have non-U.S. owners.Q. I am US citizen and I want to open a business with a 50% partner who is a non-resident alien living abroad. What type of taxes will my partner pay if we form a C Corporation?There are pros and cons to both structures for a non-resident. A C-Corp would mean your partner is not necessarily required to file a US tax return. He can be paid dividends from the C-Corp, but as with any C-Corp there is no tax deduction for dividends paid out so the earnings are likely to be double taxed, once by the corporation and then by the owners - in the US for you and in your partner’s country for him - as dividend income.Q. Double taxation doesn’t sound like a good idea. What if we choose LLC (taxed as partnership) instead?An LLC taxed as partnership would eliminate the double taxation, but definitely subjects the non-US partner to U.S. taxation for his share of earnings and profits from the business. The partner would then have to file a 1040NR and report his share of profits and pay US tax on those profits. The partnership would also need to withhold tax at 30% for the foreign partner. Depending on his earnings the withheld tax would be credited and potentially refunded against what he may owe when he files his individual non-resident tax return.U.S. Business Owned by a Foreign BusinessQ. Can a non-U.S. company own a U.S. company?Yes, it can, provided the U.S. company is not S Corporation (or LLC taxed as S Corporation).Q. Is it better to own the U.S. company with my non-U.S. company from tax point of view?Not necessarily. Ownership does not control if tax is due on US operations of the business. You will need to consider US taxation of non-resident aliens, and if the profits earned in the US are what is known as income effectively connected to operation of a US business, to understand how taxation would work in your specific case.Q. I own a company in my country, and I want to register an LLC to be owned by this company. Can I then distribute U.S. profits of this LLC to my company, and pay the taxes in my country?It is not uncommon for an online business to avoid US taxation, but there are a number of specific factors that are unique to every business which you will have to consider. As you can see from a previous answer, ownership is not the only factor in defining if tax is due, so cases like this should be discussed with a US based tax professionalQ. What if I own the U.S. company with my non-U.S. company, and the non-U.S. company will sell the U.S. company products for resale for the same price the U.S. company will sell them in the U.S.? I want to avoid having to pay taxes in the U.S.You would not be able to sell at zero profit, due to what are known as transfer pricing rules, which establish how related entities located in two different taxing jurisdiction must establish the price they charge each other for items that are transferred between themselves.U.S. Business Owned by U.S. Person(s) Living AbroadQ. I am US citizen and a sole owner of an LLC. I live abroad, and my business is online only, without any physical connection. What kind of tax would I have to pay?Online businesses are taxed just like any other business for income tax purposes and as a US citizen you are subject to tax on worldwide income. If you are living abroad, you may qualify for an earned income exclusion for wages you earn overseas, but profits from your US business would still be subject to state and federal income taxes in the US.An individual can qualify for a foreign earned income exclusion, but the amount of exclusion is $97,600 for 2013 and earnings over that amount in any one year are taxable.Q. I am U.S. citizen living abroad. Is there a way for me to run a business from abroad and avoid being taxed in the U.S.?There is the potential to avoid or at least delay, US taxation through setting up a non-US subsidiary, but that is typically only temporary as any earnings would be taxable in the US if or when those earnings are brought back into the US.Depending on the long term goals of the taxpayer he might at least defer paying US tax, but if he intends to bring that money back into the US at some point it will probably be taxed as foreign profits. There are some methods to further defer or avoid US taxation of repatriated profits, but it is a complex area of the tax code that is very specific to the taxpayer's situation and way beyond what we would attempt to explain here.ConclusionWell, as we mentioned earlier, U.S. taxation is anything but trivial. We hope this article was educational enough to give you some idea on how U.S. taxation works, and what to do next.Keep in mind two important points:no matter what your situation is, it is always a good idea to consult a knowledgeable U.S. tax expert who will be able to analyze your specific situation, and give you qualified advice. Knowledge gained from this article will already save you some time, so you can focus on understanding the deeper issues related to your situation. Those $50 or $100 spent on a 30 minute tax consultation might be the best money spent on our business.chances are there is no "right" or "wrong" solution - a few solutions that you would consider to your particular situation might all be "more or less right".Good luck with your business!