# Please share your experience filing tax returns for an offshore single member LLC



## achab (May 31, 2014)

Hi,

I was reading https://hodgen.com/digital-nomads-eliminating-social-security-tax/ a few days ago, and, according to that article, a corporation can be disregarded for income tax purposes but not for social security purposes.

I am a US citizen living outside of the US. I am considering forming a Nevis single member LLC in a few years. I plan to file an IRS form to elect for the LLC to be treated as a disregarded entity. Since I plan to be working for the LLC outside the US, I believe (but I am not sure) that neither the LLC nor I will have to pay US self employment taxes.

If you have done the above, either with a Nevis LLC or another OFFSHORE LLC, please share your experience in how exactly you went about preparing your tax returns. Did you use TurboTax Home & Business (TTHB) ? If so, was TTHB smart enough to report your income and expenses in Schedule C, but then not transfer that information to the schedule SE as if you were operating a sole proprietorship or an onshore LLC, generating self employment taxes ? Did you use other software ? Did you use an enrolled agent or a CPA ? 

My understanding is that the Nevis single member LLC, who elects to file the appropriate form with the IRS to be treated as a disregarded entity, and employs nobody in the US, does NOT have to pay self employment taxes to the US Social Security system. No will I, the member-owner, living outside the US, have to. Does my understanding match your experience ?

Does the offshore LLC paying me a salary make any difference to anything above ?

If you are contemplating an answer with the word "generally" in it, please keep it to yourself. I am not looking for "generally" type answers. But for somebody who has already walked the walk and is willing to share his experience.

Thanks.


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## Bevdeforges (Nov 16, 2007)

The issue of paying (or not) "self-employment" taxes on foreign income relates to whether or not you are enrolled in the appropriate social security system in the country in which you are operating. (It may also depend on the Social Security treaty between the US and the country where the business is operating.)

If your business is paying you a salary and that salary is being properly withheld for the social insurance system in the country where you are tax resident, then no, you won't pay US self-employment taxes. (That's pretty much what I've been doing the last 20 years or so.) However, I will caution you that the various do-it-yourself tax preparation softwares aren't set up to automatically put all the numbers in the proper places on all the forms. And I suspect that the "home and business" versions are definitely working from the US rules without much support for "offshore" rules. It depends very much on the details: where your business is registered, type of business, how much revenue, income and investment is involved, etc.
Cheers,
Bev


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