[financeknowhow]

1. We open an LLC entity, 2 out of 3 investors are foreigners, one is resident alien . How do we pay tax? Self employment tax, personal income tax, foreign tax? We are from Vietnam.

[AtlantaTaxExpert]

Is the LLC a partnership or a sub-chapter S corporation?

In either case, the partnership/S-Corp would file an information-only tax return, then issue K-1s to the partners/shareholders to detail how the profits (of losses) are distributed. Then the partners/shareholders file their returns (Form 1040 with SCH E Page 2 for the resident; Form 1040NR with SCH E Page 2 for the non-residents) to pay the U.S. income taxes on the distributed profits. Non-residents are liable for U.S. income taxes because the income is U.S.-sourced.

Self-employment tax is also calculated for the partnership distributions on Schedule SE for the RESIDENT tax return; non-residents are NOT liable for self-employment taxes.

I cannot comment on whether you owe taxes to Vietnam.

[financeknowhow]

We changed the plan from 3 peoples, 2 people left out, only one people left with. He is resident alien. All the income of the LLC is from rental of the property. I read somewhere that income from rental does not have to pay self-employment tax. Please correct me for this.

[AtlantaTaxExpert]

Rental income to an INDIVIDUAL is NOT subject to self-employment tax; the rental income is reported on Schedule E.

However, if it is a partnership or S-corporation, then self-employment tax IS required.

[financeknowhow]

So if it is a single owned LLC own (not manage) the property, do I have to pay self-employment tax. What tax form should I file? Thank you.

[AtlantaTaxExpert]

Yes, if the LLC is listed as a "disregarded entity". Then it is treated as a sole proprietorship and you can report the rental property income and expenses on Schedule E.