Since nobody mentioned this yet - you should seriously consider whether your LLC is being treated as a corporation or disregarded entity for US tax purposes. If you never filed Form 8832 to elect corporate treatment, a single-member foreign-owned LLC is by default treated as a disregarded entity. This distinction matters because filing requirements are different. A disregarded entity owned by a foreign person still needs to file Form 5472, but attached to a pro forma Form 1120 (not a full tax return). Understanding this might help you file the correct forms now.

I went through almost the exact same situation with my Delaware LLC that I abandoned after formation. The stress and panic you're feeling is completely understandable, but there is hope! Here's what I learned from my experience: Yes, you do need to file Form 5472 and a pro forma Form 1120 for each year, even with zero activity. The key is acting quickly now and putting together a strong reasonable cause statement. For your reasonable cause letter, emphasize these points: 1) You're a non-US resident who was genuinely unaware of the filing requirements, 2) The LLC had absolutely no business activity or transactions, 3) You're coming forward voluntarily to correct the situation, and 4) This was an honest mistake, not willful non-compliance. I filed my delinquent returns with detailed reasonable cause statements and requested penalty abatement. While I can't guarantee your outcome will be the same, the IRS did accept my reasonable cause and waived most of the penalties. The fact that your LLC truly had no activity works strongly in your favor. Don't let the $25,000 penalty amount scare you into paralysis - that's the maximum statutory penalty, but the IRS has discretion to reduce or waive penalties when there's reasonable cause. Get those returns filed ASAP with solid documentation of your circumstances.

This is exactly the kind of situation that keeps me up at night as a small business owner! Thank you Justin for sharing your story - it's both terrifying and reassuring to know I'm not the only one who's made these kinds of mistakes. What really stands out to me from all these responses is how much the IRS seems to value good faith efforts and honest communication. It sounds like being proactive and documenting everything you tried to do right is almost as important as the actual compliance itself. I'm bookmarking this thread because the advice about First Time Penalty Abatement, getting extensions on deadlines, and even the deductibility of backup withholding payments are all things I never would have known about. It's amazing how much critical tax information isn't readily available to small business owners when we need it most. For anyone else reading this in a similar situation - it seems like the key takeaways are: don't ignore the notices, document your good faith efforts, ask specifically for First Time Penalty Abatement, and don't be afraid to get help whether that's through professional services or just getting connected to the right IRS representative. This community is incredibly valuable for sharing these real-world experiences!

As someone who's been lurking in this community for a while but never posted, I felt compelled to share after reading through all these responses. I went through almost the identical situation with Form 945 backup withholding about 18 months ago, and I wish I had found advice like this back then! What I want to emphasize is that the emotional toll of these tax issues can be just as challenging as the financial impact. I remember feeling like a complete failure as a business owner and losing sleep for weeks. But the reality is that these compliance gaps are incredibly common for new businesses - you're definitely not alone in this, Justin. One thing I learned that hasn't been mentioned yet is to keep detailed records of ALL your interactions with the IRS throughout this process. Dates, times, names of agents you speak with, reference numbers - everything. I had to call back multiple times during my case, and having that information made each subsequent call much smoother because agents could see the history of our discussions. Also, while the financial aspect is scary, remember that small businesses survive these situations all the time. The IRS has programs specifically designed to help businesses get into compliance, not to shut them down. Focus on the solutions people have outlined here rather than the worst-case scenarios your mind might be creating. You've already taken the hardest step by asking for help and being proactive about addressing this. That puts you way ahead of business owners who just ignore IRS notices and hope they go away!

Quick tip that helped us: make sure you're calculating the affordability threshold correctly. It's 9.12% of your ENTIRE household income, not just your spouse's employment income. So take your total AGI (including your self-employment income) and multiply by 0.0912 - that's your annual affordability threshold. If the annual cost of adding you to your spouse's plan exceeds that number, you should be eligible for the deduction.

This is a great question that many self-employed individuals face! Based on my understanding of the tax code, your husband should indeed be eligible for the self-employed health insurance deduction. The key is that "affordability" test - if your employer's family plan costs more than 9.12% of your household income, then your husband is not considered to have access to "affordable" employer-sponsored coverage. A few important points to keep in mind: 1. The deduction is limited to your husband's net self-employment income - he can't deduct more than his business actually earned 2. Make sure to keep documentation of your employer's family plan costs in case of an audit 3. This deduction goes on Schedule 1 of Form 1040, not Form 8962 (which is for premium tax credits) The IRS recognizes that just because coverage is "available" doesn't mean it's actually accessible if the cost is prohibitive. Since your family was able to get marketplace coverage based on the unaffordability of your employer's family plan, that's a good indication that the IRS would view your situation the same way for the self-employed health insurance deduction.

Offsets are the worst fr. Lost half my refund to old student loans this year 😭

The timing really depends on which agency is doing the offset. Federal agencies like student loans or child support usually update faster (1-2 weeks) while state debts can take up to a month to show on your transcript. If you're expecting more offsets, you can also check with the specific agency that's collecting the debt - they often know before it hits your IRS transcript.

Has anyone here actually been audited for this kind of thing? I've been doing something similar with electronics and credit card rewards for years and just reporting the sales as income and purchases as expenses without factoring in the cashback. Now I'm worried I've been doing it wrong...

This is a really complex situation that highlights how cash back rewards in business contexts are treated differently than personal rewards. I've been following this thread and it seems like there's solid consensus that you need to treat the cash back as reducing your cost of goods sold rather than ignoring it entirely. One thing I haven't seen mentioned yet is the potential quarterly estimated tax payments. Since you're making consistent profits from this activity, you may need to make quarterly payments if you expect to owe more than $1,000 in taxes for the year. The IRS can penalize you for underpayment even if you file correctly at year-end. Also, keep in mind that as a California resident, you'll need to handle state taxes too. California generally follows federal treatment for business income, so the same principles should apply for your state return. I'd strongly recommend keeping detailed records going forward - not just for the cash back calculations, but also for any expenses related to your coin business (gas for pickups/deliveries, storage costs, etc.) since these can be legitimate business deductions on Schedule C.