I haven't considered electing to be treated as a corporation - could you explain a bit more about when that might be advantageous for investment activities? Would the corporate tax rates be better than the withholding rates in some cases? And would I still need to file Form 5472 if I made that election?

Making an election to be treated as a corporation (Form 8832) can sometimes be advantageous because U.S. corporate tax rates might be lower than the withholding rates applied to foreign persons, especially for certain investment types. For example, while dividends are typically subject to 30% withholding (or lower with tax treaties), the corporate income tax rate is 21%. Yes, you would still need to file Form 5472 if you made the election, as it applies to 25% foreign-owned U.S. corporations. However, instead of filing a pro-forma 1120, you'd file a regular Form 1120 as an actual tax return. Another benefit is that a corporation can potentially claim deductions against income that might not be available to a foreign person receiving passive income. The downside is increased compliance requirements and potential for double taxation if you eventually distribute earnings to yourself. The optimal structure really depends on your specific situation, investment amounts, and how your country's tax treaty interacts with U.S. tax law.

I've had an account with Interactive Brokers for my foreign-owned Delaware LLC for about 3 years now. They're definitely more accommodating to international structures than many other brokerages. The documentation requirements were still extensive, but their system is set up to handle foreign ownership situations. They also have good systems for handling tax withholding based on tax treaty status.

Yeah I did get a confirmation email from TurboTax when I made the payment, but it was just saying they submitted it - not that the IRS actually received it. Should I be getting something directly from the IRS too?

Yes, you should have received a confirmation directly from the payment processor the IRS uses, not just from TurboTax. When you pay through TurboTax, they typically redirect you to an IRS-authorized payment processor, which should provide its own confirmation number. I'd recommend logging into your TurboTax account and checking the payment details section. There should be information about how your payment was processed and possibly a second confirmation number from the actual payment processor. If you can't find this, you might want to contact TurboTax support to get the payment confirmation details.

This is the right answer. I check my transcript every year. The transaction codes tell you everything - way more reliable than calling or using Where's My Refund.

Thanks! Yeah I've found the transcript to be the most reliable source of information. The IRS website isn't the most user-friendly, but once you learn how to read the transaction codes, it's actually pretty straightforward. For anyone looking for this information, you want the "Account Transcript" specifically, not the "Return Transcript" - they're different documents in the IRS system.

Oh no, I might have missed the deadline for 2020 then! Does the IRS ever make exceptions for people who didn't know about the 3-year rule? And just to clarify, even if I can't get a refund for the older years, I should still file those returns anyway, right?

Unfortunately, the IRS is very strict about the 3-year refund statute and doesn't make exceptions even if you didn't know about the rule. It's set by law, not IRS policy, so they can't bend it. Yes, you should still file all unfiled returns even if you can't get the refund anymore. This closes your file with the IRS and prevents future issues. While you won't get money back for those older years, filing completes your tax record and can help with things like loan applications, government benefits, or any situation where tax return information is needed. Better to have everything clean and complete than leave those old years hanging.

Free File Fillable Forms only work for the current tax year (so right now, only 2024). For prior years, you need to download the specific forms for those tax years from the IRS website and mail them in. I did this last year for my 2021 and 2022 returns. You can still use free tax software though! Most of the major companies (TurboTax, H&R Block, TaxSlayer) offer access to prior year returns on their websites. The catch is that you can prepare them for free, but they usually charge to file them. Since you have to mail prior year returns anyway, you can just print them out and mail them yourself without paying.

What's a good ratio of salary to distributions that won't trigger IRS concerns? I've heard different things from different sources.

There's no fixed percentage that's universally "safe" as the IRS looks at what's reasonable for your industry, experience, and business circumstances. A common approach is researching what comparable positions in your industry would pay and documenting that research. For many service businesses, I've seen recommendations ranging from 50-70% of profits as salary being reasonable, but it varies widely. Healthcare professionals often need higher salary percentages while capital-intensive businesses might justify lower percentages. The key is having solid documentation for whatever number you choose.

This! So many people don't understand marginal tax rates and make decisions based on completely wrong assumptions. OP needs to look at effective tax rate across all income, not just the highest bracket they hit.

Thanks for bringing this up - I honestly wasn't sure if I should have been getting a W-2 or 1099. My job involves framing houses and doing general construction work. I use their tools, work on their schedule, and they tell me exactly what to do and how to do it. Does that sound more like an employee situation?

Based on what you've described, you sound much more like an employee than an independent contractor. The key factors the IRS looks at include: who controls when and how you work, who provides tools and equipment, how you're paid (regular wages vs. project-based), and whether the work is a key part of the business. Using their tools, working on their schedule, and having them direct your work are all strong indicators of employee status. Construction workers doing the core work of a construction company are typically employees unless there's a specific arrangement that gives the worker significant independence.

Did you run into any issues with the IRS after filing this way? I'm in a similar situation and worried they'll come after me for something that wasn't my fault.