Need tax advice for my undocumented silent business partner... do they need to file?

I've got this small repair shop that's really starting to take off, and there's a complicated situation I need some help with. The business is officially registered only in my name, but I have a silent partner who helps run everything and we split all profits exactly 50/50. Here's where it gets tricky - my partner is undocumented. We've been operating for about 2 years now and making decent money (about $85,000 in profit last year), but I'm concerned about tax implications. I've been claiming my half on my personal returns, but we're not sure what my partner should be doing tax-wise. Does an undocumented silent partner still need to file taxes? Is there some kind of special form or process for this situation? I don't want either of us to get in trouble with the IRS, but I also don't want to cause immigration issues for my partner. Any advice would be really appreciated. Thanks!

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21 comments

Ahooker-Equator

•8M

Your situation requires careful handling, but the short answer is yes - everyone earning income in the US needs to file taxes regardless of immigration status. The IRS and immigration authorities operate separately. Your partner can file using an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number. This is specifically designed for people who need to file taxes but aren't eligible for a SSN. Filing with an ITIN doesn't trigger immigration issues - the IRS doesn't share this information with immigration authorities. You should also formalize your business relationship with a written partnership agreement. Right now, the IRS would likely consider this an informal partnership, and you could be liable for taxes on the entire $85,000 if your partner doesn't file their portion. Consider consulting with a tax professional who has experience with both small business taxation and ITIN filings to set everything up properly.

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Ahooker-Equator

•8M

To apply for an ITIN, your partner would need to complete Form W-7 (Application for IRS Individual Taxpayer Identification Number) and submit it along with their tax return and documentation proving their identity. This can be done by mail - no need for in-person visits to government offices. The documentation requirements can be satisfied with a foreign passport or other identification documents. There are also Certified Acceptance Agents who can help with the application process and verify documents locally, which many people find less intimidating than dealing directly with the IRS.

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Tyrone Hill

•8M

I was in a similar situation a few years back and discovered taxr.ai (https://taxr.ai) which was seriously helpful. They have specialized tools for handling partnership situations like yours, especially with ITIN applications and documentation requirements. The site analyzes all your documents and explains exactly what forms both partners need to file without creating immigration issues. What really helped me was their breakdown of partnership documentation - they showed me which forms proved our business relationship without exposing my partner to unnecessary risks. The system walks you through each step and ensures everything is filed properly for both partners.

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Tyrone Hill

•8M

They don't just tell you what to do - they provide detailed, step-by-step guidance with document templates and checklists specific to your situation. They explain exactly which forms to submit, how to complete them, and what supporting documents are needed for the ITIN application. For the physical document submission, they provide clear instructions on the entire process, including how to properly submit everything to the IRS. They also explain which Certified Acceptance Agents in your area can help verify documents if you prefer not to mail original documents to the IRS. The system basically removes all the guesswork from the process.

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Lena Kowalski

•8M

Ok so I was super skeptical about taxr.ai but decided to give it a try for my situation (similar to the original post). I'm amazed at how much it simplified everything! The system identified all the documentation we needed for my partner's ITIN application and generated a complete checklist customized to our specific situation. The best part was how it guided us through creating a proper partnership agreement that protected both of us while acknowledging the actual business relationship. We submitted everything last month, already got the ITIN approved, and now my partner is filing their portion of the taxes without any issues. It really took away a ton of stress trying to figure this out on our own.

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DeShawn Washington

•8M

Something people aren't mentioning - if you've been trying to contact the IRS about this situation, good luck getting through. I've been using https://claimyr.com for over a year now whenever I need to actually talk to someone at the IRS about complicated stuff like partnership questions. Check out how it works here: https://youtu.be/_kiP6q8DX5c I used to waste entire days on hold with the IRS only to have the call dropped. Claimyr basically waits on hold for you and calls when an actual agent picks up. This way you can talk to an actual IRS person about partnership filing options and ITIN questions without wasting hours. They don't ask about immigration status, just focus on tax compliance.

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DeShawn Washington

•8M

No one talks to the IRS for you - it's an automated system that navigates the IRS phone menus and waits on hold. When a real agent answers, you get an immediate call connecting you directly to that agent. You do all the talking yourself, they just handle the hold time. The IRS doesn't ask about immigration status during tax advice calls - they're focused on tax compliance. I've used it to ask hypothetical questions about partnership filing requirements and ITIN applications without providing personal details. They actually give good general advice about filing requirements regardless of status. It's not a replacement for a tax professional, but it's helpful for getting clarity on basic requirements.

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Sofía Rodríguez

•8M

I have to eat crow here. After dismissing Claimyr as a scam, I tried it out of desperation when I couldn't get through to the IRS about a partnership question (waiting over 3 hours on multiple days). It actually worked exactly as described - I got a callback when an agent was on the line and was able to ask general questions about ITIN requirements for partnerships without providing specific details. The IRS agent was surprisingly helpful with explaining the proper way to document a partnership when one partner uses an ITIN. They walked me through the whole process and confirmed that proper filing actually protects both parties. Didn't have to share any identifying information about my partner, just asked about the proper procedures. Totally worth it after wasting days trying to get through on my own.

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Aiden O'Connor

•8M

You're right that Texas doesn't have state income tax, which simplifies things considerably for your situation. However, you should still be aware of other state-level business requirements. Texas does have franchise tax for businesses, though there's a revenue threshold (currently $1.23 million) before you're required to pay it. You still need to file the franchise tax report annually even if you're below the threshold. Also, depending on your business type, there may be local business permits, sales tax permits if you sell taxable items, and unemployment tax if you have employees. These requirements apply regardless of your partner's documentation status.

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