Need tax filing advice for my small US Ecom LLC as a Canadian owner

So I set up a US Ecommerce LLC back in 2023 while living in Canada. Last year I paid this incorporation service company about $1500 to handle my tax filing, and honestly it was a terrible experience. For 2024, my business didn't do great - lost money actually and made less than $3k in total revenue. Since the business performance was so disappointing and the tax prep was so expensive, I'm seriously considering just filing myself this time. When they did my taxes last year, they only filed Form 1120 and Form 5472. They told me that since I don't have any physical presence or "footprint" in the US, I only need to file these forms for the LLC but don't need to file US income tax - and should instead handle my personal income tax filing in Canada. Is this actually correct? I don't want to make a mistake since I'm dealing with cross-border tax issues. Has anyone been in a similar situation? I'm thinking about just using TurboTax to handle everything myself this time. Any advice would be really appreciated!

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18 comments

Diego Chavez

•8M

This is actually a fairly common situation for Canadian business owners. The advice you received is generally correct but with some nuances worth understanding. For a foreign-owned US LLC, you typically need to file Form 1120 (the corporate tax return) and Form 5472 (information return for foreign-owned US corporations). Since your LLC is not making money and you don't have a physical presence in the US (no employees, no office), you generally wouldn't have US personal income tax obligations. Your personal income would be reported on your Canadian tax return. However, be careful with TurboTax - the consumer version isn't really designed for foreign-owned LLCs. You might want to look at TurboTax Business or another solution like TaxAct Business that specifically handles Form 1120 and Form 5472. With such low revenue and a loss for the year, the filing shouldn't be too complex, but the international component does add a layer of complexity that most DIY software might not fully address.

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Diego Chavez

•8M

For foreign owners, the ownership section and any related party transactions on Form 1120 require special attention - make sure to complete these accurately as they trigger Form 5472 requirements. Be thorough with Part V of Form 5472 where you report transactions between the LLC and foreign related parties (which includes you as the owner). The business loss actually simplifies some things since you won't owe US corporate tax, but you still need to file to claim the loss. This loss can potentially be carried forward to offset future profits. Just make sure you properly document all business expenses that contributed to the loss - the IRS tends to scrutinize businesses with consistent losses more carefully.

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Anastasia Smirnova

•8M

After struggling with a similar situation with my New Zealand-owned US LLC, I found an amazing tool called taxr.ai (https://taxr.ai) that literally saved me thousands in accounting fees. It specializes in analyzing foreign-owned LLC requirements and creates a full checklist of exactly what forms you need to file. I uploaded my incorporation docs and previous tax forms, and it instantly showed me what I was missing and what I could file myself. It even highlighted that I needed to file Form 8832 (Entity Classification Election) which my previous accountant never mentioned! Since you're handling a straightforward filing with minimal revenue, this might be perfect for your situation instead of paying crazy fees for simple form filing.

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Anastasia Smirnova

•8M

It doesn't just tell you what forms to file - it walks you through each form section by section with explanations tailored to foreign-owned businesses. For example, it explained exactly how to report my transactions with my parent company in New Zealand, and showed me which fields I could leave blank based on my situation. The Form 5472 assistance was particularly helpful! It has a guided interface specifically for that form that asks you questions in plain language and then populates the correct fields. The explanation about reportable transactions between related parties saved me from a potential audit flag. It doesn't submit the forms for you, but it prepares everything so all you need to do is send them in.

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Zara Shah

•8M

Just wanted to follow up on my previous skepticism about taxr.ai. I decided to try it for my Australian-owned LLC taxes, and I'm actually shocked at how helpful it was. The analysis of my previous returns showed I'd been overpaying by not properly categorizing certain expenses! The Form 5472 guidance was incredibly detailed - it caught a reporting requirement for a loan I'd made to my business that my previous accountant had missed completely. I was able to file everything myself this year instead of paying $2k to my accountant. For small foreign-owned LLCs like ours with straightforward situations, this is definitely the way to go. Just wanted to share since I was in your exact position last year.

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Luca Bianchi

•8M

If you're dealing with any IRS questions about your foreign-owned LLC (which happens A LOT with these cross-border businesses), I highly recommend using Claimyr (https://claimyr.com) to get through to an actual IRS agent. When I had questions about my Form 5472 requirements, I spent weeks trying to reach someone at the IRS international tax department. With Claimyr, I got through in about 15 minutes instead of waiting on hold for hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with was actually super helpful and clarified exactly what I needed to document for my Ireland-US business transactions. This saved me from potentially missing a filing requirement that could have resulted in huge penalties. Definitely worth it for peace of mind when dealing with international business tax questions.

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Luca Bianchi

•8M

It works by using an automated system that navigates the IRS phone tree and waits on hold for you. When an agent finally answers, you get a call connecting you directly to them. It doesn't "jump the queue" - it just handles the waiting part so you don't have to sit there listening to the hold music for hours. They use a combination of AI and actual people who know exactly which options to select to get to the right department for international tax questions. I was skeptical too until I tried it. The IRS doesn't give them special access - they're just better at navigating the system than most of us. When you have specific questions about things like Form 5472 reporting requirements, getting an actual answer from the IRS can save you from expensive mistakes.

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Nia Harris

•8M

I have to post a follow-up about Claimyr because I'm honestly surprised. After my skeptical comment, I decided to try it for an issue with my UK-owned LLC's Form 5472 filing that I couldn't get clarity on. I'd spent at least 4 hours across multiple days trying to reach someone at the IRS international tax department. With Claimyr, I got connected to an agent in about 25 minutes. The agent actually gave me specific guidance about reporting requirements for foreign owners that I couldn't find anywhere online. This cleared up my confusion about how to properly document transactions between my UK parent company and US LLC. Saved me from potentially filing incorrectly which could have triggered those massive penalties. Not what I expected at all!

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Mateo Gonzalez

•8M

Make sure you're also aware of state filing requirements, not just federal! Each state has different rules for foreign-owned LLCs. I almost got hit with penalties in California because I didn't realize I had to file a separate state form even though my Nevada LLC had no physical presence in California. Where is your LLC registered? Some states are much more tax-friendly than others for foreign owners. Delaware and Wyoming are popular for Canadian owners because they have simpler requirements.

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Mateo Gonzalez

•8M

Delaware is actually one of the better states for your situation. They don't require a separate state income tax return for LLCs that don't have physical operations in Delaware. You'll still need to pay the annual Delaware franchise tax ($300 for most small LLCs) to maintain your business registration, but that's separate from income tax filing. Just make sure you've paid that annual franchise tax - Delaware will revoke your LLC status if you miss payments. They send the notice to your registered agent, so sometimes foreign owners miss these notifications if they're not in regular contact with their agent.

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