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What is Section 1446 withholding and how does it apply to foreign LLC members?
I am a foreign partner in a multi-member LLC that is treated as a partnership for U.S. tax purposes. I was told that the LLC must withhold tax on my share of the partnership's effectively connected income under Section 1446. How does this withholding work? What rate applies, and how does it interact with my actual tax liability when I file my U.S. return?
Related Questions
What is IRC 1441 withholding and when do my U.S. clients have to withhold 30% from payments to me?
I'm a South Korean graphic designer with a New Mexico LLC. A U.S. company I freelance for said they need to withhold 30% of my payments because I'm a foreign person and IRC 1441 requires it. Is this right? I provided a W-8BEN form. Does that change anything? I thought my LLC was a U.S. entity so withholding wouldn't apply. This would basically make the work unprofitable for me.
How does IRC 1442 withholding on foreign corporations differ from IRC 1441 withholding on individuals?
I have a holding company in the Netherlands that owns a U.S. LLC which elected corporate status. My U.S. accountant keeps mentioning both IRC 1441 and IRC 1442 — one for individuals and one for corporations. Since my Dutch company receives dividends from the U.S. entity, which withholding provision applies? And does the U.S.-Netherlands treaty help reduce the rate?
What is IRC 1446 withholding on foreign partners and why is the U.S. partnership withholding from my share?
I'm a German citizen who is a 40% partner in a U.S. LLC taxed as a partnership. The partnership operates a restaurant in New York. The managing partner told me the partnership has to withhold tax from my share of the profits under IRC 1446. I thought partnerships didn't pay tax — the income just passes through. Why is the partnership withholding from my distributions?
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