Understanding Single Member LLCs for Expats: What You Need to Know

A Single-Member LLC is a business structure with a single owner—you! It combines a corporation’s liability protection with a sole proprietorship’s flexibility. This means that you, as the owner, are not personally responsible for the business’s debt and have full control over the business operations.

The Basics

While a Single Member LLC has just one owner, you can have employees. However, your employees do not own any part of the business and have no equity stake in it.

Single-member (SM) LLCs, even owned by expats, do not need to issue shares or ownership interests, which is a clear distinction from other business structures. Additionally, the administrative requirements for an SM LLC are generally simpler compared to corporations.

The IRS allows SM LCC owners to classify their business in one of two ways. Either as a corporation or a ‘disregarded entity’.

If the LLC is classified as a disregarded entity, the owner must report the LLC’s financial activities and ownership on their US expat tax return. Normally, you would report it on Form 1040 Schedule C, Profit or Loss from Business (Sole Proprietorship), along with Schedule SE (Self-Employment Tax).

However, depending on the business activity, these other forms may apply.

• Form 1040 or 1040-SR Schedule E, Supplemental Income or Loss
• Form 1040 or 1040-SR Schedule F, Profit or Loss from Farming

To designate the LLC as either a corporation or a disregarded entity, the owner must file Form 8832.

Single Member LLC FAQ:

Filing Requirements for SM LLC for Expats

US citizens living abroad who meet the minimum income thresholds must file an annual federal tax return and could be subject to federal income taxes. As the US treats LLCs as pass-through entities, the income generated by the LLC is not taxed at the business level but passes through to the owner, who must report it as personal income on their tax return.

Filing Thresholds for 2025

The federal tax rate varies between 10% and 37%, depending on your income. In addition, there is a potential self-employment tax.

LLC owners are expected to pay income taxes in quarterly installments throughout the year as estimated tax payments rather than all at once when filing the following year. However, there are ways to reduce your federal income taxes as an expat!

Self-Employment Taxes

As the owner of a Single Member LLC, even US expats will need to pay Social Security and Medicare taxes. For the tax year 2024, those rates are 2.9% for Medicare and 12.4% for Social Security. MyExpatTaxes suggests setting aside 15.3% of your total earnings to pay these taxes.

If you’re a US expat living in a country with a totalization treaty agreement with the US, you can choose to contribute to the local Social Security system instead of the US. This option is particularly advantageous for expats who plan to stay in their new country of residence for five or more years.

Required Forms

Filing Deadlines

The standard tax deadline for owed taxes is April 15th. However, US expats automatically receive a two-month extension to June 16th, 2025, to file. If you need even more time, you can request an extension to October 15th with Form 4868. MyExpatTaxes users can request this extension for free with our software!

Which Credits and Deductions are Available for US Expat Single Member LLC Owners?

Here are some deductions that can help lower your US expat tax liability:

• Foreign Earned Income Exclusion: This tax break allows US expats to exclude up to $126,500 of their foreign earned income from income taxes. The FEIE will not reduce self-employment taxes.
• Foreign Tax Credit: This is a dollar-for-dollar credit on any foreign income tax paid to a foreign government to reduce their US tax bill.
• Foreign Housing Deduction: This credit allows self-employed expats to deduct a portion of qualifying housing expenses, including rent, rental insurance, utilities, and more.
• Business Expense Deductions:
  • Insurance such as general liability insurance if the policy is in the name of the LLC
  • Legal fees, including tax consultants
  • Equipment, including laptops and tablets
  • Home office, including rent and utilities, based off how much of your property is dedicated to the home office
  • Advertising, including branding and promotional events
  • Your vehicle, if used for business purposes
  • Software subscriptions
• Eligible retirement accounts: Such as a 401(k) or traditional IRA based in the US
• Child Tax Credit
• Charitable Contributions: Made to qualifying 501(c)(3) nonprofits
• Student loan interest

Considerations for US Expats with a Single Member LLC

Beyond filing an annual federal tax return from abroad, SM LLC owners may also need to file:

• The FBAR: The Foreign Bank Account Report must be filed if you have over $10,000 in any combination of foreign financial accounts. This includes business and personal bank accounts.
• Form 8938: The Statement of Specific Foreign Assets is required for US expats with more than $200,000 in foreign assets on the last day of the tax year or over $300,000 in foreign assets throughout any time of the year.
• Form 8865 or Form 5471: If you have a foreign entity that is related to the US Single Member LLC.

MyExpatTaxes can help! Single Member LLCs can be a great option for US expats seeking tax flexibility and liability protection, but filing your tax return can get tricky. Get started with MyExpatTaxes today to ensure you maximize your US tax return and stay compliant.

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