Each year, payment platforms are required to report to the IRS any customer who received more than $5,000 during the fiscal year. This is done through Form 1099-K, where one copy is sent to the IRS and another is usually emailed to the recipient.
Although the official reporting threshold starts at $5,000 annually, platforms usually choose to report all customers, regardless of the amount received.
But receiving a 1099-K doesn’t automatically mean you owe taxes. The form is simply one of the tools the IRS uses to cross-reference information, but it doesn’t determine tax liability on its own.
If your LLC has a single non-resident member, and provides services 100% from outside the U.S., with no physical presence, employees, or operations in the country, your income may not be considered “effectively connected” with the U.S. – and therefore may not be taxable in the U.S.
In this scenario, if your company receives a 1099-K, you’ll need to file Form 5472 and also Form 1040NR with Schedule C. On the other hand, if you don’t receive a 1099-K, you’ll likely just need to file Form 5472 along with Form 1120.
At Globalfy, we know these tax obligations can raise a lot of questions. That’s why we offer plans tailored to your business needs, with full support in English, Spanish, or Portuguese.
Still not sure how to handle it properly? Get in touch! Globalfy takes care of your U.S. company’s accounting and tax filings for you.
