
Ask HN: What taxes you should pay for app stores income? - keplerrocks
We are 3 friends that develop music apps for the app store and play store.
We recently created a multimember LLC in the US but we are not residents there.
Does anyone know about the taxes we should pay in the US? I read something about income tax but I don&#x27;t think we have &quot;effectively connected income&quot;, we do not have any infrastructure in the US besides the LLC (no office, no employees, no servers)<p>Any info on the subject will be welcome :D
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anoncoward111
Disclaimer, I'm not an accountant but I can act like I know something about
accounting :)

You have a multi-member LLC. Any money received as revenue, and any money
spent as an expenditure, must/should be reported on the LLC's taxes. Some LLCs
pay taxes as if it was an individual human, but since there three of you, I
believe the LLC entity would be taxed first.

If you are receiving an income (w2 or 1099) from the LLC, then I believe you
must pay taxes on that too, either in the USA or in your home country or
possibly both if you are really unlucky.

If you aren't receiving an income from the LLC, then you personally are fine.
You presumably would only be taxed if you sold your shares in the LLC to
someone else.

Also, I think you might have to collect sales tax in some jurisdictions. It's
pretty complicated, but the statistics show that you don'r get audited unless
you are making over maybe 100k, or commit some seriously obvious fault like
claiming 1 million USD in expenditures on food every year :)

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keplerrocks
I think the LLC is not taxed, but we as owners /shareholders do.

[https://www.nolo.com/legal-encyclopedia/how-llcs-are-
taxed-2...](https://www.nolo.com/legal-encyclopedia/how-llcs-are-
taxed-29675.html)

My question was if I should pay income tax. Foreign people should pay this tax
if the income "effectively connected" to the US. I wondered if selling apps in
the apple app store constitute "effectively connected income"

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anoncoward111
Hmmm ok, so then based on that article and your opinion of the situation, it's
debatable if you owe personal income tax on your share of the yearly income,
which let's say is 33%. Is there a way to make sure you are only paying taxes
on the yearly profit and not revenue? 100k in revenue is nothing if the
business had 100k in expenses that year.

What state is the LLC registered in? That will affect if you owe state taxes
too, even if you live abroad.

I'm sure if the income was large enough, the IRS would send you an audit
saying you owe xyz +5% late penalty.

If it's small and you have no physical address here and the income is entirely
online, then perhaps you owe 0% tax. Confusing to me, really, as I've only
ever worked W2, 1099, and cap gains for income

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cimmanom
The Apple App Store will collect sales tax on your behalf, I believe. Not sure
about the Play store. Income taxes are almost certainly an issue. I’d suggest
finding a few tax accountants and asking for free 20-min consultations to a)
quickly assess whether you’re likely to owe income taxes at all; and b) decide
which you’d like to work with.

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foobarbazetc
Does Apple not allow businesses from your country to sign up?

No one should create any sort of nexus with the US without understanding the
implications.

You need to talk to an accountant who understands your country’s tax law and
US tax law. Usually that’s like 2-3 people in the whole country.

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keplerrocks
We are from Argentina, the constant fluctuation of the country economical
stability makes it really difficult to establish the business here. They force
you to charge in local money and you can really loose a lot of money since the
peso is currently sinking.

~~~
anoncoward111
My gut instinct here is to say you owe 0% taxes. If you don't have an SS
number or a TIN (taxpayer identification number), there's no way for you to
even file taxes.

If your share of profit is less than $10,600 USD, then you owe 0% taxes anyway
because of the standard deduction.

Good luck in Argentina my friend! It is really so sad that the peso is being
pressured like this.

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keplerrocks
Yes, Argentina is in a really awful spot since we owe a lot of money to
everyone and the economy is in resession. It is really sad to see happen again
and again. I didn't know about the standard deduction, I'll look into it.
Thanks

~~~
anoncoward111
It's my pleasure to help, friend! The world financial authorities have been
very unfair to Argentina, I think, regardless of the debt situation.

Yes, definitely check out the standard deduction. In your case it will
probably save you a lot of money. Here's how a typical US tax return looks:

W2 worker non married:

~15% tax rate federal (first 10k is tax free)

~6% tax rate state (some states do not tax)

~7.5% payroll tax (15% if you are a 1099 contractor, not w2)

So you can see that it's typical to pay less than 30%. Even if you make
$110,000 per year, your rate will be about 30%. Only if you are an athlete or
insanely senior programmer will you pay 40-50%.

But, since you do not physically live here or work here (like for example a
bartender), I think you will be ok.

