IRS Tax Return Filing for Alaska LLC Owners

Creating a Limited Liability Company (LLC) in Alaska has advantages such as limited personal liability, flexibility in taxation, and minimal maintenance requirements.

Nonetheless, knowing how to deal with the IRS tax return filing for LLC owners in Alaska is essential from a compliance and avoidance of penalties standpoint.

In this article, we will discuss the process of IRS tax return filing for Alaska LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.

Do Alaska LLCs Have to Pay Federal Taxes When No State Income Tax Exists?

Affirmative. Even though Alaska does not require state-level income tax, all LLCs are subject to the federal taxation system. The IRS does not treat LLCs as a distinct tax entity. Instead, the taxation of LLCs depends on the form of ownership:

• A single-member LLC is treated as a “disregarded entity”, hence, income is reported in the personal tax return of the owner.
• Multi-member LLCs need to file taxes as if they were a partnership and issue one informational return externally.

Also, LLC members need to account for self-employment taxes as well as some other requirements depending on the nature of their business.

Federal IRS Tax Filing Requirements for Alaska-Based LLCs

Tax obligations depend on whether the LLC consists of one or multiple members:

1. Single Member LLC (Considered a Sole Proprietorship by IRS):

• Complete and submit Schedule C (Form 1040) to report business income and expenses.
• Include this form with the owner’s tax return.
• Self-employment taxes will apply and must be reported on Schedule SE (Form 1040).

2. Multi-Member LLC (Considered a Partnership by IRS):

• Complete and submit Form 1065 (U.S. Return of Partnership Income) to provide a statement of income, gains, losses, deductions, and credits.
• Partners get Schedule K-1 (Form 1065), where their share of the profits/losses will be noted.
• Profits and losses need to be reported on personal tax returns.

Does Your Alaska LLC Need an EIN? Find Out When it’s Necessary

An Employer Identification Number (EIN) becomes mandatory for your LLC when it:

• Includes more than one member.
• Employs workers.
• Opt to be taxed as a corporation (C-Corp or S-Corp)

Applying for an EIN is free, you can do it directly on the IRS website.

Choosing to Be Taxed as an S Corporation or a C Corporation as an Alaska LLC

LLCs can choose to be taxed as an S Corporation or C Corporation by filing IRS Form 2553 or Form 8832, respectively.

S Corporations:

• Annual filing with Form 1120-S
• Must provide shareholders with Schedule K-1 (Form 1120-S)
• Business owners working in the business must be reasonably compensated.

C Corporations:

• Must file Form 1120 (U.S. Corporation Income Tax Return)
• Income is subject to corporate tax rates.
• Shareholders are likely to face double taxation on any distributed dividends.

Key Federal Tax Filing Deadlines for Owners of Alaska LLCs

Mark the following deadlines:

• March 15: Deadline for filing Form 1065 (Partnerships) and Form 1120-S (S Corporations)
• April 15: Deadline for filing Form 1040 (individual return with Schedule C/SE) and Form 1120 (C Corporations)
• Business extensions: Can be filed using Form 7004, personal return using Form 4868.

Alaska LLC Tax Return Fines

In Alaska, not filing taxes for your LLC could result in some serious legal repercussions. These may include:

• Nonfiling fee: Up to 25% of the unpaid taxes applicable.
• Failure-to-pay penalty: Apply each month on the existing unpaid balance.
• Interest on unpaid taxes: Grows until settled in full.

Not following these could also result in audits, collection activities, or the closing of your business.

How to File Federal Taxes for Your LLC Formed in Alaska

• Identify how you will be taxed (proprietorship, partnership, or corporation).
• Get an EIN (if needed).
• Create accounts for all income, expenses, and payroll, and track them.
• Fill out the IRS forms appropriate to your LLC.
• Send all forms to the IRS before their deadlines.
• Be sure to pay all taxes or set up an installment agreement if needed.

Additional IRS Forms That May Be Required for Your Alaska LLC

Form 1099-NEC: Used for payment reporting to non-employees, e.g., contractors.

Form 941: Used for reporting employment taxes if the LLC has employees.

Form 5472: Applies when the LLC is foreign-owned with a U.S. owner who elected to be treated as a corporation.

How EasyFiling Can Assist with IRS Tax Filing for Alaska LLCs

At EasyFiling, we focus on maintaining compliance with federal requirements for LLCs. Here’s what we offer to their owners:

• Guidance on tax classification and setting up the EIN.
• Bookkeeping is used to maintain accurate financial records.
• Preparation and filing of federal IRS forms 1040, 1065, 1120-S, etc.
• Assistance with S-Corp and C-Corp elections.
• Compliance tracking and assistance, including deadline notifications, ongoing support, and reminder systems.

Conclusion

Alaska provides a relatively “tax-welcoming” atmosphere for LLCs. However, federal IRS requirements must be observed. Managing a single-member LLC or a multi-member LLC requires succession and discipline in observing IRS tax filing rules.

Should you need assistance managing your Alaska LLC tax filings, don’t hesitate to contact EasyFiling, where bookkeeping and compliance services are tailored for your business.

Frequently Asked Questions (FAQs)

1. Do Alaska LLCs have to file for federal taxes every year?

Your LLC has to comply with all federal tax filing obligations, which means that it will have to file an Alaska LLC federal tax return every year, irrespective of the local state taxation rules.

2. Which form should I file if I am the sole member of the LLC registered in Alaska?

In most cases with single-member LLCs will file a Schedule C alongside Form 1040 and Schedule SE for self-employment taxes.

3. Do foreign-owned Alaska LLCs have any specific filing requirements?

Indeed. As a foreign owner, you might be required to attach Form 5472 with Form 1120, even in instances where there isn’t any income.

4. What happens if my Alaska LLC didn’t earn any money for the previous year?

In most cases, you should still send a return which is often a zero value return, in order to keep compliant with the law and avoid penalties.

5. Will EasyFiling assist me with filing back taxes or correcting mistakes made in prior filings?

Absolutely. Returns for the previous year, amendments and IRS notices, EasyFiling will assist with all this and more.