Payment to foreigner

[KlausE]

Jurisdiction

Georgia

My LLC got a loan from a friend who is a French citizen and lives in France.

I paid back the loan with interest in 2021.

I am working on my taxes.

Do I need to report this anywhere?

 

[adjusterjack]

The interest you paid should be deductible as a business expense on your Schedule C depending on the nature of your business and how you used the money.

2021 Schedule C (Form 1040) (irs.gov)

2021 Instructions for Schedule C (2021) | Internal Revenue Service (irs.gov)

You can also go to the IRS website and find a variety of business tax related booklets.

 

[KlausE]

Thanks. Yes, I am aware of that.

Do I need to report the payment somewhere? Like I do on a 1099?

 

[adjusterjack]

Here's information about 1099-INT

About Form 1099-INT, Interest Income | Internal Revenue Service (irs.gov)

 

[KlausE]

Thank you!

 

[flyingron]

1099-INT is probably the wrong form for a non-resident. You should be filing a 1042-S.

 

[KlausE]

I thought a 1042 is only used when you withhold money. I have a signed W-8BEN, so I did not withhold anything.

 

[flyingron]

I thought a 1042 is only used when you withhold money. I have a signed W-8BEN, so I did not withhold anything.

The 1042 and the 1042-S are distinct forms. The 1042 is for you to report withholding. The 1042-S is for you to report payments that (might) be subject to withholding.

 

[KlausE]

I am not sure if the loan I got counts as a service performed abroad.

If I can avoid reporting the 1042-S I would like to do it.

 

[flyingron]

Interest is required to be reported on 1042-S.

 

[zddoodah]

My LLC got a loan from a friend who is a French citizen and lives in France.

I paid back the loan with interest in 2021.

You paid back the loan? Or your LLC paid back the loan? If the former, why would you pay back a loan that was made to your LLC?

Did you or the LLC pay interest on the loan?

Until you clarify these things, your question cannot be answered intelligently.

 

[KlausE]

My LLC got a loan and paid it back with additional interest.

I got a W-8BEN so I did not withhold anything.

Trying to find out if I have to report the interest payment. On my own research, I found some articles that say I have to, but also some who say that if I do not withhold anything I don't have to.

 

[flyingron]

1024-S has to be filed on withholdable payments whether or not you actually do (or are obliged) to. You've created the same thread on two different boards and you've been told the same thing by multiple people. If you don't believe us, hire an attorney or accountant.

 

[KlausE]

Thanks. Now I understand. I never said I don't trust you?!

Sorry for the posting in "Banking, Finance, Investments". I deleted it after a few minutes and as far as I know, there were no answers. I just checked again and I can not find it, so I can not find any answers.

 

[KlausE]

I have now filed a 1024-S form. I couldn't do it electronically, so I used a paper form.

Thanks for all your help!

Klaus

 

[Tax Counsel]

1024-S has to be filed on withholdable payments whether or not you actually do (or are obliged) to.

You meant Form 1042-S. Form 1024 is an application for exemption for most exempt organizations (other than charities)

 

[Tax Counsel]

I have now filed a 1024-S form. I couldn't do it electronically, so I used a paper form.

I hope you actually filed a Form 1042-S as that is the form you need.

 

[flyingron]

Yeah, the dysnumeria got me that morning. There's no 1024-S anyhow.

 

[KlausE]

Yes, 1042-S filed.