Final answer:
As a U.S. citizen, you must report income from a Belizean LLC on your U.S. tax return, regardless of where the money is held. There are specific forms and potential exclusions like the FEIE, but professional advice is essential to navigate international tax law.
Step-by-step explanation:
As a U.S. citizen setting up an LLC (Limited Liability Company) in Belize, you are generally still subject to U.S. tax reporting requirements. The United States operates on a worldwide income taxation system for its citizens and residents. This means that regardless of where your income is earned, you are required to report it on your U.S. tax return.
It is important to understand that even if the money earned by your Belize LLC is kept in Belize, the Internal Revenue Service (IRS) still requires you to report this income. There are specific reporting requirements for foreign accounts and assets, notably the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR) that may apply depending on your situation.
There are potential tax benefits such as the Foreign Earned Income Exclusion (FEIE), which can exclude a certain amount of foreign earned income from U.S. taxation, but there are qualifications to meet and specific forms to file to claim these benefits. Lastly, seek professional tax advice from an accountant or tax attorney who is well-versed in international tax law to ensure compliance and to understand all the intricacies involved.