Running a US small business from abroad means keeping track of taxes on top of everything else — which ones apply to you, which deductions you’re leaving on the table, and which rules changed since you last checked. This guide pulls together what actually matters for the 2026 tax year: the deductions most non-resident founders miss, what the 2025 tax law reset changed, and the planning moves that make a real difference before year-end.
Quick summary: your 2026 obligations depend on your entity type, several deduction limits went up this year, and a handful of 2025 headlines (bonus depreciation especially) are worth double-checking before you plan around them.
Your 2026 tax obligations, at a glance
What you owe depends on your business structure and whether you have employees, but a few figures apply across the board:
- Self-employment tax: 15.3% on net earnings for US citizens and residents (the Social Security portion caps at $184,500 for 2026) — but if you’re a nonresident alien, you generally don’t owe US self-employment tax at all. The IRS excludes nonresident aliens from it unless a bilateral totalization agreement places you under the US Social Security system.
- QBI deduction: 20% of qualified business income, permanent since the 2025 tax law reset.
- Standard mileage rate: 72.5¢ per mile for 2026 business driving.
Income tax, self-employment tax, and — if you have staff — employment taxes can all apply depending on how your business is set up. Figuring out which ones apply to you is exactly the kind of thing we handle as part of federal tax filing.
How your business structure changes the math
| Structure | Tax form | Self-employment tax (US residents) | Key benefit |
|---|---|---|---|
| Sole proprietorship | Schedule C (Form 1040) | Yes (15.3%) | Simplest to set up and file |
| Single-member LLC | Schedule C, or 1120 + 5472 if foreign-owned | Yes (15.3%) | Liability protection, pass-through taxation |
| Multi-member LLC | Form 1065 + K-1s | Yes, on distributions | Flexible profit-sharing among partners |
| S-Corporation | Form 1120-S + K-1s | Only on wages | Potential SE-tax savings on distributions |
| C-Corporation | Form 1120 | No (corporate tax instead) | Standard for outside investment |
The self-employment tax column describes the rule for US citizens and residents. As a nonresident alien you’re generally not subject to US self-employment tax at all — the exceptions are a totalization agreement that covers you under the US system, or becoming a US tax resident. Income tax on US-source business income is a separate question, and the filing requirements above still apply either way.
If you haven’t picked a structure yet, our breakdown of Wyoming vs. Delaware covers how state choice interacts with these federal forms, and company formation covers the rest.
Deductions most non-resident founders miss
Every dollar you can legitimately deduct is a dollar you don’t pay tax on. The ones we see founders skip most often:
- Home office: $5 per square foot up to 300 sq ft (max $1,500), or your actual prorated costs.
- Vehicle use: 72.5¢/mile for 2026, backed by a mileage log.
- Self-employment tax: if you owe it (see above), half of what you pay is itself deductible.
- Health insurance premiums, if you’re not eligible for coverage through an employer.
- Retirement contributions — SEP IRA and Solo 401(k) both reduce this year’s taxable income.
- Business meals: 50% deductible, with proper documentation.
- Professional services — accounting, legal, and registered agent fees.
- Software, marketing, and office supplies used for the business.
The 20% Qualified Business Income deduction is permanent, not a temporary provision anymore. Sole proprietors, partners, and S-corp shareholders can claim it — though some service businesses phase out at higher income levels, so it’s worth checking exactly where you land.
What changed for 2026
The tax law reset signed in mid-2025 touched several provisions small businesses rely on. Here’s what’s actually different heading into 2026:
Section 179 and bonus depreciation. Section 179 now lets you expense up to $2,560,000 in equipment and vehicle purchases immediately, phasing out once purchases pass $4,090,000 — both figures adjusted for inflation each year going forward. Bonus depreciation is back to 100%, permanently, for qualifying property placed in service after January 19, 2025. If you’ve seen older guides describing a 60% phase-down, that’s now out of date — the 2025 reset restored full first-year expensing.
R&D costs. Domestic research and development costs are once again fully deductible in the year you incur them, reversing a multi-year amortization requirement that had been in place since 2022. This applies on top of the separate R&D tax credit, and it’s still one of the more underclaimed benefits among small businesses that qualify.
Work Opportunity Tax Credit — a caveat worth knowing. This credit, worth up to $2,400 per qualifying hire, lapsed at the end of 2025 and hadn’t been renewed as of this update. That’s not unusual — Congress has let it expire and then renewed it retroactively more than a dozen times before. If you’re hiring from a targeted group (veterans and SNAP recipients among them), keep your paperwork on file so you’re ready to claim it if it’s reinstated.
Small Business Health Care Credit. Still available, worth up to 50% of premiums paid, if you have fewer than 25 full-time employees and cover at least half of their premium costs — the full credit is reserved for the smallest, lowest-average-wage employers.
Deadlines, in short
Your filing deadline follows your entity type: multi-member LLCs and S-corps file in mid-March, while C-Corps and foreign-owned single-member LLCs — filing a pro-forma Form 1120 with Form 5472 attached — file by April 15. We’ve laid out the exact 2026 dates and how extensions work in our full deadline guide.
If you expect to owe $1,000 or more for the year, you’ll also make quarterly estimated payments, generally due April 15, June 15, and September 15, plus January 15 of the following year for the fourth quarter.
If you have employees or contractors, W-2s and 1099-NECs for the 2026 tax year are due to recipients by January 31 the following year (or the next business day if that lands on a weekend). Extensions push your filing date, not your payment date — interest keeps accruing on anything still owed after the original deadline.
Planning moves that actually help
Time your income and expenses. If this year was strong, cash-basis taxpayers can often defer income into next year and accelerate deductible expenses into this one — useful if it shifts you into a lower bracket or just buys planning time.
Maximize retirement contributions. A SEP IRA lets you contribute up to 25% of net self-employment income, capped at $72,000 for 2026. A Solo 401(k) allows higher combined limits between employee and employer contributions. A SIMPLE IRA is often the easier option once you have employees.
Lean on the reinstated bonus depreciation. Combined with the higher Section 179 cap, most equipment purchases can now be fully expensed in the year you place them in service — worth factoring into the timing of any planned purchase.
Put family on payroll, if the work is real. Paying a child or other family member for legitimate business work shifts income into what’s often a lower bracket. A child’s earnings up to the 2026 standard deduction — $16,100 — can be tax-free to them.
Mistakes we see most often
- Mixing personal and business finances — one shared account makes every deduction harder to defend if questioned.
- Weak recordkeeping — missing receipts are the single most common reason a deduction gets disallowed.
- Misclassifying contractors as employees, or the reverse — the IRS looks closely at control and independence.
- Skipping quarterly estimated payments — a routine, fixable gap, but one that adds up if it’s not tracked.
- Leaving credits unclaimed — R&D, WOTC when it’s active, and retirement-plan startup credits are dollar-for-dollar reductions, more valuable than a deduction of the same size.
Underpaying your quarterly estimates adds interest on the shortfall for each quarter it’s outstanding. It’s an easy gap to close once you know your numbers — we calculate and track your quarterly payments so there’s nothing to estimate on your own.
How we handle it
Federal filing is priced per filing, one-time: $399 for a foreign-owned single-member LLC (pro-forma Form 1120 with Form 5472 attached), or $899 for a C-Corp or multi-member LLC (Form 1120 or 1065, unlimited K-1s, and one state return included). A US-licensed CPA reviews every return before it’s filed.
If your books need attention too, our accounting plan keeps Xero current for $1,999/year — unlimited transactions, 50+ currencies converted automatically — so the numbers behind every deduction are already accurate when tax season arrives. Either way, we track your quarterly estimates, flag deductions you’re eligible for, and file on time.
A quick 2026 checklist
- Confirm your entity type — it decides which form and which deadline apply to you.
- Set aside time before year-end to review income/expense timing and any equipment purchases.
- Maximize retirement contributions before your filing deadline, not after.
- Make each quarterly estimated payment as it comes due, rather than catching up at year-end.
- Keep documentation for any hire that might qualify for a lapsed credit like WOTC.
- Send us your year’s transaction summary as soon as it’s ready — earlier is easier for everyone.
None of this needs to sit on your to-do list indefinitely. It’s built into every one of our federal tax plans: we track the deadline that applies to your entity, prepare and review the return, and file it — or your extension — on time. If you want a second look at your specific situation before year-end, reach out and we’ll walk through it with you.
