US taxes for non-resident LLC owners: what you owe and what you file

How is a US LLC taxed: disregarded entity, partnership or corporation?

The IRS doesn't tax an LLC as an LLC. It applies one of three classifications, and that decides who pays and which returns are due. A single-member LLC is a disregarded entity by default, so its activity counts as yours. An LLC with two or more members is a partnership by default. Either can file Form 8832 to be taxed as a corporation; the election can take effect up to 75 days before it's filed and no later than 12 months after.

S corporation status isn't open to you, because an S corporation can't have nonresident alien shareholders. Corporate tax is a bigger decision: the LLC pays tax on its profit, and dividends paid to a foreign owner are generally subject to 30% US withholding unless a treaty lowers the rate. Compare the options in LLC vs C-corp and single-member vs multi-member LLCs.

When does a non-resident owe US income tax?

The IRS splits a non-resident's US income into two kinds:

• Effectively connected income (ECI): income connected with a US trade or business. It's taxed after deductions at the same graduated rates US citizens pay, and reported on Form 1040-NR.
• Fixed, determinable, annual or periodical (FDAP) income: US-source income such as interest, dividends, rents and royalties that isn't connected with a US business. It's taxed at a flat 30%, or a lower treaty rate, with no deductions.

So the key question is whether you're engaged in a US trade or business. The IRS looks at the nature of your activities, which must be considerable, continuous and regular. It says you're generally engaged in one if you own and operate a business in the US selling services, products or merchandise, or if you perform personal services in the US. A member of a partnership engaged in a US trade or business is treated as engaged in it too.

Where the work happens matters more than who pays. For services, the place where the work is performed decides the source of the income, regardless of where the contract was made or where the client lives.

Example: a design agency run entirely from India

You own a single-member Wyoming LLC. You and your team work from Bengaluru for clients in the US and Europe, and the LLC has no US office, employees or agents. Pay for work performed in India is foreign-source income, and nothing here points to a US trade or business, so on these facts the LLC's profit generally isn't subject to US federal income tax. The LLC still files Form 5472 for years with reportable transactions. Confirm the US side with a US CPA, and ask a Chartered Accountant about India, which may tax the income.

That changes if you start working from the US. Pay for services performed there is US-source, and performing personal services in the US usually counts as a US trade or business, though a treaty may still protect some or all of it.

Example: an e-commerce brand with US staff or inventory

Now the same LLC hires a US employee, rents a US office, or keeps inventory in a US warehouse and sells to US customers. The IRS says profit from selling inventory in the US is effectively connected income for a foreign person engaged in a US trade or business, and owning and operating a business in the US is how it describes being engaged in one. You would report that profit on Form 1040-NR at graduated rates. The LLC also takes on employment tax filings under its own EIN for US staff, and usually has to register in the state where they work.

Exactly where the line falls, for example with a third-party fulfillment center or a US contractor, depends on the facts, and a treaty's permanent establishment rules can change the result. Get advice from a US CPA before you set this up, not after.

Which US tax forms do you file each year?

Form 1040-NR in short

• Who files: a non-resident engaged in a US trade or business at any time in the year, even with no US-source income or treaty-exempt income, and a non-resident with other US income whose tax wasn't fully withheld.
• When: April 15 if you have a US office or place of business, or wages with US tax withheld; otherwise June 15. Form 4868 gives more time to file.
• Deductions: you get deductions and credits only on a true and accurate return filed within 16 months of the due date. After that, the IRS can deny them.
• Self-employment tax: non-residents generally don't owe it, unless an international social security agreement covers them.
• Tax ID: you need an SSN or ITIN, and you can apply for an ITIN with the return itself. See ITIN vs SSN vs EIN.

A partnership must file Form 1065 unless it had no income and no deductible expenses. Filing late costs $255 for each month or part of a month, up to 12 months, multiplied by the number of partners. It also withholds tax on foreign partners' share of ECI, currently 37% for individuals and 21% for corporations.

State income tax and sales tax

The state you form in isn't necessarily the state that taxes you. The IRS points out that many states tax income sourced in their state and that some states don't honor tax treaties. If you have employees, an office or inventory in a state, expect to register the LLC there and check its income and franchise tax rules. That's separate from the yearly fee or tax your formation state charges; see LLC annual fees by state.

Sales tax basics for e-commerce

Sales tax is a state tax, not an IRS tax. Since the Supreme Court decided South Dakota v. Wayfair on June 21, 2018, a state can make an out-of-state seller collect its sales tax without any physical presence, once sales into the state pass a threshold. This is called economic nexus.

Each state sets its own threshold and rules. South Dakota, for example, requires remote sellers with more than $100,000 in gross sales in the state in the current or previous calendar year to register, and dropped its 200-transaction test on July 1, 2023. Before you sell physical products to US customers at volume, check the rules in the states you sell into.

W-8BEN or W-8BEN-E: what to give US clients

US clients and platforms ask for a tax form before they pay you. Form W-9 is for US persons and the W-8 forms are for foreign ones. Which one you give depends on how your LLC is taxed, not on whose name is on the invoice:

• Single-member LLC owned by you: give Form W-8BEN in your own name. The IRS treats you as the beneficial owner of the LLC's income, and the Form W-9 instructions say a foreign owner must give a W-8 instead of a W-9, even with a US tax ID. You can add the LLC's name on line 7.
• Single-member LLC owned by your foreign company: the foreign company gives Form W-8BEN-E.
• LLC taxed as a partnership or corporation: it's a US person for tax purposes, so it gives Form W-9 with its own EIN.
• Income effectively connected with a US business: give Form W-8ECI instead of Form W-8BEN.

US withholding generally applies to US-source income, and pay for services is sourced where the work is done, so fees for work you perform outside the US generally aren't subject to it. To claim certain treaty benefits on Form W-8BEN, you need a US tax ID (SSN or ITIN) or your foreign tax ID. A W-8BEN generally stays valid until the end of the third calendar year after you sign it.

Do tax treaties help, and when should you hire a US CPA?

A tax treaty can reduce or remove US tax on some income for residents of the treaty country. The US has income tax treaties with India, the UK, Pakistan, Bangladesh, Indonesia, the Philippines, Thailand and Mexico, among others. The IRS list checked in September 2026 doesn't include the UAE, Singapore, Nigeria or Brazil, so there's no US income tax treaty to rely on if you live there.

For LLC owners, the article that matters most is usually business profits. Under it, individuals can generally exempt business profits from US tax unless they have a permanent establishment in the US, such as an office, that the profits are attributable to. The details differ by treaty. Claiming a treaty position generally means filing a US return with Form 8833, and not disclosing one when required can cost $1,000 per failure.

When to hire a US CPA

• Before you hire in the US, rent US space or store inventory in the US.
• When the LLC has two or more owners, or you're considering corporate tax.
• When a US client or platform withholds tax from your payments.
• When you or your team will work from the US for part of the year.
• When you've missed Form 5472 or other returns in earlier years.

Your home-country adviser matters too, because your country may tax the same income; for Indian residents, that's a Chartered Accountant. We're not a law or CPA firm, and this guide explains general rules, not your situation.

What we handle, and what needs a CPA

Starter ($349 a year plus the state fee) covers formation, your EIN, a registered agent and the annual report. Pro ($999 a year plus the state fee) adds Form 5472 and the pro forma Form 1120, prepared by our US tax partner. Compare them on the pricing page.

If your LLC has effectively connected income, more than one owner or a corporate election, you'll also need a US CPA for Form 1040-NR, Form 1065 or a full Form 1120.

Frequently asked questions