How a non-resident's US LLC is actually taxed: what you pay in the US and what you don't
'With an LLC you pay no taxes' is the internet's best-sold, worst-explained sentence. Like every good lie, it contains half a truth. Here's the full explanation: when the US truly doesn't tax you, when it does, and the giant difference between 'no tax due' and 'nothing to file'.
🌐 También en español: Impuestos de una LLC de no residente
The true half of the myth
A single-member LLC is "disregarded" by the IRS: the company pays no tax of its own; results flow to the owner. If the owner is a non-resident and the income is not US-source effectively connected income, the US generally does not tax it. Up to there, the myth is true. What the myth-seller leaves out fills the rest of this article.
When the US does NOT tax you
Services performed from your country. If the work physically happens outside the US — you, at your desk, even if the client is American and pays in dollars — that income is generally not US-source. This is the freelancer, agency and consultant case.
The technical key is ECI (effectively connected income): the US taxes non-residents when income is connected to a real business IN the country — your own office, employees, dependent agents closing contracts for you. Without that, your LLC is a collection vehicle, not a business "in" the United States.
When the US DOES collect
- Real operations on US soil: premises, employees, structured inventory operations. That creates ECI, taxed at progressive rates. FBA e-commerce is a case-by-case analysis zone — take the analysis, not the slogan.
- US-source passive income (FDAP): dividends, interest, royalties and rents suffer 30% withholding at the source unless a treaty reduces it. That's why creators see that deduction on YouTube — and why the W-8BEN matters so much.
- US real estate: rent is always US-source (30% on gross, or the election to be taxed on net income by filing). And FIRPTA appears when you sell.
No tax due ≠ nothing to file
The foreign-owned LLC files Form 5472 + a pro forma 1120 EVERY year (penalties start at USD 25,000 for skipping it), keeps its state annual report and its registered agent. "Zero tax" coexists with "filings every single year."
This is where the myth ruins people: they bought "zero taxes" and heard "zero paperwork." Four years later they discover four unfiled 5472s.
The final question the slogan avoids
If the US doesn't tax you… who does? Your country of tax residence. The LLC doesn't make you invisible to your local tax authority: that income is yours and is taxed where you live, under your country's rules. A serious structure is designed with both countries on the table — any "advisor" who looks at only one is telling you half the movie.
📄 Take this with you as a PDF
This article is also a free printable guide: How a non-resident's LLC is taxed.
Your specific case?
Everything above is the general rule — real cases live in the details. In a 15-minute consultation (USD 29, credited toward any service) we review your situation and you leave with a concrete next step: book here →