I opened a US LLC from abroad. Do I actually owe US taxes?
You formed a US LLC from another country. Here’s when you actually owe US tax – and when you don’t – explained without the jargon.
You watched a YouTube video, formed a US LLC in a weekend, and now a quiet worry is sitting in the back of your head: “Wait – am I supposed to be paying US taxes? Filing something? Will the IRS come after me?”
You’re not alone. This is the single most common question we get from founders outside the US. The honest answer is: it depends, and the thing it depends on is simpler than the internet makes it sound.
Why this is so confusing
A US LLC is a flexible creature. By default, a single-owner LLC is “disregarded” – the IRS looks straight through it to you, the owner. So the real question isn’t “does my LLC owe tax?” It’s “am I, a non-resident, earning income that the US is allowed to tax?”
The US generally only taxes a non-resident on income that is effectively connected to a US trade or business (often shortened to “ECI”). In plain terms: are you actually doing business inside the US – people, an office, dependent agents, operations on US soil – or are you just a foreign person who happens to own a US company and serves clients from abroad?
What’s at stake if you guess wrong
Two different mistakes, both expensive:
- Assuming you owe nothing and ignoring filings. Even if you owe zero tax, a foreign-owned US LLC almost always has to file Form 5472 + a pro-forma 1120 every year. Miss it and the penalty starts at $25,000 — regardless of income.
- Assuming you owe everything and overpaying. Many founders panic and pay US tax on income that was never US-taxable in the first place, leaving real money on the table.
The common path to getting this right
- Determine whether your income is effectively connected to a US trade or business.
- File the information returns you owe even if your tax bill is $0 (yes, the 5472 still applies).
- If a tax treaty between the US and your country applies, use it — it can reduce or eliminate US tax and prevent you being taxed twice.
How Add-wise handles this
This exact situation non-resident founders and shareholders of US companies is our core specialty, not a side service. Our team brings experience from leading US CPA firms and has handled the full alphabet of forms these cases need: 1120, 5472, 1040NR, 8833, and more. We’ll tell you clearly whether you owe US tax, keep you compliant on the filings that are easy to miss, and make sure you’re not paying a dollar more than you have to.
Not sure where you stand? Get a clear answer before the next filing deadline sneaks up on you. Talk to a US tax specialist