Interactive tax-position tool
Do I Owe US Tax? ECI / US-Trade-or-Business Self-Assessment
Answer a focused set of questions and get a decision-first read on whether your factors point toward or away from being engaged in a U.S. trade or business (ECI) — with the one thing most founders miss hard-railed: a foreign-owned single-member LLC owes Form 5472 regardless of profit. Domestic-law first pass, not a final liability determination.
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- First read
- not a filing service
Workflow
How to use it
- 1 Choose your US entity and confirm you are a nonresident / foreign owner — the two required inputs.
- 2 Answer where the work is performed, your US presence, customers, income types, money movement, and ITIN status.
- 3 Read the decision-first verdict: do your factors point toward or away from a US trade or business, plus the Form 5472 caveat.
- 4 Save the report as a PDF, copy the summary, or take the ranked actions to a cross-border CPA.
Why this matters
Founders fixate on income tax and miss the filing that bites hardest: a foreign-owned single-member U.S. LLC owes Form 5472 (with a pro forma Form 1120) whenever any money moves — even at $0 revenue — with a $25,000 penalty for missing it. Separately, whether your business income is taxable depends on the "engaged in a U.S. trade or business" (ECI) question, which turns on where the work is performed and your U.S. presence, not just where your customers are. This tool weighs your specific factors into a toward/away read, hard-rails the 5472 caveat, and branches you correctly between "5472-only = need an EIN" and "must-file 1040-NR = need an ITIN" — so you arrive at a CPA with the right questions, not a guess.
Frequently asked questions
Does this tool tell me whether I owe US tax?
No. It is a domestic-law first pass that weighs your factors into a "points toward / away from a US trade or business (ECI)" read, and flags the Form 5472 filing trap. It is not a final liability determination, it does not model tax treaties, and it is not tax advice. Confirm with a licensed CPA (IRS Circular 230).
Why does Form 5472 appear even when my work is all abroad?
Because the Form 5472 obligation is separate from ECI. A foreign-owned single-member US LLC that had any reportable transaction — including capital you contributed or any distribution you took — must file Form 5472 with a pro forma Form 1120, even at $0 income. Missing it risks a $25,000 penalty.
What is the difference between ECI and FDAP?
ECI (effectively connected income) is active income connected to a US trade or business, taxed at graduated rates after deductions. FDAP is passive US-source income (interest, dividends, rents, royalties) taxed at a flat 30% on the gross, with no deductions — a different regime that a tax treaty can lower.
Could a tax treaty change the result?
Yes. A tax treaty between your country and the US can override the domestic-law result — for example, taxing business profits only if you have a permanent establishment, or lowering FDAP rates. This tool applies US domestic rules only and never reads as a final determination.
Do I need an ITIN or an EIN?
It depends on the path. If your factors mean you must file Form 1040-NR, you (the individual) generally need an ITIN via Form W-7. If you are only filing Form 5472 for the LLC, the LLC needs an EIN (Form SS-4), not a personal ITIN.
Keep going
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