Archive of entries posted on October 2012

Are Non-US Persons Liable for US Income Taxes?

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The US generally taxes non-US Persons on “territorial income,” not “worldwide income.” Territorial income taxed by the US includes:

  • Income effectively connected with a US trade or business (ECI), and
  • US source income that is not effectively connected with US trade or business.

Absent application of a superseding tax treaty, ECI, after allowable exclusions, exemptions and deductions, is taxed at graduated rates. These are the same rates that apply to US citizens,

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Single Member LLCs

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A single member LLC is disregarded for US federal income tax purposes. Income, gain, deduction and loss of a single member LLC is reported directly on the income tax return of its owner. The single member LLC does not file an income tax return with the IRS. A US Person who is the sole owner of the LLC will report all worldwide income,gain, deduction and loss on her income tax return. A non-US Person that owns a single member LLC doing business in the US will be treated as doing business in the US,

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