US tax for an owner abroad · A term for founders abroad
What is a non-resident alien?
For US tax, someone who isn't a US citizen, doesn't hold a green card and doesn't pass the substantial presence test; most founders abroad are one.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 70 of 105 in the glossary, filed under N.IRS: Publication 519, tax guide for aliens
Non-resident alien, for a founder abroad.
The IRS sorts everyone who isn't a US citizen into resident aliens and non-resident aliens. You're a resident alien if you hold a green card or pass the substantial presence test, which counts days in the US; otherwise you're a non-resident alien. The word "alien" is the tax code's, not a judgement.
The substantial presence test
- At least 31 days in the US this year, and
- 183 days over three years, counting every day this year, a third of the days last year and a sixth of the days the year before.
A non-resident alien is taxed by the US only on US-source income and on income effectively connected with a US business, doesn't owe US self-employment tax, and can't own an S-Corporation. Owning a US company doesn't change your status.
Sources: IRS: Publication 519, tax guide for aliens; IRS: substantial presence test.
Read next · guide · 5 minLLC or C-Corporation for a founder outside the United StatesWhat founders ask next.
- Does owning a US LLC make me a US resident for tax?
- No. Residence depends on a green card or days spent in the US, not on what you own.
- How many days can I spend in the US without becoming a tax resident?
- Under 31 days in a year never counts. Above that, the three-year count of 183 weighted days decides, and some visits, such as on certain visas, aren't counted.
03 · See also
- US tax for an owner abroadUS personFor US tax and reporting, a US citizen or resident, or a company, partnership, estate or trust formed in the US; a US LLC is one for the FBAR.Read the term
- The EIN and IRS formsITINA personal US tax number for people who must file a US return but can't get an SSN; not needed to form a company or to get its EIN.Read the term
- The EIN and IRS formsForm 1040-NRThe US tax return for a non-resident individual with US-taxable income, such as income from a US trade or business; most foreign LLC owners don't owe one.Read the term
- US tax for an owner abroadEffectively connected incomeIncome connected with a US trade or business, which the US taxes a foreign person on at ordinary rates; pay for work done abroad usually isn't ECI.Read the term
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