1040-NR vs 1040: Which Return for a US LLC Owner?

TL;DR

• Your residency status, not the LLC, decides the return. A single-member LLC is disregarded by default, so its income is the owner's income. US citizens and resident aliens file Form 1040; nonresident aliens file Form 1040-NR.
• Resident alien = a green card holder at any time during the year, or someone who meets the substantial presence test: at least 31 days this year and 183 weighted days over three years (IRC §7701(b)).
• Form 1040 taxes worldwide income, with self-employment tax on LLC profit. Form 1040-NR taxes only effectively connected income (ECI) at graduated rates and US-source FDAP income at 30% or a treaty rate (IRC §871).
• No US trade or business and no ECI → often no 1040-NR, but the foreign-owned LLC still files a pro forma Form 1120 with Form 5472 for any year with reportable transactions.
• No standard deduction for nonresidents (IRC §63(c)(6)(B)) or in a dual-status year.
• Deadlines: Form 1040 — April 15. Form 1040-NR — April 15 if you had wages subject to US withholding, otherwise June 15. Treaty-based positions generally require Form 8833 (IRC §6114).

Quick comparison

Step 1: are you a resident for tax purposes?

Immigration status and tax status differ. Under IRC §7701(b)(1), a non-citizen is a resident alien for a calendar year if:

1. Green card test: you were a lawful permanent resident at any time during the year; or
2. Substantial presence test: you were in the US at least 31 days this year, and days this year + ⅓ of days last year + ⅙ of days the year before total 183 or more (IRC §7701(b)(3)(A)).

Example: 120 days in each of three years gives 120 + 40 + 20 = 180, so the test is not met.

Adjustments:

• Exempt individuals — foreign government-related individuals, teachers or trainees, students and certain athletes — do not count days in that status (IRC §7701(b)(5)). Humanitarian parole (for example U4U), TPS and visitor visas are not on that list, so those days count.
• Closer connection exception: fewer than 183 days this year, a tax home abroad and a closer connection to that country (IRC §7701(b)(3)(B); Form 8840).
• Treaty tie-breaker: a dual resident treated as a resident of the other country under a treaty computes US tax as a nonresident and attaches Form 8833 (Treas. Reg. §301.7701(b)-7).

A domestic single-member LLC is disregarded unless it elects otherwise (Treas. Reg. §301.7701-3(b)(1)(ii)); multi-member LLCs and LLCs taxed as corporations follow other rules. More: US LLC.

US-resident owner: Form 1040

You report worldwide income, including the LLC's profit on Schedule C, and pay self-employment tax on net earnings of $400 or more (IRC §1402(b)). Foreign accounts may require an FBAR and Form 8938. The LLC is not foreign-owned, so no Form 5472.

Nonresident owner: what Form 1040-NR covers

A nonresident alien pays US income tax on two kinds of income:

• ECI — effectively connected income: income connected with a US trade or business, taxed after deductions at the same graduated rates as residents (IRC §871(b)). On Form 1040-NR you report only effectively connected income and expenses from Schedule C (2025 Instructions for Form 1040-NR).
• FDAP — fixed or determinable annual or periodical income from US sources that is not ECI: interest, dividends, rents, royalties and similar. Taxed at 30% of the gross amount or a lower treaty rate (IRC §871(a)(1)), on Schedule NEC.

Is there a US trade or business? There is no single number of days or dollars. Key rules:

• Performing personal services in the United States is a US trade or business (IRC §864(b)), with a narrow exception (up to 90 days and $3,000, for certain foreign employers).
• Services performed outside the US produce foreign-source income (IRC §862(a)(3)), and foreign-source income is generally not ECI (IRC §864(c)(4)(A)). The exceptions in IRC §864(c)(4)(B) — certain royalties, financial income and inventory sales — require a US office or fixed place of business.
• An agent's office counts as yours only if the agent is dependent: has and regularly uses authority to conclude contracts in your name, or fills orders from your stock of goods, and is not an independent broker or commission agent (IRC §864(c)(5)(A)).
• Most US income tax treaties tax business profits only if they are attributable to a permanent establishment — a fixed place of business or a dependent agent. Claiming that ECI is not attributable to a US permanent establishment must be disclosed (Treas. Reg. §301.6114-1(b)(5)).

US employees, a US office or warehouse, inventory stored in the US and regular business trips are gray areas that depend on facts.

A return can be required even without taxable income. A nonresident engaged in a US trade or business at any time during the year must file Form 1040-NR even with no ECI, no US-source income, or treaty-exempt income (Treas. Reg. §1.6012-1(b)(1)). Deductions and credits are allowed only if a true and accurate return is filed (IRC §874(a)). Without an SSN, you need an ITIN to file. More: Form 1040-NR.

No ECI: no 1040-NR, but still Form 5472

A typical case: a founder abroad owns a Wyoming or Delaware LLC, performs all services outside the US and has no US office, employees or dependent agents. The income is generally foreign-source and not ECI, the owner is not engaged in a US trade or business, and if there is no under-withheld US-source FDAP income, Form 1040-NR is generally not required (2025 Instructions for Form 1040-NR, Table A).

The LLC is still a foreign-owned US disregarded entity. For every year with a reportable transaction — contributions, distributions, loans, payments between owner and LLC — it files a pro forma Form 1120 with Form 5472 (Treas. Reg. §301.7701-2(c)(2)(vi); Treas. Reg. §1.6038A-2(b)(3)(xi)). Missing it costs $25,000 (IRC §6038A(d)). If the LLC has foreign accounts above $10,000 in aggregate, the LLC itself must file an FBAR: a US-formed LLC is a US person, and the FBAR instructions state that a disregarded entity must file if otherwise required (31 CFR 1010.350(b)(3)).

Details: Form 5472 vs Form 5471 and Form 5472.

Dual-status: the year you become a resident

In the arrival year you are usually a nonresident until your residency starting date and a resident afterwards:

• under the substantial presence test — the first day you were present in the US that year (IRC §7701(b)(2)(A)(iii)); up to 10 days may be disregarded if your tax home and closer connection were abroad (Treas. Reg. §301.7701(b)-4(c)(1));
• under the green card test — the first day you were present as a permanent resident (IRC §7701(b)(2)(A)(ii)).

If you are a resident on December 31, you file Form 1040 marked "Dual-Status Return" with Form 1040-NR as the "Dual-Status Statement" for the nonresident part (2025 Instructions for Form 1040-NR). Restrictions: no standard deduction even for the resident part, no joint return, no head of household, and no earned income, elderly or disabled, or education credits. A married couple can instead elect full-year resident treatment (IRC §6013(g) or (h)), which brings worldwide income for the whole year.

The LLC may also still owe Form 5472 for that year: §6038A applies if the company was foreign-owned at any time during the tax year (IRC §6038A(a)).

Standard deduction

The standard deduction for a nonresident alien is zero (IRC §63(c)(6)(B)). On Schedule A (Form 1040-NR) you may itemize deductions connected with ECI, such as state and local income taxes on it, plus certain gifts to US charities and casualty and theft losses. The exception: students and business apprentices eligible under Article 21(2) of the US–India treaty.

Deadlines

For 2025 returns these were April 15, 2026 and June 15, 2026 (2025 Instructions for Form 1040-NR); weekend and holiday dates move to the next business day. Check the current year's instructions.

Treaty positions and Form 8833

If you take the position that a treaty overrides or modifies the Code, you must disclose it (IRC §6114), generally on Form 8833. Typical positions for LLC owners: no US permanent establishment (Treas. Reg. §301.6114-1(b)(5)), or dual residence resolved by the treaty tie-breaker. Some positions are exempt, for example a treaty-reduced withholding rate on dividends or interest paid to an individual (Treas. Reg. §301.6114-1(c)(1)). A missing disclosure costs $1,000 per failure for an individual (IRC §6712(a)). Check the treaty's current status: the IRS treaty list marks the treaty with Russia as partially suspended.

Sources

• IRC §7701(b) (residency)
• IRC §871 and IRC §864 (ECI and FDAP)
• IRC §63, IRC §6072, IRC §6114
• Treas. Reg. §1.6012-1 and Treas. Reg. §301.6114-1
• 2025 Instructions for Form 1040-NR
• Instructions for Form 5472
• Publication 519, U.S. Tax Guide for Aliens
• IRS: United States income tax treaties A to Z

Not sure about your status or your LLC's ECI? Book a consultation.