Do non-residents pay US tax on Amazon FBA: ECI and Form 1040-NR

There is no flat yes or no: IRS Publication 519 says whether you are engaged in a trade or business in the United States depends on the nature of your activities (IRS: Publication 519 (2025)). If you are, income effectively connected with that business is taxed, after allowable deductions, at the graduated rates US citizens and residents pay.

What the trade or business test is

It is the IRS question of whether you are engaged in a trade or business in the United States. Publication 519, the IRS tax guide for aliens, states the rule in one sentence: “Whether you are engaged in a trade or business in the United States depends on the nature of your activities” (IRS: Publication 519 (2025)). Put simply, the test looks at what you do.

The answer matters because Publication 519 taxes two categories of income in different ways:

• Effectively connected income. This is income effectively connected with a US trade or business. Publication 519 says this income, “after allowable deductions, is taxed at graduated rates.” These are the same rates that apply to US citizens and residents (IRS: Publication 519 (2025)).
• Income that is not effectively connected. Publication 519 says it is taxed at a flat 30% rate, or at a lower rate where a tax treaty provides one (IRS: Publication 519 (2025)).

In plain words, “after allowable deductions” means the deductions the law allows come off before the rates apply.

Which category your Amazon income falls into depends on your facts. This article stops before that judgment. A CPA or enrolled agent can apply the test to your business.

Who reports your LLC's activity

You do, on your own federal tax return, if your LLC has one member and has not elected to be treated as a corporation. The IRS calls such an LLC a “disregarded entity”: its activities should be reflected on its owner's federal tax return (IRS: Single Member LLCs).

For a foreign owner, Publication 519 describes such an entity as generally transparent. As a result, the foreign person includes on Form 1040-NR any of the entity's tax items that are subject to reporting (IRS: Publication 519 (2025)).

Form 1040-NR is the return where effectively connected income goes. The 2025 Instructions for Form 1040-NR say this income is taxed at the same rates that apply to US citizens and residents. You report it on page 1 of the form (IRS: Instructions for Form 1040-NR (2025)).

The same instructions also say who must file. If you were a nonresident alien engaged in a trade or business in the United States during the year, you must file Form 1040-NR even if you have no income from a trade or business conducted in the United States (IRS: Instructions for Form 1040-NR (2025)).

What Form 5472 asks of your LLC

If your LLC is a foreign-owned US disregarded entity that must file Form 5472, it files that form attached to a pro forma Form 1120, the US corporation income tax return (IRS: Instructions for Form 5472). The December 2024 instructions treat this filing as separate from an income tax return. They say a foreign-owned US disregarded entity has no income tax return filing requirement, yet must file the pro forma Form 1120 with Form 5472 attached.

The instructions define a foreign-owned US disregarded entity as a domestic disregarded entity wholly owned by a foreign person. For tax years beginning on or after January 1, 2017, and ending on or after December 13, 2017, such an entity is treated as a corporation for the limited purpose of the Form 5472 reporting requirements (IRS: Instructions for Form 5472). Publication 519 adds the owner's side. Because the entity is generally transparent, the foreign person will “include (or continue to include)” on Form 1040-NR any of its tax items that are subject to reporting (IRS: Publication 519 (2025)).

The instructions call for a separate Form 5472 for each foreign or US person who is a related party with which the reporting corporation (here, your LLC) had a reportable transaction (IRS: Instructions for Form 5472). For the form itself, see the Form 5472 guide for foreign-owned LLCs.

What to take to a tax professional

Take the parts that depend on your facts: whether you are engaged in a US trade or business, and how any tax treaty applies.

Two treaty points from IRS guidance:

• Rates. Publication 519 taxes income that is not effectively connected at a flat 30% rate, or a lower treaty rate (IRS: Publication 519 (2025)).
• Residence. If you are a resident of both countries under their laws, and the treaty has a rule that settles conflicting residence claims, being treated as a resident of the foreign country under that treaty means you are treated as a nonresident alien in figuring your US income tax (IRS: Publication 519 (2025)). For a dual resident whose treaty tie-breaker rule points to the other country, the 2025 Instructions for Form 1040-NR say you can be treated as a US nonresident for figuring your income tax liability if you file Form 1040-NR and attach Form 8833 (IRS: Instructions for Form 1040-NR (2025)).

Which treaty applies, and what it says for your country, is a question for a CPA or enrolled agent. See whether a foreign-owned LLC needs an accountant.

Three things to prepare for that conversation:

1. Confirm how your LLC is classified. A single-member LLC that does not elect to be treated as a corporation is a disregarded entity (IRS: Single Member LLCs).
2. Describe your US activities in writing. Whether you are engaged in a trade or business in the United States depends on the nature of your activities (IRS: Publication 519 (2025)).
3. List the filings to ask about. Ask whether you must file Form 1040-NR, and whether your LLC must file Form 5472 with a pro forma Form 1120 (IRS: Instructions for Form 5472).

Federal filing dates are on the federal tax calendar.

Quick answers

Does a single-member LLC owned by a non-resident pay US income tax?

If the LLC has one member and has not elected to be treated as a corporation, it is a disregarded entity, and its activities should be reflected on its owner's federal tax return (IRS: Single Member LLCs). The Form 5472 instructions say a foreign-owned US disregarded entity has no income tax return filing requirement (IRS: Instructions for Form 5472). Publication 519 says the foreign owner includes its reportable tax items on Form 1040-NR (IRS: Publication 519 (2025)).

Do I need to file Form 1040-NR if my LLC made no profit?

You may. The 2025 Instructions for Form 1040-NR say a nonresident alien engaged in a trade or business in the United States during the year must file Form 1040-NR even if they have no income from a trade or business conducted in the United States (IRS: Instructions for Form 1040-NR (2025)). Whether you are engaged in a US trade or business depends on the nature of your activities (IRS: Publication 519 (2025)). Your facts decide.

Does filing Form 5472 mean I owe no US tax?

Not by itself. The Form 5472 instructions say a foreign-owned US disregarded entity has no income tax return filing requirement, yet one that must file Form 5472 attaches it to a pro forma Form 1120 (IRS: Instructions for Form 5472). For income tax, Publication 519 says effectively connected income, after allowable deductions, is taxed at graduated rates, the same rates that apply to US citizens and residents (IRS: Publication 519 (2025)).

Where Taxller fits

Money you put in or take out, and loans between you and the LLC, are kept separate in your books — the owner transactions that Form 5472 asks about. Our free tax calendar lists the federal deadlines for sellers and the state deadlines for 19 states, with weekend shifts applied and sources cited. Taxller never files or pays anything on your behalf: you or your accountant review and file.

Sources

• Publication 519 (2025), U.S. Tax Guide for Aliens
• Instructions for Form 1040-NR (2025)
• Single Member Limited Liability Companies
• Instructions for Form 5472 (Rev. December 2024)