United States: tax residence, LLCs and the E-2 visa, what you really pay

The United States combines three levels of taxation — federal, state and sometimes local — and one singular rule: US citizens are taxed on their worldwide income wherever they live. For a foreign national, everything depends on a preliminary classification: is the person a resident or a non-resident for US tax purposes? The answer follows from the green card or from a day count, not from the visa held.

Two profiles must be clearly separated. A non-resident who holds a US LLC from abroad is taxed in the United States only on US-source income or income connected with a US business, but bears heavy reporting obligations. A person who lives and works in the United States, for example on an E-2 visa, generally becomes a tax resident and falls within worldwide taxation.

A disregarded LLC does not mean "no tax": it means that the tax is calculated at the level of its owner, according to the owner's own situation. And the state of registration does not, on its own, settle the question of state taxes.

Who is a tax resident?

A foreign national is a tax resident if they meet one of two tests. The green card test: the person was a lawful permanent resident at any time during the calendar year. The substantial presence test: the person was present for at least from 31 days¹ in the current year, and at least from 183 days² over a three-year period on a weighted total — all the days of the current year, one third of those of the previous year and one sixth of those of the year before that.

Even if the presence test is met, the person may remain a non-resident if they show a closer connection with another country, or by application of a tax treaty. Certain days do not count, notably for exempt individuals (certain students, teachers, diplomats). The year of arrival or departure may be a dual-status year.

Residents and citizens: worldwide taxation

Federal law requires citizens and residents to report their worldwide income. The 2026 federal schedule for a single person starts at 10%³ and reaches 37%⁴ above more than $640,600⁵ of taxable income. A Net Investment Income Tax of 3.8%⁶ is added on investment income when income exceeds more than $200,000⁷ for a single person.

Holders of foreign accounts whose total value exceeds more than $10,000⁸ at any time during the year must report them (FBAR). A citizen living abroad may, under conditions, exclude foreign earned income up to up to $132,900⁹ for 2026; the person is still required to file a return.

Non-residents: connected income and FDAP income

A non-resident is taxed on only two categories. Income effectively connected with a business carried on in the United States (ECI) is taxed, after deductions, at the same rates as for residents; the person must then file a Form 1040-NR. Fixed or determinable annual or periodical US-source income that is not connected (dividends, interest, royalties) is taxed at the flat rate of 30%¹⁰ on the gross amount, without deductions, unless a lower treaty rate applies.

It is this distinction that governs the position of a foreign owner of an LLC: if the LLC carries on a business in the United States — staff, office, services performed on site — its profits are connected income and are taxed in the owner's hands. If it does not, US tax may be nil, but the reporting obligations remain.

State taxes

Each state defines its own residence rules, rate schedule and tax base; some local authorities also levy an income tax. A person who lives in a state is in principle taxed there, regardless of the state in which their company is registered.

We do not publish any state rate schedule here: none has been reviewed for this page. The choice of state of residence should be checked case by case on the website of its tax authority.

Federal estate and gift taxes (and their treatment of non-residents) had not been verified at the date of consultation.

The LLC is a legal form created by the law of each state; its federal taxation results from a separate classification. By default, a single-member LLC is a disregarded entity and a multi-member LLC is a partnership. Either may elect, on Form 8832, to be taxed as a corporation.

Disregarded single-member LLC

Its results are reported by the owner (for a resident individual, in the schedules to the individual return). The LLC remains a separate entity for employment taxes and certain excise taxes. When the owner is a foreign person, it is treated as a corporation solely for the Form 5472 reporting obligation: it files a pro forma Form 1120 to which it attaches that form, within 4 months¹¹ after year-end, and keeps books and records.

Transactions with the foreign owner and related parties must be reported, including contributions to the entity and distributions. Failure to file results in a penalty of $25,000¹²; if the failure continues for more than more than 90 days¹³ after notification by the IRS, an additional penalty of the same amount applies for each 30 days¹⁴ period or part of a period. For corporations, the requirement applies to those at least from 25%¹⁵ owned by a foreign shareholder.

Multi-member LLC (partnership)

The income is taxed at the level of the partners. If the partnership has effectively connected income allocated to foreign partners, it must withhold tax at a rate of 37%¹⁶ for individual partners (the federal corporate rate for corporate partners) and file Forms 8804 and 8805. The withholding is an advance payment: the foreign partner files their own return.

C corporation

The corporation, or the LLC that has elected corporate treatment, is taxed at the federal rate of 21%¹⁷. Dividends distributed to a non-resident shareholder are subject to FDAP income withholding, which may be reduced by a treaty; a resident shareholder reports them in their income. State corporate tax is added on top.

The state of registration does not determine the whole tax picture

Registering an LLC in Delaware costs a flat annual tax of $400¹⁸, failing which a penalty of $200¹⁹ plus interest applies. But an entity that carries on its business in another state generally has to register there and may be taxed there; and a person who lives in a state is taxed there on their income, including their share of the LLC's profit.

The rules on treaty permanent establishment, the branch profits tax and the minimum tax on large groups are not covered: they were not reviewed for this page.

The E-2 visa, depending on nationality and the project

The E-2 visa first requires holding the nationality of a country linked to the United States by a treaty of commerce and navigation that opens this category. France is on the State Department's list (treaty of 21 December 1960, extended to Martinique, Guadeloupe, French Guiana and Réunion). What matters is the investor's nationality, not their country of residence.

• the US enterprise must have the nationality of the treaty country: at least from 50%²⁰ of its capital must be held by nationals of that country;
• the investment must be substantial, sufficient to ensure the operation of the business, and committed: uncommitted funds or funds in an account that can be withdrawn generally do not count;
• the business must not be marginal: it must produce more than the living of the investor and their family, or have a significant economic impact;
• the principal investor comes to develop and direct the business and must intend to leave the country when the status expires;
• the spouse and unmarried children under less than 21 years²¹ may accompany them for a temporary stay.

The State Department sets no minimum investment amount: whether the investment is substantial is assessed in light of the project. The E-2 does not, in itself, lead to a green card.

The EB-5: permanent residence through investment

The EB-5 leads to a conditional green card. For petitions filed since 15 March 2022, the minimum investment is from $1,050,000²², or from $800,000²³ in a targeted employment area or for an infrastructure project, and it must create at least from 10²⁴ jobs for American workers. Direct tax consequence: the green card holder becomes a tax resident from the year in which it is obtained.

The other routes (work visas, the L-1 intra-company transfer, the O-1) and processing times were not verified for this page.

The visa does not determine tax treatment: an E-2 holder settled in the United States will in practice meet the substantial presence test and become a tax resident, taxed on worldwide income, including French income. Conversely, a non-resident who manages their LLC from abroad must monitor their days of presence: crossing the test changes their entire situation.

• The year of arrival may be a dual-status year, with one part taxed as a non-resident and one part as a resident; a first-year residence election exists under certain conditions.
• The France–United States tax treaty resolves cases of dual residence; it does not remove the taxation of US citizens by the United States.
• A green card holder remains a tax resident until the status is formally abandoned, even if they live outside the United States.

The exit regime (expatriation tax) applicable to citizens and long-term residents who give up their status was not verified for this page.

We do not publish a living budget or property prices: the differences between states and metropolitan areas are considerable and no official series was reviewed for this page. Property tax, which is local, also varies by county and municipality.

1. First determine your situation: a non-resident holding an entity, or a person who will live and work on site;
2. choose the form and classification (disregarded LLC, partnership, corporate election, C corporation) according to that situation, not the reputation of a state;
3. register the entity, obtain an EIN, and register in the states where the business is carried on;
4. for a foreign owner of a single-member LLC, file the pro forma Form 1120 and Form 5472 every year, even if no tax is due;
5. for the E-2, build the consular file around a real project, a committed investment and a business plan.

• A disregarded LLC is not exempt: its income is taxed at the owner's level, in the United States if the activity is connected to it, and in the owner's country of residence in every case where that country taxes it.
• Failure to file Form 5472 is penalised regardless of any tax due; it is the most frequent mistake made by non-resident founders.
• The country of residence may not recognise the LLC's transparency and may treat it as an opaque company; the French characterisation must be checked separately.
• A prolonged stay on site, even without any intention of settling, can create tax residence through the day count.

Does a US LLC owned from France pay tax?

In the United States, a disregarded single-member LLC does not pay federal income tax as such: its owner is taxed on income connected with a US activity. Without activity in the United States, federal tax may be nil, but filings remain due. An owner resident in France reports in France under French rules.

Does the E-2 visa make me a tax resident?

Not the visa itself, but the presence it allows: beyond the thresholds of the substantial presence test, you are a tax resident and taxed on your worldwide income.

Is there a minimum amount for the E-2?

The State Department sets none. The investment must be substantial in relation to the cost of the business and sufficient for its operation; the business must not be marginal.

Does registering in Delaware or Wyoming avoid state tax?

No, not on its own. The state where the activity is carried on and the one where the owner lives may impose tax, whatever the state of registration.