Digital nomad with U.S. LLC: tax by visa status

As a digital nomad without a permanent visa, your U.S. tax residency is primarily determined by the substantial presence test. This test uses a weighted formula counting days spent in the U.S. over a three-year period: all days in the current year, plus one-third of the days in the prior year, plus one-sixth of the days two years prior. If the total equals or exceeds 183 days, you are treated as a U.S. tax resident for the current year.

If you do not meet the substantial presence test, you are a nonresident alien for U.S. tax purposes. As a nonresident alien who owns a U.S. LLC, you are subject to tax on income that is effectively connected with a U.S. trade or business (ECI). If your LLC has a U.S. office, employees, or conducts business activities in the U.S., it likely generates ECI. However, if all your work is performed outside the U.S. and the LLC has no U.S. business presence, the income may not be ECI.

Even if you meet the substantial presence test, you may avoid being treated as a U.S. tax resident if you were present in the U.S. for fewer than 183 days in the current year and you maintain a closer connection to a foreign country. To claim this exception, you must file Form 8840 (Closer Connection Exception Statement for Aliens) with the IRS. You must demonstrate a tax home in a foreign country and stronger ties to that country than to the U.S.

As a digital nomad, consider whether your LLC truly has a U.S. trade or business. If you perform all services outside the U.S. and have no U.S.-based employees or office, your income may not be subject to U.S. tax as a nonresident alien. However, the LLC may still have state filing requirements in the state where it is formed. Some nomads choose states like Wyoming or Delaware for their favorable LLC laws and minimal state tax obligations.

Meticulous record-keeping is essential for digital nomads. Track every day you spend in the U.S. with documentation such as flight records and passport stamps. Keep records of where you perform work each day, as the location of work performance determines sourcing for tax purposes. Document your tax home and ties to any foreign country if you plan to claim the closer connection exception. This documentation protects you in case of an IRS audit.

Do not forget that your home country (or the country where you maintain tax residency) may also tax your LLC income. Many countries tax their residents on worldwide income, similar to the U.S. Research your home country's tax rules for citizens or residents earning income abroad. Tax treaties between the U.S. and your home country may provide relief from double taxation through credits or exemptions.