US Tax Filing for Non-Residents – Form 5472, Proforma 1120 and Form 1040-NR

If you are a non‑resident individual, foreign entrepreneur, or foreign‑owned U.S. LLC owner, understanding U.S. federal tax obligations is critical. Non‑compliance can result in severe IRS penalties, even when there is no income or tax due.

This page explains — in clear, practical language — all major U.S. federal tax filing requirements for non‑residents, including:

• What taxes apply to non‑residents

• What is Form 5472 and Pro‑Forma Form 1120

• What is Form 1040‑NR and who must file it

• What the IRS means by U.S. Trade or Business (USTB)

• Common mistakes made by foreign owners

• How professional CPA support protects you from penalties

If you are new to U.S. taxation, this guide will help you make an informed decision to hire a qualified professional.

Who Is Considered a Non‑Resident for U.S. Tax Purposes?

You are generally treated as a Non‑Resident Alien (NRA) for U.S. federal tax purposes if:

• You are not a U.S. citizen, and

• You do not hold a Green Card, and

• You do not meet the Substantial Presence Test

Non‑residents can still have U.S. tax filing obligations even if:

• They live outside the USA

• They have no U.S. employees

• Their company has no physical office in the USA

U.S. Federal Tax Liabilities of Non‑Residents – Overview

Non‑residents may be subject to U.S. tax if they have:

• Income from U.S. sources

• A U.S. Trade or Business (USTB)

• Ownership in a U.S. LLC or Corporation

• Reportable transactions with a U.S. entity

Key federal filings include:

• Form 5472 with Pro‑Forma Form 1120 (Foreign‑Owned U.S. LLCs)

• Form 1040‑NR (Non‑resident individuals)

Each form serves a different purpose and applies to different taxpayers.

What Is a U.S. Trade or Business (USTB)?

According to IRS guidance, a non‑resident is engaged in a U.S. Trade or Business if they conduct regular, continuous, and substantial business activities in the United States.

Examples include:

• Actively operating a U.S. LLC

• Providing services to U.S. clients

• Selling products through U.S.‑based fulfillment (in some cases)

• Having dependent agents or employees in the USA

If a non‑resident is engaged in a U.S. Trade or Business, income becomes taxable in the USA and Form 1040‑NR is usually required.

Form 5472 – Foreign‑Owned U.S. LLC Reporting

What Is Form 5472?

Form 5472 is an information reporting form required by the IRS to disclose transactions between a U.S. entity and its foreign owners or related parties.

It is not an income tax return, but penalties for non‑filing are extremely high.

Who Must File Form 5472?

You must file Form 5472 with Pro‑Forma Form 1120 if:

• You own a single‑member U.S. LLC, and

• The LLC is 100% foreign‑owned, and

• The LLC is disregarded for tax purposes

This applies even if:

• There is no income

• There are no expenses

• The LLC is inactive

What Transactions Are Reported on Form 5472?

Reportable transactions include:

• Capital contributions

• Loans to or from the foreign owner

• Management fees

• Reimbursements

• Payments made on behalf of the LLC

Even a single transfer of money can trigger a filing obligation.

Pro‑Forma Form 1120 – Why Is It Required?

A Pro‑Forma Form 1120 is attached to Form 5472 to:

• Provide basic entity identification

• Enable electronic or paper processing by the IRS

Important points:

• Income and expenses are typically shown as zero

• It is not a corporate tax return

• It exists solely to support Form 5472

Penalties for Not Filing Form 5472

Failure to file or filing incorrectly may result in:

• USD 25,000 penalty per year

• Additional penalties if non‑compliance continues

• Increased IRS scrutiny and audits

This is one of the most penalized forms for foreign owners.

Form 1040‑NR – U.S. Tax Return for Non‑Residents

What Is Form 1040‑NR?

Form 1040‑NR is the U.S. federal income tax return for non‑resident aliens.

It is required when a non‑resident earns or is deemed to earn U.S.‑source income.

Who Must File Form 1040‑NR?

Based on IRS instructions, Form 1040‑NR must be filed if you:

• Are a non‑resident alien, and

• Are engaged in a U.S. Trade or Business, OR

• Have U.S.‑source income subject to U.S. tax

This includes:

• Business income connected with U.S. operations

• Rental income from U.S. property

• Certain service income

• Other effectively connected income (ECI)

What Income Is Reported on Form 1040‑NR?

Income reported may include:

• Effectively Connected Income (ECI)

• Fixed, Determinable, Annual, or Periodical (FDAP) income

• Capital gains from U.S. sources (in specific cases)

Tax treaties may reduce or eliminate tax, but filing is still required.

Common Mistakes Made by Non‑Residents

• Assuming “no income” means “no filing required”

• Ignoring Form 5472 obligations

• Mixing personal and LLC bank transactions

• Filing the wrong form (1040 instead of 1040‑NR)

• Missing deadlines and penalty exposure

These mistakes often lead to costly IRS notices and penalties.

Why Professional CPA Support Matters

U.S. taxation for non‑residents is highly technical and penalty‑driven. Hiring a qualified professional ensures:

• Correct form selection

• Accurate reporting

• Treaty benefit analysis

• Penalty risk minimization

• Peace of mind

I specialize in non‑resident U.S. tax compliance, including:

• Form 5472 & Pro‑Forma Form 1120

• Form 1040‑NR preparation

• Foreign‑owned LLC compliance

• Cross‑border tax guidance

Ready to Stay IRS‑Compliant?

If you are a foreign owner of a U.S. LLC, a non‑resident individual, or a new entrepreneur entering the U.S. market, I can help you:

• Understand your federal tax obligations

• Avoid costly penalties

• File accurately and on time

Contact us today to discuss your situation and ensure full U.S. federal tax compliance.