A four-step diagnostic. Four minutes. The Diagnostic Terminal surfaces the dormant IRS triggers in your current structure — from Form 5472 penalty exposure to automatic 30% FDAP withholding — and nothing is transmitted until you confirm it on the final step.
Step 1 of 4 · Residency
About 4 minutes
The country you live in decides which tax treaty, if any, applies between you and the United States. That changes most of what follows.
Live in the United States? This check is built for people resident elsewhere. The personal tax page covers U.S. residents.
Your answers stay in this browser until you send them on the last step, and are cleared when you close the tab.
Each one answers a different question the IRS can ask about your business. We handle them together so the answers do not contradict each other.
Form 5472 is required of every U.S. corporation that is 25% foreign-owned, and of foreign-owned single-member LLCs that are disregarded entities. It must be filed annually with a Pro-Forma 1120 reporting all reportable transactions with related parties. Failure to file carries a $25,000 penalty per filing per year, and until it is filed, the clock the IRS normally runs against on that year never starts. The year stays open instead of closing on the ordinary cycle.
Yes. There is no citizenship or residency requirement to own a U.S. entity. The structural choice depends on operations, capital formation needs, treaty position, and downstream banking and processor requirements — not residency.
Where a treaty applies and the claim is properly supported, the standard 30% U.S. withholding rate on dividends, interest, royalties, and certain service income may be reduced. The rate that applies is set by the specific treaty article and the taxpayer's facts, including the limitation-on-benefits test. Claiming it requires a properly executed W-8BEN-E with a Part III treaty claim, supported by a tax residency certificate from the home jurisdiction.
ECI is income from a U.S. trade or business attributable to a foreign person. ECI is taxed at graduated corporate or individual rates after deductions — not the flat 30% withholding rate. Determining whether income is ECI or fixed/determinable/annual/periodic (FDAP) is the central classification question of inbound U.S. tax planning.