Disregarded entity

What is a disregarded entity?

How the IRS treats a single-owner LLC: the company and its owner are one taxpayer unless corporate taxation was elected. The LLC generally is not a separate federal income taxpayer; owner tax obligations and Form 5472 reporting need separate checks.

A US LLC with one owner is, by default, “disregarded” for federal tax: the IRS looks straight through the company to the person behind it. The company exists for every other purpose — it can hold a bank account, sign contracts and limit your liability — but for tax it is not a separate taxpayer.

For a non-US owner whose company earns nothing in the United States, that usually means no US corporate income tax. It does not mean no obligations. The reporting requirement may remain when there are reportable related-party transactions. US business income, withholding, state and foreign taxes may require separate handling. An election to corporate taxation, such as Form 8832, changes this treatment.