Effectively Connected Income VS Non Effectively Connected Income

VikasMunjal
VikasMunjal Posts: 17 traveler rank
in Introductions

Hello

The Income which we get from Udemy , will be it considered as effectively connected or non effectively connected based on US laws , Considering the fact that i am Indian and never visited USA and i am self employed and paying my taxes in India.

Comments

  • ElianaC
    ElianaC Posts: 5,705 Udemy rank

    Hi Vikas,


    It sounds like you're wondering about the "effectively connected income" that would help you choose between forms.


    Form W-8ECI is used by non-US individuals or businesses who earn "effectively connected income" (ECI) per the IRS, by engaging in a US trade or business. Simply receiving income from a US company (like Udemy) doesn't create a US trade or business. Similarly, the fact that US students may enroll in your courses doesn't necessarily create a US trade or business.

    Hope this helps!

    Eliana Cerna

  • Keith
    Keith Posts: 25 trailblazer rank

    Hi Eliana,

    can you answer it in simple terms? So is our income from Udemy considered ECI or non-ECI?

  • VikasMunjal
    VikasMunjal Posts: 17 traveler rank

    Hello Keith

    Based on my google search and confirmation by Eliana i found that royalty income and passive income is considered as non effectively connected income at least for non US citizens.

    Please note i am not a tax expert . I believe i am right but please also do your own research and please don't rely on me completely .

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