Effectively Connected Income VS Non Effectively Connected Income

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Effectively Connected Income VS Non Effectively Connected Income

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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.

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ElianaC
Community Moderator
Community Moderator

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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 

 

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ElianaC
Community Moderator
Community Moderator

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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 

 

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Hi Eliana,

 

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

 

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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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