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While filing tax returns, I was asked, "Is this business effectively connected with the conduct of trade or business within the United States?" then I got a little confused.

I'm a US citizen working as a freelancer for the entire year in the US. I work with several clients and companies in foreign countries (e.g., selling a book on Amazon UK, working with an agency that provides services in France, etc.). I get paid to my US bank account.

Is my business considered effectively connected with conducting trade or business within the United States?

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Generally, effectively connected income (ECI) is a concept for non-residents. As a US citizen, you're automatically a US tax resident. In any case, income derived from business conducted within the United States is effectively connected to the United States by definition. Business is conducted in the place where you are (not the clients).

Make sure you're not filing a non-resident return by mistake. As a US citizen, you should not file a "-NR" form.

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  • Thank you so much, littleadv!
    – dolph
    Commented Feb 27 at 16:18

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