diff --git a/plans/link-posthog-to-anon-extension-usage.md b/plans/link-posthog-to-anon-extension-usage.md
new file mode 100644
index 000000000..46fc135ba
--- /dev/null
+++ b/plans/link-posthog-to-anon-extension-usage.md
@@ -0,0 +1,249 @@
+# Link PostHog to Anonymous Extension Usage
+
+## Problem
+
+Cannot link PostHog analytics (`distinct_id`) with backend usage data (`anon:ip`) for anonymous extension users.
+
+**Current**: PostHog generates `distinct_id` → Backend creates `anon:{ip}` → No connection
+
+**Goal**: Pass PostHog `distinct_id` from extensions to backend via `x-posthog-distinct-id` header
+
+---
+
+## Deployment Order
+
+### ⚠️ CRITICAL: Backend FIRST, Extensions AFTER
+
+**Why**: Backend changes are backward-compatible (new field is nullable, header is optional).
+
+**Order**:
+1. ✅ Deploy backend → Extensions sending header before this = header ignored (safe)
+2. ✅ Deploy extensions → Can be days/weeks later, no coordination needed
+
+**Independent**: YES - No tight coupling, deploy at your own pace
+
+---
+
+## Repository 1: kilocode-backend (THIS REPO)
+
+**GitHub**: https://github.com/Kilo-Org/cloud
+
+### File 1: `src/db/migrations/0005_add_posthog_distinct_id_to_usage_metadata.sql` (NEW)
+```sql
+ALTER TABLE microdollar_usage_metadata ADD COLUMN posthog_distinct_id TEXT;
+
+-- Use CONCURRENTLY to avoid blocking writes on large table
+-- Note: Cannot be run in a transaction, may need separate execution
+CREATE INDEX CONCURRENTLY idx_microdollar_usage_metadata_posthog_distinct_id 
+ON microdollar_usage_metadata(posthog_distinct_id);
+```
+
+**⚠️ Migration Note**: `CREATE INDEX CONCURRENTLY` cannot run in a transaction. If your migration runner wraps statements in transactions, you may need to:
+1. Run the ALTER TABLE in one migration
+2. Run the CREATE INDEX CONCURRENTLY separately (or use a non-concurrent index if table is small)
+
+### File 2: `src/db/schema.ts` (line ~615)
+**Before**:
+```typescript
+export const microdollar_usage_metadata = pgTable(
+  'microdollar_usage_metadata',
+  {
+    // ... 14 existing fields ...
+    has_tools: boolean(),
+  },
+  table => [index('idx_microdollar_usage_metadata_created_at').on(table.created_at)]
+);
+```
+
+**After**:
+```typescript
+export const microdollar_usage_metadata = pgTable(
+  'microdollar_usage_metadata',
+  {
+    // ... 14 existing fields ...
+    has_tools: boolean(),
+    posthog_distinct_id: text(), // NEW
+  },
+  table => [
+    index('idx_microdollar_usage_metadata_created_at').on(table.created_at),
+    index('idx_microdollar_usage_metadata_posthog_distinct_id').on(table.posthog_distinct_id), // NEW
+  ]
+);
+```
+
+### File 3: `src/app/api/openrouter/[...path]/route.ts` (lines ~250, ~265)
+**Before** (line ~265):
+```typescript
+const usageContext: MicrodollarUsageContext = {
+  // ... other fields ...
+  posthog_distinct_id: isAnonymousContext(user) ? undefined : user.google_user_email,
+  // ... other fields ...
+};
+```
+
+**After** (add line ~250, modify line ~265):
+```typescript
+// NEW - line ~250
+// Validate PostHog distinct_id from header (length limit only to prevent bloat)
+const rawDistinctId = request.headers.get('x-posthog-distinct-id');
+const posthogDistinctIdFromHeader = rawDistinctId && rawDistinctId.length <= 255
+  ? rawDistinctId.trim()
+  : undefined;
+
+const usageContext: MicrodollarUsageContext = {
+  // ... other fields ...
+  posthog_distinct_id: isAnonymousContext(user) 
+    ? (posthogDistinctIdFromHeader ?? undefined)  // CHANGED
+    : user.google_user_email,
+  // ... other fields ...
+};
+```
+
+**⚠️ Security Note**: Header is validated for length only (max 255 chars) to prevent DB bloat. No character restrictions to support all PostHog distinct_id formats.
+
+**⚠️ PostHog Identity Note**: For authenticated users, PostHog's `distinct_id` IS the email (set via `posthog.identify(email)` in PostHogProvider.tsx:94). This means:
+- Anonymous: `posthog_distinct_id` = header value (e.g., `"vscode-abc123"` or `"01JFKX..."`)
+- Authenticated: `posthog_distinct_id` = email (e.g., `"user@example.com"`)
+- PostHog links them via `alias()` call, so queries work across both states
+
+### File 4: `src/lib/processUsage.ts` (VERIFY ONLY)
+Check that `posthog_distinct_id` is included in INSERT around line ~550-600. Likely already works.
+
+---
+
+## Repository 2: Kilo-Org/kilocode (VSCode & JetBrains)
+
+**GitHub**: https://github.com/Kilo-Org/kilocode
+**Note**: Both extensions share TypeScript API code
+
+### File 1: `src/core/kilocode/anonymous-id.ts` (NEW)
+```typescript
+import * as vscode from 'vscode';
+import crypto from 'crypto';
+
+const STORAGE_KEY = 'kilocode.posthogAnonymousId';
+
+export async function getPostHogAnonymousId(context: vscode.ExtensionContext): Promise<string> {
+  let anonymousId = context.globalState.get<string>(STORAGE_KEY);
+  
+  if (!anonymousId) {
+    const machineId = vscode.env.machineId;
+    const hash = crypto.createHash('sha256')
+      .update(machineId)
+      .update('kilocode-posthog')
+      .digest('hex')
+      .substring(0, 16);
+    
+    anonymousId = `vscode-${hash}`;
+    await context.globalState.update(STORAGE_KEY, anonymousId); // AWAIT to ensure persistence
+  }
+  
+  return anonymousId;
+}
+```
+
+**⚠️ Note**: Function is async and awaits `globalState.update()` to ensure ID is persisted before extension deactivates.
+
+### File 2: `src/api/providers/kilocode-openrouter.ts` (line ~60)
+**Before**:
+```typescript
+override customRequestOptions(metadata?: ApiHandlerCreateMessageMetadata) {
+  const headers: Record<string, string> = {
+    [X_KILOCODE_EDITORNAME]: getEditorNameHeader(),
+  };
+  
+  // ... existing header logic ...
+  
+  return Object.keys(headers).length > 0 ? { headers } : undefined;
+}
+```
+
+**After**:
+```typescript
+override customRequestOptions(metadata?: ApiHandlerCreateMessageMetadata) {
+  const headers: Record<string, string> = {
+    [X_KILOCODE_EDITORNAME]: getEditorNameHeader(),
+  };
+  
+  // ... existing header logic ...
+  
+  // NEW: Add PostHog distinct_id
+  const distinctId = this.options.posthogDistinctId;
+  if (distinctId) {
+    headers['x-posthog-distinct-id'] = distinctId;
+  }
+  
+  return Object.keys(headers).length > 0 ? { headers } : undefined;
+}
+```
+
+### File 3: `src/shared/api.ts`
+**Before**:
+```typescript
+export interface ApiHandlerOptions {
+  // ... existing fields ...
+}
+```
+
+**After**:
+```typescript
+export interface ApiHandlerOptions {
+  // ... existing fields ...
+  posthogDistinctId?: string; // NEW
+}
+```
+
+### File 4: `src/core/webview/ClineProvider.ts`
+**Before**:
+```typescript
+const apiHandler = new KilocodeOpenrouterHandler({
+  // ... existing options ...
+});
+```
+
+**After**:
+```typescript
+import { getPostHogAnonymousId } from '../kilocode/anonymous-id'; // NEW
+
+const posthogDistinctId = await getPostHogAnonymousId(this.context); // NEW - await async function
+
+const apiHandler = new KilocodeOpenrouterHandler({
+  // ... existing options ...
+  posthogDistinctId, // NEW
+});
+```
+
+---
+
+## Validation Queries
+
+```sql
+-- Check coverage rate
+SELECT 
+  COUNT(*) FILTER (WHERE mum.posthog_distinct_id IS NOT NULL) * 100.0 / NULLIF(COUNT(*), 0) as coverage_pct,
+  COUNT(*) as total_requests
+FROM microdollar_usage mu
+JOIN microdollar_usage_metadata mum ON mu.id = mum.id
+WHERE mu.kilo_user_id LIKE 'anon:%' AND mu.created_at > NOW() - INTERVAL '7 days';
+
+-- View anonymous users with PostHog tracking
+SELECT 
+  mu.kilo_user_id,
+  mum.posthog_distinct_id,
+  COUNT(*) as requests,
+  SUM(mu.cost) / 1000000.0 as cost_usd
+FROM microdollar_usage mu
+JOIN microdollar_usage_metadata mum ON mu.id = mum.id
+WHERE mu.kilo_user_id LIKE 'anon:%' AND mum.posthog_distinct_id IS NOT NULL
+GROUP BY mu.kilo_user_id, mum.posthog_distinct_id
+ORDER BY requests DESC LIMIT 20;
+```
+
+---
+
+## Summary
+
+- **2 repositories**, **8 files**
+- **1 backend endpoint** creates `anon:ip`: `/api/openrouter/` (no auth + free model)
+- **Used by**: VSCode & JetBrains only (not CLI, not web)
+- **Deploy**: Backend first (safe), extensions after (independent)