Own a Foreign Corporation? Tips for Filing Form 5471

If you are an American who owns a Foreign Corporation, you likely have an IRS requirement to file Form 5471 for your company. But why? Because Congress wants to make sure that all worldwide income produced by Americans is taxed and corporations have ways of obscuring that income. The Form 5471 and the GILTI tax schedules that accompany it help determine if you are taxed extra or not. The 5471, GILTI and multiple schedules accompany your 1040 when you file.

Who really needs to file it?

Owners of Controlled Foreign Corporations (CFC) This is a somewhat easy test. If you own 50.1% or more of your foreign corporation then it is a CFC, requiring you to file form 5471. This is the most frequent status and family co-owners might also help you cross the 50% threshold as well.

10% plus owners of Specified Foreign Corps (SFCS). A Section 965 SFC is a foreign corporation that has 10% plus ownership by domestic corporations. If you own 10% plus also, then you will need to file form 5471.

Aren't there huge penalties for not filing form 5471? There were! Now, you will only pay interest and late penalties for income on your 1040 thanks to a 2023 Tax Court Decision abolishing the Section 6038(b) penalties. The penalties scared many businesses and individuals to file for the US Streamline Expat program.

Does being late filing 5471 still mean you have to do Streamline Expat?

Probably not any longer. But if you haven't filed your 1040s, FBARS and form 5471, you might consider the use of the Streamline program to calm your nerves and lower possible penalties.

Looking for US Expat compliance experts? The experts at WATAX are ready to handle your query.

You can reach our tax experts directly by calling or emailing:
Portrait of Jay Freeborne
Jay Freeborne
Enrolled Agent and Tax Resolution and Compliance Expert
(866) 525-7302 or [email protected]
Portrait of Stephanie Johnston
Stephanie Johnston
Enrolled Agent, Tax Resolution & Expat Expert
(866) 525-7321 or [email protected]

Is 2024 the year to solve your tax issue? WATAX is ready to assist you now. Please call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you promptly.

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