Foreign Tax Filings 54-71 and 54-72

Tax law can certainly get confusing, especially when a US citizen owns 10% or more of a foreign company. In order to properly file your taxes for ownership of that business, you must complete Form 5471 every year alongside your personal income taxes. The form asks for pertinent information such as the business name, a balance sheet and an income/expense sheet for the entire calendar year. Also required is all information regarding dealings between you and the company, a list of capital contributions and anything else the IRS deems important.

When it comes to foreign tax filings, ownership percentage is key. If US taxpayers combine for 50% or more of a foreign business, then the IRS will label that corporation as a Controlled Foreign Corporation. This means that only certain revenue streams going to US partners can be taxed by the United States Government. This partial revenue stream is known as Subpart F Income and it can include revenue gained from interest, dividends, insurance income, shipping income or service income.

It’s very important to make sure all of your business ventures are accounted for when you file your taxes every spring. A late or missing form can bring about stiff financial penalties that can easily total more than $10,000. It’s the experience of Ross Greenberg that the IRS is seriously cracking down on reporting foreign income so hiding foreign income isn’t an option anymore. In order to ensure your foreign tax filings go off without a hitch, hire an experienced tax lawyer like Ross Greenberg today. The knowledge and expertise utilized by a certified tax attorney can be very helpful when you aren’t sure if all your tax information is in order.