IRS Form 5471
Published on March 13, 2025
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Own a foreign business? You might need to file Form 5471.
If you are a US citizen, Green Card holder, or resident who owns or has control over a foreign business, you likely need to file Form 5471 with your annual tax return. This form helps the IRS track US taxpayers with business interests outside the country.
Filing Form 5471 is not optional—it’s required by US tax laws. Ignoring it can lead to high penalties, so it’s important to understand when you need to file and how to do it correctly.
- Possible Tax Savings
- Some US taxpayers can claim foreign tax credits for taxes paid to another country.
- Filing Form 5471 properly may help you lower your overall tax bill.
- A tax professional can help you explore legal tax planning strategies.
Why is Form 5471 required?
Form 5471 is a tax form the IRS requires US citizens and residents to file if they own or control a foreign corporation. It helps the IRS keep track of offshore businesses and ensures that US taxpayers are paying the correct amount of taxes on their foreign income.
The form is part of the US government’s effort to prevent tax evasion and improve transparency in foreign business activities.
It also helps determine whether tax rules like GILTI (Global Intangible Low-Taxed Income) or Subpart F income apply, which can affect how much tax you owe on foreign earnings.
If you own 10% or more of a foreign corporation, you may have to file Form 5471 each year.
Who is required to file Form 5471?
Not everyone with a foreign business needs to file Form 5471. The IRS requires it if you meet certain ownership or control thresholds.
You must file Form 5471 if:
- You own 10% or more of a foreign corporation (directly or indirectly).
- You are a director or officer of a foreign corporation, and a US person has acquired 10% or more of the company.
- You bought or sold shares of a foreign corporation, resulting in you reaching or dropping below the 10% ownership threshold.
- You are a US shareholder of a Controlled Foreign Corporation (CFC)—a company where US persons own more than 50% of the total shares.
If you meet any of these conditions, you must file Form 5471 with your annual tax return.
Are there benefits to filing Form 5471?
- Claim Foreign Tax Credits – If you already paid taxes to another country, you might reduce your U.S. tax bill through foreign tax credits.
- Avoid Extra Taxes on Foreign Earnings – Certain types of foreign income, like GILTI (Global Intangible Low-Taxed Income) or Subpart F income, can be taxed differently. Filing Form 5471 ensures you pay the right amount and don’t overpay.
- Plan Your Taxes Effectively – A qualified tax professional can help structure your foreign business ownership in a way that minimizes your tax burden.
- Protecting you from IRS scrutiny – The IRS closely watches foreign business ownership. Filing Form 5471 shows transparency and helps avoid unwanted IRS attention.
- Avoiding classification as a PFIC (Passive Foreign Investment Company) – If your business is wrongly classified as a PFIC, it could lead to higher taxes and more paperwork. Filing Form 5471 ensures your company is correctly classified.
What are the most common mistakes when filing Form 5471?
Many people struggle with Form 5471 because it has multiple parts and requires detailed information. Here are the most common mistakes:
- Not filing when required
- Some people don’t realize they need to file. If you meet ownership rules, you must file, even if the business makes no money.
- Choosing the wrong filing category
- There are different filing categories based on how much ownership you have in the foreign business.
- If you pick the wrong category, you may miss required sections and face penalties.
- Leaving out important information
- Form 5471 has several sections (called schedules), and you must complete the right ones based on your ownership.
- Missing required sections could trigger IRS penalties.
- Incorrectly reporting your ownership percentage
- The IRS needs to know exactly how much of the business you own.
- If your ownership share is wrong or unclear, it can cause issues.
- Filing late
- Form 5471 is due with your tax return, usually by April 15.
- If you file late, you can be fined thousands of dollars.
Own a foreign business and need help filing Form 5471?
We’ve got you covered.
When is Form 5471 Due, and can I get an extension?
Standard Deadlines:
- For Individuals (US citizens and residents): April 15
- For US Corporations/Partnerships: March 15
Can I get more time to file?
Yes. If you need extra time, you can request an extension:
- Individuals can file Form 4868 for a six-month extension (new deadline: October 15).
- Businesses can file Form 7004 for an extension on corporate tax returns.
However, extensions only give you more time to file the paperwork—they do NOT give extra time to pay taxes owed.
How does Form 5471 differ from Form 5472?
Form 5471 and Form 5472 both deal with foreign business interests, but they apply to different situations and different types of taxpayers.
- Form 5471 is for US citizens or residents who own or control a foreign corporation. This form reports the corporation’s financial details, ownership, and income.
- Form 5472 is for foreign-owned US businesses (or US businesses with significant foreign ownership). It reports transactions between the business and its foreign owners.
If you own part of a foreign company, you’ll likely need Form 5471. If you own a US business that has foreign investors or transactions, you may need Form 5472.
How do I file Form 5471?
- Find out if you need to file
- If you own or control at least 10% of a foreign corporation, you likely need to file.
- If you’re an officer or director of a foreign corporation and a US person acquires 10% or more of the company, you may also have to file.
- Determine your filing category
- There are five categories based on how much ownership or control you have in the company.
- Your filing category determines which parts of the form you need to complete.
- Complete the required sections (Schedules)
- Depending on your category, you’ll need to fill out different sections, such as ownership details, income, and balance sheets.
- Attach Form 5471 to your tax return
- If you’re an individual, include it with Form 1040.
- If filing for a business, attach it to Form 1120.
- File it by the deadline
- Form 5471 is due when your tax return is due, typically April 15 for individuals or March 15 for businesses.
- If needed, you can request an extension using Form 4868 (for individuals) or Form 7004 (for businesses).
What are the different schedules of Form 5471?
Form 5471 has multiple sections (called schedules) that collect different types of information about the foreign business.
Common Schedules:
- Schedule A: Lists company stock ownership.
- Schedule B: Identifies all US shareholders.
- Schedule C: Reports the company’s income statement.
- Schedule E: Details foreign taxes paid.
- Schedule F: Shows the company’s balance sheet.
- Schedule G: Includes general business information.
- Schedule H: Reports the company’s earnings and profits.
- Schedule I: Summarizes the shareholder’s share of the company’s income.
- Schedule J: Tracks accumulated earnings.
- Schedule M: Lists transactions between the foreign company and US shareholders.
- Schedule O: Reports new ownership changes or company restructurings.
Not everyone needs to fill out every schedule. The filing category determines which ones apply.
How do GILTI and subpart F income affect Form 5471?
If you own a Controlled Foreign Corporation (CFC), you might have to pay taxes on certain foreign earnings, even if you don’t receive them as payments.
Two key tax rules affect Form 5471:
- Subpart F Income:
- Covers certain types of passive income (like dividends, interest, and rents).
- Requires US shareholders to report and pay tax on this income, even if the company keeps the money.
- GILTI (Global Intangible Low-Taxed Income):
- Applies to profits earned by a foreign corporation that exceed a certain limit.
- Affects US shareholders of CFCs, requiring them to report some of the company’s profits as taxable income.
- Introduced as part of the Tax Cuts and Jobs Act (TCJA) to prevent companies from shifting profits to low-tax countries.
Both Subpart F and GILTI must be reported on Form 5471, typically using Schedule I-1.
What are the penalties for not filing Form 5471?
- US$10,000 Initial Penalty – If you fail to file Form 5471 on time, you automatically face a US$10,000 fine per year, per foreign corporation.
- Additional US$50,000 Penalty for Continued Non-Compliance – If you still don’t file within 90 days of an IRS notice, the IRS can charge an extra US$10,000 for every 30 days you remain non-compliant (up to US$50,000).
- Foreign Tax Credit Reduction – The IRS can reduce your ability to claim foreign tax credits, meaning you could owe more in US taxes.
- Criminal Charges – In serious cases, willfully failing to file Form 5471 could lead to criminal penalties, including fines or even jail time.
These penalties add up quickly, so it’s important to file on time and ensure the form is completed correctly.
Can I avoid penalties even if I file late?
Yes, the IRS does offer options if you missed filing Form 5471 but had a reasonable reason for the delay.
Ways to reduce or avoid penalties:
- Prove “Reasonable Cause” – If you can show that you didn’t file due to a valid reason (not willful neglect), the IRS may waive the penalties.
- Use the IRS Streamlined Filing Compliance Procedures – This program helps US taxpayers who unintentionally failed to report foreign financial assets.
- Voluntary Disclosure – If you come forward before the IRS contacts you, you may have a better chance of reducing penalties.
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