If you are a US citizen or resident alien and are an officer, director, or shareholder in certain foreign corporations, you must file IRS Form 5471, Information Return of US Persons with Respect to Certain Foreign Corporations (CFC), along with your expat taxes. A CFC is a foreign corporation with U.S. shareholders who own more than 50% of the total combined voting power of all classes of voting stock or the entire value of the corporation’s stock on any day during the tax year of the foreign corporation. Learn more about IRS Form 5471 and Corresponding Schedules.
It is important to note that no tax liability is associated with this filing but instead it is a way for the IRS to compare it to the corporation’s return to better determine when and if an audit needs to be initiated.
When filing your expat taxes, it is critical to consult with your Toronto expatriate tax accountant to ensure that you file correctly and on time.
Many US expats misread the regulations about who must file Form 5471. To put it simply, the filing requirement applies to every US person (including US residents, partnerships, companies, trusts, and estates) who owns at least 10% of a foreign corporation... [read more]