Filing IRS Form 5471 for Americans Living Abroad
Although you may live abroad, that doesn’t make you exempt from filing important tax forms with the IRS. When it comes to confusing tax filing requirements, like IRS Form 5471, turn to an accountant you can trust.
Americans living abroad generally have to file IRS Form 5471 if they own more than 10% of a foreign corporation, among other reasons. This is because American expats are still required to report their worldwide income to the IRS, no matter the source and regardless of where they live. Generally, the deadline to file Form 5471 is Tax Day, although extensions are often available to Americans living abroad. To ensure that you file IRS Form 5471 on time and don’t lose access to advantageous tax credits, you should hire an experienced CPA that you can rely on.
Our accountants are here to make tax season simpler for Americans living abroad. To learn more about the tax CPAs for American expatriates at US Tax Help, call today at (541) 362-9127.
What is IRS Form 5471?
When you move abroad, you still have to pay taxes in the United States and report your financial endeavors to the IRS. One of the requirements that U.S. expats may face is IRS Form 5471. So, what is it?
IRS Form 5471 is an information return that Americans connected to certain foreign corporations must file. This form is generally for informational purposes, to track U.S. expats’ financial activity concerning their relationships with foreign corporations.
IRS Form 5471 is an extension of your annual tax return, which you must file even if you live abroad. The good news is that your tax CPA for American expatriates can help you claim the foreign tax credit so that you don’t get taxed on your worldwide income twice. Because of this advantageous tax credit, you may not have to pay dual taxes on any income earned through your ownership or stake in a foreign corporation.
Do I Have to File IRS Form 5471 as an American Living Abroad?
The requirements for which American expats have to file IRS Form 5471 are actually quite broad. While expats may be under the impression that only Americans who are foreign corporation owners and directors have to complete Form 5471, that’s not necessarily true. If you fall into one of four categories outlined by the IRS, you may have to file IRS Form 5471.
It’s not just American owners of foreign businesses that must file IRS Form 5471 regarding their income. American expats who own 10% of a foreign corporation’s stock, or those who controlled a foreign company for more than 30 days during the tax year also have to file IRS Form 5471.
These are the general guidelines for which Americans living abroad have to file IRS Form 5471. If you’re unsure whether or not you have to file IRS Form 5471, speak to a tax CPA for American expatriates.
If you live abroad and are involved with a foreign corporation, you may be wondering why the IRS gets to learn about your income from such endeavors. In reality, as long as you stay an American citizen, the IRS gets to ask such questions. Your worldwide income, including income earned from investing in a foreign corporation and acting as an office or director of one, is considered taxable.
Some American expats may be unaware that IRS Form 5471 exists, let alone that they are responsible for filing it. This complicated tax form requires filers to complete seemingly countless attached schedules and gather detailed financial information regarding a foreign corporation. It’s important to know whether or not you’re responsible for filing Form 5471, as failure to file can result in financial penalties.
What is the Deadline to File IRS Form 5471 for Americans Living Abroad?
Filing IRS Form 5471 and all the necessary corresponding schedules on time is crucial. If Americans living overseas don’t submit Form 5471 by the due date, they may face substantial financial penalties and difficulty claiming helpful credits.
Generally, IRS Form 5471 is due on Tax Day. Americans living overseas file this tax form along with their annual tax return. If you have difficulty filing on time, your tax CPA for American expatriates can help you file for an extension.
If you don’t file for an extension and fail to submit IRS Form 5471 by the due date, you can face serious consequences. The IRS tends to impose financial penalties on Americans living overseas who do not properly report their involvement with certain foreign corporations. Expats who don’t file Form 5471 by Tax Day can face an initial financial penalty of $10,000 and subsequent penalties of the same amount for each month that they don’t file.
Not filing on time can also impact an expat’s eligibility for the foreign tax credit. This can be incredibly damaging, as it may cause you to pay dual taxes on your income.
Helpful Tips for Americans Living Abroad When Filing IRS Form 5471
Filing tax forms can be complicated, especially for Americans living abroad. So, learning some helpful tips can make all the difference come Tax Day. Generally, the best thing you can do to ensure you file IRS Form 5471 properly is to hire an accountant.
Although you may be an officer or director of a foreign corporation or own a considerable percentage of one, you may be at a loss when faced with IRS Form 5471 and its confusing schedules. Gathering the necessary information and properly reporting it can be difficult for anyone.
Instead of stressing out during tax season, hire a tax CPA for American expatriates to help you. Your accountant can easily file IRS Form 5471 so that you don’t have to worry about any financial penalties or consequences.
Let Our Accountants Help You File IRS Form 5471
If you need to file IRS Form 5471 as an American living abroad, hire an accountant to make the process simpler. To learn more about the tax CPAs for American expatriates at US Tax Help, call today at (541) 362-9127.