Form 5471 is an informational tax return that is filed by US persons with the IRS to disclose ownership in certain foreign corporations.
Just to be clear, Form 5471 relates to foreign corporations and is separate from any reporting requirements tied to holding deposits with foreign banks as a US person.
In this article, we’re going to help you understand your obligations under Form 5471, who needs to file, and the filing requirements. We will also be answering common questions we receive from our members on the topic.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Form 5471
- Who Needs to File Tax Form 5471?
- Filing Requirements for Tax Form 5471
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
What Is Form 5471?
Form 5471 is a required IRS Information Return that is submitted by U.S. taxpayers with an ownership interest in certain foreign corporations. Filing Form 5471 is purely information and is to ensure ownership disclosure of foreign corporations by US citizens and residents.
It’s important to note that Form 5471 does not typically impact the amount owed in taxes after filing a tax return. However, if an individual fails to file Form 5471, it is possible that they will face tax reporting penalties. Needless to say, it’s very important to make sure you comply with all requirements, including reporting overseas accounts, foreign corporations, and foreign disregarded entities.
Who Needs to File Tax Form 5471?
There are five categories of filers that need to file Form 5471. Generally speaking, they range in terms of affiliation or relationship with the foreign corporation in question. However, the commonality between the groups is that they are US persons and hold at least a 10% ownership interest in a foreign corporation, either directly or indirectly.
For clarity, US persons (as understood by the IRS), means citizens or residents of the United States, domestic corporations, domestic estates or trusts, or domestic partnerships.
The IRS categories of filers differ based on the specific type of corporation (controlled foreign corporation or not), the relationship between the individual and the corporation (officer, director, shareholder), and ownership interest (<0%, 10%, 50%).
In other words, any US person or entity with a 10% ownership interest in a foreign corporation needs to be aware of their filing requirements related to Form 5471.
Of course, if you’re trying to confirm whether you (or a domestic entity you control) is obligated to file Form 5471, you should contact a tax professional to review your case directly and make an informed decision.
Filing Requirements for Tax Form 5471
When completing Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations), both personal and corporate information is required.
In this section, we will share a number of the details that you will need to prepare when filing. However, you should review the Form 5471 instructions provided by the IRS as an attachment to the form prior to filing.
Here is a closer look at the information you will be required to submit when filing.
Reporting for a Foreign Corporation
- Personal identifying information for the reporting party
- Information regarding the stock of the foreign corporation
- Shareholding information about the foreign corporation
- Income statement of the foreign corporation
- The balance sheet of the foreign corporation
- Summary of the shareholder’s income from the foreign corporation
Additional information is also required when preparing Form 5471 for filing. Again, you should carefully review the instructions and if you are trying to confirm whether this is a filing requirement for you, you should speak with a qualified tax professional.
Do You Want Our Free Non-Resident Banking Guide?
Sign up here to receive our Free Non-Resident Banking Starter Guide and weekly updates on the best account opening options available:
Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into this topic. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Is the Difference Between Form 8865 vs 5471?
The main difference between Form 8865 and Form 5471 is that Form 8865 reports on qualifying foreign partnerships while Form 5471 reports on qualifying foreign corporations. In other words, both Form 8865 and Form 5471 are information returns about certain foreign entities to the IRS that US persons file.
What is a 5471 form used for?
Form 5471 is used for reporting ownership interest in certain foreign corporations by US citizens, residents, domestic corporations and partnerships, and estates or trusts. In most cases, the reporting threshold for reporting is 10% direct or indirect ownership interest, though there are nuances you should be aware of.
Do I need to file 5471 every year?
Yes, most US persons with an ownership interest in qualifying foreign corporations need to file Form 5471 every year as an attachment to their federal income tax return. If you want to confirm your annual filing requirements, you should speak with a qualified tax professional.
Do You Want Help Opening Bank Accounts?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
GlobalBanks Insider is a dedicated account opening solution that involves direct support from our team and direct introductions to the banks of your choosing. It gives you instant access to the…
+ Direct support from a team of banking experts
+ Direct introductions to your desired banks
+ Answers to your most pressing questions and challenges
+ Expert insights on which banks to choose & why
+ Plus, FULL access to our entire suite of account opening tools and intelligence!
And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
You can learn more on the Products page on our website.
