Hep with Form 5471

Hi Hutcheson & Co. LLP,

I am a U.S. citizen living in Canada for several years now. I recently started a consulting business with my husband. Do I have to file any additional forms with my U.S. return?

Thanks,

XXXX
Hi XXXX,

Thanks for the question. Generally speaking, your U.S. filing requirements will depend on the company’s structure.

If the company is not incorporated, then you and your husband each probably own a specified percentage of the company. The income and expenses of the company would be reported on schedule E of your U.S return and on T2125 of your Canadian tax return. Your share, which is based on your ownership percentage, would then be allocated to you on your T1 and 1040.

If the company is incorporated and you own 10% or more of the total value of the corporation’s stock then you will most likely have to file from 5471 along with your personal U.S. tax return. Form 5471 has five categories of filers. The categories are based upon stock ownership and control of the corporation. The categories are very broad and your filing requirements will vary with each category, so it is important to review the instructions for form 5471 and the different filing categories described in the instructions. Instructions for form 5471 can be found here: http://www.irs.gov/pub/irs-pdf/i5471.pdf.

Form 5471 can be very complex and confusing. This form requires the filer to disclose and report specific details regarding the company such as ownership information, stock details, balance sheet and income statement translated to US dollars. It is very important for any U.S. taxpayer to be aware of their filing requirements for this form as the penalties for failing to file are very significant. The IRS can impose a $10,000 penalty per corporation for each annual accounting period in which form 5471 is not filed. In addition, a $10,000 penalty can be imposed if a 5471 is filed incomplete or incorrect. The IRS can also issue additional fines and penalties if the form is not filed after the IRS has issued a failure to file notification.

For individuals the due date for this form would be April 15th or the extended due date.

If you would like to discuss your U.S. filing requirements please contact one of our qualified professionals.

Regards,

Rob Brown, CA

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up comments new replies to my comments

Label

{} [+]

Name*

Email*

Website

Δ

Label

{} [+]

Name*

Email*

Website

Δ

0 Comments

Inline Feedbacks

View all comments