What Is Form 5471? Complete Guide for US Citizens Owning Foreign Companies

Form 5471 is an information return that US persons must file when they own shares in certain foreign corporations. The form reports ownership stakes, financial data, and related-party transactions to the IRS. Filing requirements depend on five filer categories based on ownership percentage and control. Failure to file carries a $10,000 penalty per form, increasing to $60,000 maximum for continued non-compliance. US shareholders of controlled foreign corporations must also report and pay tax on Global Intangible Low-Taxed Income (GILTI) and Subpart F income.

Owning a foreign business brings exciting opportunities but creates complex US tax obligations that many discover only when facing IRS penalties. You established a company abroad, managed operations successfully, and assumed foreign tax payments covered your obligations. Then you learned about Form 5471, an information return you've never filed carrying penalties starting at $10,000 per form per year.

You risk severe penalties if you do not understand when and how to file form 5471 that multiply across years and multiple corporations, potential criminal prosecution for willful violations. 

In this guide you will learn what Form 5471 is and its purpose, who needs to file Form 5471 based on the five filer categories, what schedules and information must be reported. 

What is Form 5471?

Form 5471 (Information Return of U.S. Persons With Respect To Certain Foreign Corporations) is an information return that certain US persons must file annually when they have ownership or other specified interests in foreign corporations. The form satisfies reporting requirements under IRC Sections 6038 and 6046.?

It is the official IRS form that reports detailed information about foreign corporate ownership, financial statements, earnings and profits, and related-party transactions.?

The purpose of Form 5471

The IRS uses Form 5471 to monitor US ownership in foreign corporations and ensure proper taxation of foreign earnings. This helps prevent tax deferral through foreign corporations, track controlled foreign corporation (CFC) income subject to current US taxation, ensure proper reporting of cross-border transactions, and facilitate calculation of foreign tax credits.

What is a controlled foreign corporation?

A controlled foreign corporation (CFC) is a foreign corporation where more than 50% of total voting power or value is owned by US shareholders who each own at least 10%. CFC status triggers additional reporting requirements and subjects certain income to immediate US taxation regardless of whether the corporation distributes earnings.

Who needs to file Form 5471?

Understanding who needs to file Form 5471 requires identifying which of five filer categories apply to your situation.

Category 1: Shareholders of Section 965 specified foreign corporations

Category 1 filers are US shareholders of specified foreign corporations (SFCs) related to the Section 965 transition tax. This includes US persons who owned stock in a deferred foreign income corporation on specified dates.

Category 2: Officers and directors

Category 2 filers are US citizens or residents who are officers or directors of foreign corporations where a US person acquired or disposed of sufficient stock to own 10% or more.

You must file as Category 2 even if you personally own no shares in the corporation, provided you served as an officer or director when the acquisition or disposition occurred.

Category 3: Significant acquisition or disposition

Category 3 filers are US persons who acquired stock bringing their ownership to at least 10%, acquired additional stock when already owning 10% or more, or disposed of stock reducing ownership below 10%.

This category captures changes in ownership rather than continuous holding.

Category 4: US shareholders of controlled foreign corporations

Category 4 filers are US persons who controlled a foreign corporation for an uninterrupted period of at least 30 days during the annual accounting period. Control means owning more than 50% of voting power or value.

Category 4 requires the most extensive reporting, including detailed financial statements and earnings and profits calculations.

Category 5: US shareholders of controlled foreign corporations

Category 5 filers are US shareholders (defined as 10% or more ownership) of a CFC for an uninterrupted period of at least 30 days during the CFC's tax year.

This is the most common category for US expats owning foreign businesses. If you own 10% or more of a CFC, you're a Category 5 filer regardless of whether you control the corporation.

Summary table:

Category	Who Must File	Ownership Threshold	Duration Requirement	Common Examples
Category 1	Section 965 shareholders	Owned SFC stock on specific dates	N/A	Transition tax filers
Category 2	US officers/directors	No personal ownership required	When acquisition/disposition occurs	Officer of foreign corp with US shareholders
Category 3	US persons with ownership changes	Acquired ≥10% or disposed below 10%	N/A	Buying into or selling out of foreign business
Category 4	Persons who controlled foreign corp	>50% voting power or value	≥30 days uninterrupted	Majority owner/controller
Category 5	US shareholders of CFC	≥10% of CFC	≥30 days uninterrupted	Minority shareholder in CFC (most common for expats)

Who must NOT file Form 5471

Understanding who is exempt from filing Form 5471 helps you avoid unnecessary compliance costs and focus on actual obligations.

Ownership below 10% in non-controlled corporations

If you own less than 10% of a foreign corporation that is not a CFC, you generally don't file Form 5471. Passive minority shareholders below 10% have no reporting obligation unless they're officers or directors.

Passive shareholders in publicly traded companies

Owning shares in foreign publicly traded companies purchased through normal stock exchanges doesn't trigger Form 5471 unless you own 10%+ or the company is a CFC where you're a US shareholder.

Portfolio investment in foreign mutual funds

Owning shares in foreign mutual funds doesn't require Form 5471 (though it likely requires Form 8621 for Passive Foreign Investment Company reporting).

Shareholders in certain entities not treated as corporations

If the foreign entity is not treated as a corporation for US tax purposes (like a disregarded entity or partnership), you don't file Form 5471. You might instead file Form 8858 (disregarded entities) or Form 8865 (partnerships).

When ownership ended before the tax year

If you completely disposed of all ownership before January 1 of the tax year, you generally don't file for that year (though you filed for the disposal year as Category 3).

Example: You sold your entire 30% ownership in a foreign corporation on November 15, 2025. You file Category 3 Form 5471 with your 2025 return but don't file Form 5471 for 2026.

Attribution & constructive ownership rules 

The IRS uses attribution rules to determine whether you meet the 10% US shareholder threshold or whether a foreign corporation is a CFC. You must count both direct ownership and shares attributed to you.

Family attribution

Stock owned by certain family members is attributed to you:

• Spouse: Stock owned by your spouse is fully attributed to you
• Children and grandchildren: Stock owned by your children, grandchildren, and adopted children is fully attributed to you
• Parents: Stock owned by your parents is fully attributed to you
• Siblings: NOT attributed (siblings are excluded from attribution rules)

Ownership through entities

Stock owned by or for corporations, partnerships, estates, and trusts is attributed proportionately:

• Corporate attribution: Stock owned by a corporation is attributed proportionately to shareholders owning 10% or more of the corporation's value.
• Partnership attribution: Stock owned by a partnership is attributed proportionately to partners.
• Trust and estate attribution: Stock owned by trusts or estates is attributed proportionately to beneficiaries based on actuarial interests.

Multiple layers of attribution

Attribution can occur through multiple layers simultaneously.

Example: You own 60% of US Corporation A. Your spouse owns the remaining 40% of US Corporation A. US Corporation A owns 20% of Foreign Corporation B. Your direct attribution: 12% (60% × 20%). Your spouse's attribution to you: 8% (40% × 20% attributed through spousal rules). Total attributed ownership: 20%, making you a Category 5 filer if Foreign Corporation B is a CFC.

Downward attribution only for CFC determination

For determining whether you're a 10% US shareholder, only upward attribution applies (entities to individuals). However, for determining whether a foreign corporation is a CFC (>50% owned by 10% US shareholders), downward attribution also applies (individuals to entities they own).

Why attribution matters

Many filers miss Form 5471 obligations because they only consider direct ownership. Attribution rules frequently reveal that:

• You're a 10% US shareholder even though you directly own less than 10%
• A foreign corporation is a CFC even though no single US person directly owns more than 50%
• Family members' ownership combined with yours triggers filing requirements

Note: Always calculate ownership using attribution rules. Include spouse's and children's shares. Factor in ownership through US entities you control. Consider indirect ownership through foreign entities. Document your attribution calculations to support your filing position.

What schedules must be filed with Form 5471?

Form 5471 includes multiple schedules, but not all filers complete every schedule. Required schedules depend on your filer category.

Schedule E: Foreign taxes paid

Schedule E reports income, war profits, and excess profits taxes paid or accrued by the foreign corporation. This schedule supports foreign tax credit calculations.?

Required for: Categories 4 and 5

Schedule H: Current earnings and profits

Schedule H calculates current-year earnings and profits (E&P) under US tax principles. This differs from foreign GAAP or local tax calculations.?

Required for: Categories 4 and 5

Schedule J: Accumulated earnings and profits

Schedule J reports accumulated earnings and profits carried forward from prior years. This schedule tracks undistributed earnings available for potential distribution.

Required for: Categories 4 and 5

Schedule I-1: GILTI and tested income

Schedule I-1 calculates Net CFC Tested Income (NCTI, formerly called GILTI through 2025) for controlled foreign corporations. This schedule computes income subject to immediate US taxation under the GILTI regime.?

Required for: Category 5 (US shareholders of CFCs)

Schedule M: Related-party transactions

Schedule M reports transactions between the foreign corporation and US related parties, including sales, services, rents, royalties, and loans.

Required for: Categories 4 and 5

Summary table:

Schedule	Purpose	Category 1	Category 2	Category 3	Category 4	Category 5
Schedule E	Foreign taxes paid	No	No	No	Yes	Yes
Schedule H	Current earnings and profits	No	No	No	Yes	Yes
Schedule J	Accumulated earnings and profits	No	No	No	Yes	Yes
Schedule I-1	GILTI/NCTI and tested income	No	No	No	No	Yes
Schedule M	Related-party transactions	No	No	No	Yes	Yes

 

How GILTI and Subpart F income affect your taxes

US shareholders of CFCs face immediate taxation on certain foreign income categories regardless of whether the CFC distributes earnings.

What is GILTI (Net CFC Tested Income)?

Global Intangible Low-Taxed Income (renamed Net CFC Tested Income starting 2026) is the CFC's gross income minus allocable deductions, excluding Subpart F income, with reduced allowances for tangible assets.?

For 2026 and beyond, NCTI rules changed: the QBAI exclusion (10% of tangible assets) was eliminated, Section 250 deduction decreased from 50% to 40%, effective corporate rate increased from approximately 10.5% to 12.6%, and foreign tax credit haircut decreased from 20% to 10%.?

What is Subpart F income?

Subpart F income includes passive income categories that Congress determined should not enjoy tax deferral. This includes foreign personal holding company income (interest, dividends, royalties, rents), foreign base company sales income (using the CFC as a sales conduit), and foreign base company services income (performing services outside the CFC's country for related parties).?

Subpart F income is taxed at ordinary rates (up to 37% for individuals). GILTI/NCTI is calculated after excluding Subpart F income.?

Section 962 election

Individual US shareholders can elect under Section 962 to be taxed on CFC income (both Subpart F and GILTI) at corporate rates (21%) rather than individual rates (up to 37%). This election can significantly reduce current tax but affects basis calculations.

 

Form 5471 vs Form 8865 vs Form 8858: Which form do you need?

Understanding which international information return applies to your foreign business prevents filing the wrong form.

 

Feature	Form 5471	Form 8865	Form 8858
Entity type	Foreign corporation	Foreign partnership	Foreign disregarded entity
Who files	US persons with 10%+ ownership or officers/directors	US persons with 10%+ interest or control	US owner of foreign disregarded entity
Ownership threshold	Generally 10% for Categories 3-5	Generally 10% interest	Any ownership (even 100%)
CFC/CFP concept	Controlled Foreign Corporation (>50% US ownership)	Controlled Foreign Partnership (>50% US ownership)	Not applicable (disregarded)
Tax treatment	Separate taxable entity (may have GILTI/Subpart F)	Pass-through entity (income flows to partners)	Disregarded (treated as branch of owner)
Common examples	Foreign Ltd, GmbH, S.A., SAS treated as corporation	Foreign LLP, partnership	Foreign single-member LLC, branch office
Penalty for non-filing	$10,000 per form, up to $60,000 maximum	$10,000 per form, up to $60,000 maximum	$10,000 per form, up to $60,000 maximum
Due date	With Form 1040/1120/1120S/1065 (April 15 or March 15)	With Form1040/1120/1120S/1065(April 15 or March 15)	With Form 11040/1120/1120S/1065 (April 15 or March 15)
Schedules required	E, H, J, I-1, M (varies by category)	K, K-1, P (varies by category)	M (transactions with owner)

 

Key distinctions:

Form 5471 applies to entities treated as corporations for US tax purposes. This depends on entity classification and Form 8832 elections.

Form 8865 applies to entities treated as partnerships for US tax purposes. Multi-member LLCs are typically partnerships unless they elect corporate treatment.

Form 8858 applies to entities completely disregarded for US tax purposes. Single-member foreign LLCs are typically disregarded unless they elect corporate treatment.

Entity classification matters

The same foreign entity type can require different forms depending on how it's classified:

• Foreign LLC with one owner: Form 8858 (disregarded)
• Foreign LLC with two owners: Form 8865 (partnership)
• Foreign LLC electing corporate treatment: Form 5471 (corporation)

Multiple forms may apply

You might file multiple forms for the same foreign entity:

• Form 5471 for the foreign corporation PLUS Form 5472 if it's 25% foreign-owned and you have reportable transactions
• Form 8865 for a foreign partnership PLUS Form 8858 if the partnership owns a disregarded entity

Many foreign entities can elect their US tax classification using Form 8832. Changing classification changes which form you file.

What is the penalty for not filing Form 5471?

Understanding Form 5471 penalties helps you appreciate the importance of timely, accurate filing.?

• The IRS assesses a $10,000 penalty for each Form 5471 that is not filed when required, filed late, filed incompletely, or filed inaccurately. The penalty applies per form, per year.??
• If you own shares in three CFCs and fail to file all three required Forms 5471, you owe $30,000 in penalties for one year.
• If you fail to file within 90 days after the IRS issues a notice, additional $10,000 penalties accrue every 30 days up to a maximum of $50,000 in continuation penalties (total $60,000 including initial penalty).?
• Separate $10,000 penalties apply for failing to report organization, reorganization, acquisition, or disposition events under Section 6046.?

In addition to monetary penalties, failure to file Form 5471 can result in a 10% reduction of foreign tax credits available to offset US tax on foreign income.?

In egregious cases involving willful failure to file or fraud, criminal prosecution is possible with fines up to $100,000 and imprisonment up to three years.?

Form 5471 instructions: How to file

Understanding how to file Form 5471 requires gathering complete information and following specific procedures.

Part I: General information

Provide comprehensive filer identification:

• Complete legal name (individual or entity name)
• US taxpayer identification number (Social Security Number for individuals, EIN for entities)
• Complete address including country if residing abroad
• Identifying number of foreign corporation
• Name of foreign corporation
• Country of incorporation
• Principal place of business
• Functional currency used by foreign corporation

Check all applicable filer category boxes:

• Category 1: Section 965 shareholder
• Category 2: Officer or director
• Category 3: Acquisition or disposition during tax year
• Category 4: Person who controlled the foreign corporation
• Category 5: US shareholder of controlled foreign corporation

Part II: US officers, directors, and 10% shareholders

List all US persons who were officers, directors, or owned 10% or more at any time during the year. Multiple persons require separate entries.

For each person provide:

• Complete legal name
• US address
• Identifying number (SSN or EIN)
• Description of position (officer title, director, or percentage owned)
• Check applicable boxes indicating relationship to corporation

Schedule E: Income, war profits, and excess profits taxes paid or accrued

Report foreign taxes paid or accrued by the foreign corporation. Use functional currency of the foreign corporation, then convert to US dollars.

For each category provide:

• Country or US possession to which tax was paid
• Type of tax (income, war profits, excess profits)
• Amount of tax in foreign currency
• Exchange rate used
• Amount of tax in US dollars
• Date tax was paid or accrued

Schedule H: Current earnings and profits

Calculate current-year earnings and profits under US tax principles. This differs from foreign GAAP or local tax calculations.

Starting with foreign corporation's net income, make adjustments for:

• Tax-exempt income under US rules
• Non-deductible expenses under US rules
• Differences between US and foreign depreciation
• Currency gain or loss adjustments
• Other adjustments to conform to US tax principles

Schedule J: Accumulated earnings and profits

Report accumulated earnings and profits carried forward from prior years.

Provide beginning balance. Add current year E&P from Schedule H. Subtract distributions made during the year. Subtract Section 965 amounts if applicable. Calculate ending accumulated E&P balance.

Schedule I-1: Information regarding GILTI

Calculate Net CFC Tested Income for controlled foreign corporations. This schedule computes income subject to immediate US taxation.

Starting with gross income, make required calculations:

• Gross income of CFC
• Less: allocable deductions
• Less: Subpart F income (excluded from GILTI)
• Less: effectively connected income
• Less: high-taxed income election (if applicable)
• Less: dividends from related CFCs
• Equals: tested income subject to GILTI

Schedule M: Transactions between controlled foreign corporation and shareholders or other related persons

Report all transactions between the foreign corporation and US related parties during the tax year.

Each transaction type provides dollar amounts: sales of inventory, sales of tangible property, sales of intangible property, rents received or paid, royalties received or paid, services provided or received, commissions received or paid, loans made or received, interest received or paid, and other transaction categories.

Are there separate forms for multiple foreign corporations?

You must file a separate Form 5471 for each foreign corporation in which you have a filing obligation. Three different foreign corporations require three separate Forms 5471, each attached to your Form 1040 or Form 1120.

Filing deadlines for 2026

Individual taxpayers filing 2025 returns must file Form 5471 by April 15, 2026 (or June 15, 2026, if residing abroad with automatic extension). Corporations must file by March 15, 2026.

Common Form 5471 filing mistakes

Avoiding these frequent errors ensures successful compliance and prevents penalties.

Mistake #1: Not applying attribution rules

The most common mistake is calculating ownership without applying family and entity attribution. Many filers believe they're exempt because they directly own only 8%, failing to add their spouse's 5% attributed ownership.

Mistake #2: Confusing Form 5471 with Form 5472

Form 5471 reports foreign corporations owned by US persons. Form 5472 reports US corporations owned by foreign persons. They serve opposite purposes. Filing the wrong form creates non-compliance.

Mistake #3: Using foreign GAAP for earnings and profits

Schedule H requires calculating earnings and profits under US tax principles, not foreign GAAP or local tax rules. Using foreign financial statements without US tax adjustments produces incorrect E&P calculations.

Mistake #4: Not filing for dormant corporations

Filing requirements are based on ownership and structure, not activity level. You must file Form 5471 even if the foreign corporation has zero income, zero assets, or hasn't conducted business all year.

Mistake #5: Missing the GILTI calculation

Category 5 filers (US shareholders of CFCs) must complete Schedule I-1 calculating GILTI/NCTI. Missing this schedule leaves your return incomplete and subjects you to penalties despite filing Form 5471.

How NSKT Global helps with Form 5471 filing

NSKT Global specializes in Form 5471 compliance for US citizens and residents owning foreign corporations. Our experienced international tax team provides comprehensive support for complex foreign reporting requirements.

Our services include filer category analysis to determine your filing obligations, complete Form 5471 preparation with all required schedules, GILTI and Subpart F income calculations, earnings and profits computations under US tax rules, Section 962 election analysis for individual shareholders, foreign tax credit optimization, delinquent filing assistance for missed prior years, and reasonable cause statement preparation for penalty relief.

If you want to know what is Form 5471, or need to file Form 5471, NSKT Global provides the expertise to ensure full compliance while minimizing your tax burden and protecting you from severe penalties.

People Also Ask

Do I need to file Form 5471 if my foreign corporation has no income? 

Yes. Filing requirements are based on ownership and control, not income. You must file even if the corporation has zero income or activity.

Can I file Form 5471 electronically? 

Yes. Form 5471 can be e-filed when attached to electronically filed Forms 1040 or 1120 through approved e-file providers.

What if I inherit shares in a foreign corporation?

Inheriting shares can trigger Category 3 filing requirements if you acquire 10% or more ownership. You must file Form 5471 for the year of acquisition.

Do attribution rules apply to Form 5471? 

Yes. Shares owned by spouses, children, grandchildren, and parents are attributed to you for determining US shareholder status and control.

How do I correct a missed Form 5471 filing? 

File delinquent Forms 5471 immediately with amended returns. Consider submitting reasonable cause statements explaining late filing to request penalty relief.