The IRSMedic 2020 IRS Form 5471 guide - Part 4: Categories, schedules & fees

The IRSMedic 2020 IRS Form 5471 guide - Part 4: Categories, schedules & fees

Complete guide here: https://ift.tt/2RN1tun How to determine your IRS Form 5471 Category: https://ift.tt/2Rtqrjz Questions of on IRS Form 5471 Schedules: https://ift.tt/318GTJv Questions on IRS Form 5471 Preparation fees https://ift.tt/2O30yF3 US Taxpayers, their CPAs, accountant attorneys, enrolled agents, taxpapyers and even th3 IRS are massively confused by IRS form 5471 rules. In this Part 4 of our 2020 Form 5471 series, Anthony Parent and Robert Hanson discuss the following questions: How do I know what Category I am for Form 5471? Here are some rules of thumb: • If you know that you directly, indirectly, or constructively own greater than 50% of the foreign entity, then you are probably a Category Four and/or Five filer. • If you have had a change in the percentage of ownership of a foreign company, are an officer or director of the company, then you could be a Category Two or Three filer. • Category One is back. Tax Reform brought back Category One, and thanks to the transition tax, this can be a big issue. Do I need Form 5471 schedule H? What is schedule H? Schedule H is the schedule that documents what your earnings and profits are for the year. You will only need this if you are Category Four or Five filer. When was Form 5471 schedule J introduced? Schedule J has been around for as long as we've been doing the form. Schedule P is new. Are there state Forms 5471? We are not aware of any particular information reporting forms at the state level. Some of the issues in recent years have been whether states will actually be taxing GILTI inclusion amounts. Is net income on Form 5471 schedule C cash flow? Not by default, and only in limited circumstances. Schedule C is used in situations where there is a disregarded entity, or just a sole proprietorship. You do not use a Schedule C to report income from a foreign corporation. If you “check the box” and possess an eligible LLC abroad, then you may be able to use schedule C income at that point. What is the average fee for preparation of a Form 5471? It is difficult to define an “average” 5471, as there are simply too many variables from case to case. The simpler cases – such as preparing Form 5471 on a dormant corporation – can be of negligible cost, whereas a more complicated or extensive Form 5471 can cost over $15,000 to prepare. Further, the large firms don’t necessarily want anything other than non-price-sensitive corporations as clients. So for the global entrepreneur, it can actually be very hard to find a firm that can complete a Form 5471 that would survive the toughest scrutiny, and be reasonably priced. https://youtu.be/ptKG3ivP9g8 IRS Medic

The IRSMedic 2020 Form 5471 Guide Part 3: Top preparation and filing questions answered

The IRSMedic 2020 Form 5471 Guide Part 3: Top preparation and filing questions answered

Our entire 2020 Form 5471 guide is here: https://ift.tt/2RN1tun In this video, tax attorneys Robert Hanson and Anthony Parent of Parent & Parent LLP answer the most common question that taxpayers, CPAs, Enrolled Agents, tax preparers, attorneys, controllers - heck - even IRS employees have about IRS Form 5471! Including: When is IRS Form 5471 due? • Do I report controlled foreign corporation bank account information on Form 8938, since it's already on Form 5471? What about an FBAR form? FinCEN form 114? • Where on Form 5471 do you track foreign taxes and credits paid? • Can foreign corporation tax be used as a tax credit on Form 5471? • How does one value a company based on Form 5471? • Is a Form 5471 balance sheet required to be in U.S. dollars? • What schedule does Subpart F income go into on Form 5471? They have traditionally been on Schedule I, did tax reform change it? • How does one amend a Form 5471? If you need help with your own Form 5471 or those of your clients, feel free to reach out to us - info@irsmedic.com 888 477-4258 Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269 -6699 https://youtu.be/Jo9u2iI76J0 IRS Medic

The IRSMedic 2020 Form 5471 Guide Part 2: Who has to File Form 5471

The IRSMedic 2020 Form 5471 Guide Part 2: Who has to File Form 5471

Complete Guide here: https://ift.tt/2RN1tun In this video, Anthony Parent and Robert Hanson answer the most common questions taxpayers, CPAs, other tax lawyers, enrolled agents and tax preparers have about who has a Form 5741 filing requirements. Find out the answers to these common Form 5471 preparation and filing questions: • Who should file a Form 5471? • Who must file a Form 5471? • Is an LLC or other limited liability entity considered a corporation for Form 5471? • When employees are given restricted stock or preferred stock, are those reportable on Form 5471? • If you don't own more than 10% of the stock, is there any situation in which you would have to file a Form 5471? • Are there ways that you can legally avoid filing IRS Form 5471? • Is a Form 5471 required if you only own 50%? • Do I need to file Form 8938 if I file Form 5471? • Can I file a Form 5471 separately from a Form 1040 tax return? • When employees acquire more than 10% of stock in a company, are they reportable on Form 5471? • Do I need to file a 5471 if my parents are not U.S. citizens? • Do hedge funds have to file Form 5471? If you or your clients needs help with any Form 5471 issue, from a question about categories to preparing years of unfiled Form 5471s, don't hesitate to contact us. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 (888) info@irsmedic.com https://youtu.be/DIFti6Q0REU IRS Medic

The IRSMedic 2020 Form 5471 Guide Part 1: Overview - What is IRS Form 5471?

The IRSMedic 2020 Form 5471 Guide Part 1: Overview - What is IRS Form 5471?

Our 2016 Form 5471 series proved to be such a success however, Tax Reform made some of that information obsolete. In this part of our updated guide, international tax attorneys Anthony Parent and Robert Hanson discuss the following commons questions that taxpayers, CPAs, enrolled agent and attorneys have about IRS Form 5471. What is IRS Form 5471? IRS Form 5471 is one of the hand full of forms part of the very consequential international information reporting forms, and it's for US persons who are shareholders in foreign corporations to disclose their ownership of that foreign corporation. It is a form few have to file. But for those who do, it is one the most complicated forms we come across. Is Form 5471 based on US sourced income or worldwide income? Really neither. It's definitely not based on US income and it's not even necessarily based on foreign income per se. For instance, you could have a foreign entity that doesn't generate income and still have a Form 5471 filing requirement. Be aware - Form 5471 actually might not have any tax due. There are some changes where there is not a tax return component but we'll get to that in a little bit. When was Form 5471 introduced? Sometimes 1960s. It has been around a long time. And if you don't file it the IRS has forever to assess. So even if you're missing one an unfiled 5471 keeps your entire return open permanently. So it's really one of those things you want to make sure you get done correctly because any tax year you have however unlikely could be open indefinitely without a correctly filed 5471 if one's required. So what is Form 5471 used for? It is fairly easy for the government to Summons or Subpoena any bank or business record in the United States. But what if the records were located overseas? Even with FATCA, it is very difficult and expensive for the IRS to do so. So this is what Form 5471 is meant to do. It is meant to make it as easy for the IRS to audit a foreign corporation owned by US persons as it is to audit a domestic corporation owned by US persons. But of course it doesn’t work that way at all, the forms complications ensure that there is nothing easy about audited a foreign corporation. Yet the Form 5471 labyrinth is enforced by severe penalties. So for many US taxpayers, their best choice is to simply pay the higher costs associated with being in Form 5471 compliance and leave it at that - as they simply have to much to lose. What about a situation you have a dormant 5471 and no income? If you otherwise don’t have tax return filing requirement and a dormant 5471 you might still have still want to file the Form 5471. Sometimes it might pay to be a little bit more conservative with this and file a 1040 within income an attachment 5471 if you're not sure. The benefit of being conservative here is that if you do start making money, you likely won’t forget about your Form 5471 requirement. Is Form 5471 a Standalone Form? It is not considered as such. Although there can be instances where stand alone For 5471 needs to be filed. The form is typically attached to a 1040 variant if filed by an individual or an 1120 variant if filed by a corporation. What’s the difference between an 1120-F and a Form 5471? A foreign corporation files an 1120-F to report its income, gains, losses, deductions, credits, and to figure their U.S. income tax liability. A Form 5471 is used to report certain US shareholders interests in a foreign entity. What is Form 5471 and what is Form 5472? While they are close in numbers, they are actually quite different. Form 5472 is almost the mirror image of the 5471. The 5471 is for US shareholders of foreign corporation and the 5472 is for domestic entities that are held more than 25% by non-US persons that also might have some non-reportable transaction and reportable transactions. Now while the Form 5472 doesn’t get the attention Form 5471 does, it should, as the Form 5472 are much higher than the 547. Tax Reform increased 5472 penalties to $25,000, while Form 5471 penalties remain at a still extreme, $10,000. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 Assisting US taxpayers worldwide (203) 269-6699 (888) 477 4258 https://youtu.be/9x-VCwWU8m8 IRS Medic

Tax preparation for US citizens moving abroad - don't get surprised!

Tax preparation for US citizens moving abroad - don't get surprised!

Joining is our great friend, Ryan Socash of Kult America. He helps us discuss some of the most common tax situation expats like himself encountered while building a new life for themselves overseas. Are you a US citizen considering employment in a foreign country? Although working abroad is a fantastic way to take advantage of new opportunities a top priority must be tax planning. The IRS enforces compliance on all citizen professional abroad, from English teachers to business tycoons or artist you must educate yourself on American tax compliance as it is the law! If you need help with your tax situations, follow the links to our website. https://ift.tt/35PpUfZ Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/I6e2dEmjM1c IRS Medic

How the IRS Treats International Taxpayers and Returns

How the IRS Treats International Taxpayers and Returns

https://ift.tt/38evniS The proper tax reporting of international and foreign income is rather onerous. Be aware that the stakes are much higher and the returns can become much more difficult if you have a foreign bank account, a foreign corporation, a foreign pension and even a foreign life insurance policy. Frequently Asked Questions About International Taxpayers and Returns If I am a U.S. citizen living outside the U.S., do I need to file a U.S. tax return? Yes. Your worldwide income is subject to U.S. tax, so you will need to file a tax return. Note that there are likely to be various exclusions and deductions you can apply that may reduce the tax you owe. If I pay tax overseas, do I still have to file a U.S. return? Yes. You will need to file a U.S. return unless you revoke your residency status in the U.S. or your U.S. citizenship. When do I need to file a U.S. return? If you are outside the U.S. and Puerto Rico, you will typically need to file your return no later than June 15 in the year following the tax year you’re filing for. You can request an extension to delay filing until December 15. Note that tax underpayment penalties and interest will accrue from June 15. Do I need to file additional forms in addition to my U.S. individual income tax return? In some circumstances, you may be required to file additional forms. These can include: If you have foreign assets worth over a certain amount, you may have obligations under FBAR or FATCA reporting rules. If you run a business outside the U.S., you may need to file additional forms like Form 5471. If you are claiming certain foreign exclusions or deductions, you will need to file the relevant forms. There are some other circumstances where additional reporting and forms may be required. If I am not a U.S. citizen or resident, and I live outside the U.S., do I still need to file a return or pay U.S. taxes? If you’re a nonresident alien, you may need to file a return and pay taxes if you have any income sourced from the U.S. https://youtu.be/6PZxrk9KNNc IRS Medic

Why IRS Form 5471 preparation has become even MORE difficult

Why IRS Form 5471 preparation has become even MORE difficult

Previous video on Downward Attribution: https://youtu.be/dIwYRSo3mHw The Tax Cuts and Jobs act of 2017, otherwise known as tax reform, created many changes to the taxation and reporting of foreign stock ownership. And not for the better. Nowhere is this better demonstrated than on IRS Form 5471, a form with the easy to remember title of “Information Return of U.S. Persons With Respect to Certain Foreign Corporations."  In this video we will discuss some of the worst changes we’ve seen for tax years 2018 and moving forward. Here’s the big message: More people are now required to file a Form 5471, and Form 5471 has never been as complicated.  So let’s get into some of the big changes.  First off, there used to be a requirement that you had to own a stock for 30 days or more to trigger the status as a  US shareholder. Now the trigger is if you own the stock for any moment within a year. Even a second.  Second, there are now increased filing requirements because of new rules that attribute more stock ownership than actually exists - both individuals and entities can be affected. Tax reform repealed Section 958(b)(4)  - and perhaps this was an accident - I really think it was. But the effect has been to require more taxpayers to file a Form 5471 than ever before with a concept called downward attribution - a topic I discussed at length in a previous video - you’ll find the link in the description below.   While there is new program the IRS announced that offers some attribution relief, you need to check to see if it applies in your situation. Follow the links to irsmedic.com if this is something you need help with. Form 5471 now has new schedules and new definitions of certain categories - and don’t forget the attribution rules can differ category to category. Additionally Form 5471 isn’t just for information only anymore - in some cases you now use it to calculate a tax liability.  Another change - you  probably are not done with just a Form 5471. Also look to see if forms 965, 965-A 965 B, 8990, 8991, 8902, 8993 are needed.  And don’t forget about Form 926 - which has been around for a while - but it too has a  $10,000 penalty if not filed or if it is something that the IRS deems is substantially incomplete.   And lastly, Category 1 is back. If you look at the the general wording, it makes it seem like you only have to file if you have a transition tax due. But this is not true. Category 1 is related to the transition tax but again, even if you don’t have any transition tax due, you still could  a Category 1 filer.  Overall, Form 5471 preparation has gotten so complicated many very talented tax professionals have given up and are now outsourcing this work to firms like ours. They simply don’t feel comfortable - with good reason. And also, we are hearing from our clients and other tax professionals alike that many large accounting firms that used to prepare Form 5471 don’t want to be bothered - the work has gotten too difficult for them.  So does this situation seem impossible? Well there is hope. Understand that the IRS does not have the staff to examine every Form 5471 filed. This is some of the most difficult tax work around and there’s simply not enough people in the world who are up to the challenge - inside or outside the IRS. But what the IRS can do, is find easy to spot mistakes - so that’s exactly what they do. They find the low hanging fruit where they can assess those $10,000 penalties nearly automatically. The IRS doesn’t want to have to dig too deep. So the key with Form 5471 is to make sure that what you file can escape that first round of scrutiny with no problems - let the IRS focus on someone who took shortcuts, and not you or your client, right?  So what are your questions about Form 5471? What are your trouble spots? What do you want to know? Please leave your concerns below. We read every comment.  Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/hlKiO0nAFEg IRS Medic