US Global Tax provide valuable services assisting Australian companies and trusts with a US owner or trustee. Whether you're self-employed with a small business or possess a family trust to protect your assets, you may have a reporting requirement when filing taxes in the USA. This could apply regardless of whether the trust is generating taxable income or has any involvement with the United States apart from a US owner.
This is an area of US taxation that is frequently misunderstood, which often results in incorrect or inadequate reporting and subsequent penalties. Foreign company tax is one of US Global Tax's specialties. We boast a knowledgeable staff with many years experience dealing specifically with Australian trusts and their implications with regards to USA tax compliance.
Additionally, foreign companies—including small partnerships, SMEs, or large organisations—may be required to file Form 5471 with the federal government. Reporting foreign business income is strictly enforced by the IRS, and can result in large penalties for failure to comply.
Foreign Companies & Trusts
Active participation in a foreign corporation in Australia requires that you file Form 5471 annually with your income tax return if you are an officer or director within the corporation that has acquired a stock share or you own at least 10% of the foreign corporation. If US citizens account for a majority of the corporation's ownership, than any amount of ownership will require that you report your holdings.
Limited Liability Companies owned by US persons often have their own filing requirements, but with the proper guidance, LLCs can be designated as "disregarded" for federal income taxes, which means that all filing requirements can be handled within the individual's income.
A US taxpayer with a majority ownership stake in a foreign partnership needs to familiarise themselves with Form 8865, which is used to report income and filing status of the partnership. You may still need to complete this form if claim as little as 10% ownership in the partnership. Speak to our US tax experts to see if this is necessary for you.
What the US federal government does and does not consider a foreign trust is a point of confusion for many US taxpayers. Speak to our tax specialists to learn if your foreign interests meet this definition. If they do, you will need to file Form 3520 with your tax return.
More On Form 5471
Form 5471 is one of the most significant filing documents for US taxpayers with shares in foreign companies. With the passage of the Foreign Account Tax Compliance Act 2010 (FATCA), Form 5471 became much more important. The IRS takes a particular interest in Form 5471, owing to the sizable incomes reported on it. This means that detailed, accurate reporting is crucial to avoid compliance penalties. US Global Tax understands the intricacies of this and other forms required of foreign companies and trusts. Let us put our expertise to work for you.
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