Expats That Own Part Or A Whole Corporation

By: Pete
Date posted: 04.07.2013 (1:26 pm) | Write a Comment  (0 Comments)

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Ohh, what a nightmare. I thought I was finally back in line. I had not filed every year but after all of the trouble, I had finally succeeded in getting my taxes together. Then I had a flashback while taking my shower. I own a corporation with a friend of mine, it runs smaller internet websites, nothing big and while the company does pay for a few expenses (my internet connection for example), I do not get any income out of it, not a penny. Every dollar is reinvested by the company. But I started wondering… would the IRS need to know about this company? I guess it would. Because while I’m not doing it, it’s certainly possible for someone to hide revenues by diverting revenues to his or hers company.

I Then Asked An Expert

I started an email to that cross-border specialist I had mentioned in the past. As you can imagine, I had fears but was hoping he’d tell me that as long as I’m not getting any income, I do not need to report anything. I figured that at worse I’d need to send some info about the company…

It’s Worse Than I Feared

The accountant proceeded to tell me that this complicated matters quite a bit. Not only do I need to fill form 5471, send financial statements, etc. But if you look at form 5471.. you will notice that it’s actually a fairly lengthy form that requires a lot more work. He also said I would need to do it for years 2010, 2011 and 2012 (it kind of makes no sense to have filed only partially for 2010 and 2011 but not this form 5471.

Who Needs To File This?

I asked and there are of course many versions. From what I understand, legally, anyone that owns 10% or more of a corporation needs to file this but I’ve seen some people decide not to file for small corporations that make little to no money. I guess it’s up to every person, as is always the case

In case you’re wondering, I was told the penalty for not filing this could be up to $10,000 per year.. ouch. Thankfully, if you file late and explain why, they are generally willing to waive that..


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