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What You Need to Know

No matter where you currently live, you must file.  All US citizens and Green Card holders must file annual tax returns for their worldwide incomes, if you meet minimum filing thresholds.  There are many tax treaties Easton can help you utilize to allow you maximize deductions from your taxable income.  

​In order to benefit from the myriad of exclusions and treaties available, your tax return must be prepared correctly and timely. The world of expat tax is so complex that it can make the most experienced CPAs throw their hands up.  Easton will dig through the dense web of expat tax exemptions so that you can just enjoy the savings and benefits. We work hard to help preserve your wealth while you work hard abroad! We will:

• File your tax returns
  
• Identify favorable tax treaties and exemptions
  
• Provide personalized consultation to meet your individual needs
  

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​​Form 5471 - Ownership in Foreign Corporations

If you own part of a foreign corporation, you are required to file Form 5471 by listing the identity of the US shareholder and details about the foreign corporation.  Depending on which of those four categories apply to you, different schedules must be completed.  The penalty under IRC Section 6038(b)(1) is $10,000 for each late or incomplete Form 5471.

​Please remember this is mostly a disclosure form which does not result in any tax dues for you. If the failure continues for more than 90 days after the date the IRS mails notice of failure, an additional $10,000 penalty will apply for each 30-day period.  The additional penalty is limited to a maximum of $50,000.

​If you, along with other US persons, own more than 50% of a foreign corporation, it is then defined as a Controlled Foreign Corporation (CFC). Then Subpart F Income may be taxed.  The rules for determining which types of income are considered Subpart F are complex. Any types of corporate income such as dividends, interests, rental income, insurance income, offshore shipping income and personal service income under certain conditions may be treated as Subpart F income. Subpart F income is taxable on the US shareholder's personal return (or corporate return if a US corporation is the owner) in the year it occurs as ordinary income.  This happens regardless of whether the income was distributed.

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