Form 5471 | CFC & Subpart F | ITIN | FBAR | Form 8938

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Who This Applies To

• You are not a U.S. citizen but meet, or may meet, the Substantial Presence Test.
• You own 10% or more of a corporation organized outside the United States.
• Several family members who are U.S. tax residents collectively own a foreign corporation.
• The foreign corporation holds bank deposits, stocks, bonds, funds, or other investments and earns interest or dividends.
• You have signature authority over the corporation’s foreign bank or brokerage accounts.
• You personally maintain foreign financial accounts or other specified foreign financial assets.
• Your ITIN application is pending, was rejected, or has not been resolved before the filing deadline.
• You have an inactive or dormant foreign corporation and want to know whether the Rev. Proc. 92-70 summary procedure is available.

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Core Tax Rule in One Paragraph

Determine the individual’s U.S. tax residency first. A noncitizen who is a U.S. resident for tax purposes is generally subject to U.S. tax on worldwide income. If that person owns stock in a foreign corporation, the foreign-corporation rules then determine CFC status, the taxpayer’s Form 5471 category, and whether current inclusions such as Subpart F or section 951A income arise. Form 5471, FBAR, Form 8938, and ITIN administration are separate compliance systems and must be tested independently.

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Frequently Asked Questions

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1. Can I be a U.S. tax resident without being a citizen or green-card holder?

Yes. A noncitizen can become a U.S. resident alien by satisfying the Substantial Presence Test. The general test requires at least 31 days of U.S. presence in the current year and 183 weighted days over the current year and the two preceding years.

The calculation generally counts all current-year days, one-third of the prior-year days, and one-sixth of the second preceding year. Exempt-individual days and other statutory exceptions can change the calculation.

Once a person is a U.S. resident for tax purposes, worldwide income is generally within the U.S. income-tax system. An ITIN identifies the taxpayer; it does not create residency.

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2. If I leave the United States during the year, does residency end on the departure date?

Not automatically. Under the Substantial Presence Test, the general rule can keep the person a resident through December 31.

An earlier termination date may be available when the taxpayer has a foreign tax home and a closer connection to a foreign country for the balance of the year and satisfies the applicable requirements. The departure-year return can therefore require a full-year-resident or dual-status analysis.

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3. What is a controlled foreign corporation (CFC)?

A CFC is generally a foreign corporation whose qualifying U.S. shareholders own, directly, indirectly, or constructively, more than 50% of its total voting power or total value on any day during the foreign corporation’s tax year.

A U.S. shareholder generally includes a U.S. person owning at least 10% of the vote or value. Family and attribution rules can affect the calculation, so the cap table alone is not always sufficient.

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4. Does every 33% U.S. shareholder need Form 5471?

A direct one-third owner who is a U.S. shareholder of a CFC will commonly have Category 5 filing obligations, but every filer’s categories must be tested separately.

Category 3 can arise from certain acquisitions, dispositions, or ownership changes. Category 4 can apply when the control test is met. The category determines which schedules and statements are required.

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5. Can one family member file Form 5471 for the others?

Sometimes. The Form 5471 instructions contain a multiple-filer exception when another person with an equal or greater interest files the same required information and the conditions are satisfied.

The other taxpayers generally still attach the required statement to their own returns. Certain filers also must complete a separate Schedule P. Treat this as a filing exception with documentation requirements, not as permission for the other shareholders to ignore Form 5471 altogether.

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6. Why are complete corporate books necessary for Form 5471?

Form 5471 is not merely an ownership disclosure. Depending on the filing category, it can require the corporation’s income statement, balance sheet, current earnings and profits, foreign taxes, shareholder transactions, distributions, PTEP, Subpart F amounts, and section 951A data.

The current instructions require Schedule C information in the foreign corporation’s functional currency under U.S. GAAP principles, with translation as required, and Schedule F balance-sheet information in U.S. dollars. Brokerage statements and Forms 1042-S can support the books, but they do not replace them.

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7. What records should a passive investment CFC maintain?

At minimum, reconcile beginning and ending cash; bank and brokerage accounts; investment holdings; interest; dividends; realized gains and losses; withholding taxes; operating expenses; shareholder contributions, loans, and distributions; liabilities; and equity.

The records should identify the corporation’s functional currency and support both book reporting and U.S. tax adjustments. For a passive investment company, the bookkeeping may be simple, but it still must reconcile.

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8. Are interest and dividends earned by a CFC Subpart F income?

Often, yes. Dividends and interest are classic categories of foreign personal holding company income, which is generally included in foreign base company income and Subpart F, subject to statutory exclusions, high-tax rules, related-party look-through provisions where available, and other exceptions.

A CFC that principally holds financial investments should therefore expect a focused Subpart F analysis rather than assuming the income is deferred until distribution.

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9. Can I owe U.S. tax even if the CFC distributes no cash?

Yes. The CFC regime can require a U.S. shareholder to include certain income currently even when the corporation retains the cash offshore. Subpart F is the principal example for passive investment income.

Amounts previously included under the CFC rules must then be tracked because later distributions can be treated differently as previously taxed earnings and profits (PTEP).

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10. What about GILTI / section 951A?

For 2024 and 2025 tax years, Form 8992 and the GILTI rules may still be relevant after Subpart F and other exclusions are applied. Passive income that is already Subpart F income generally is not simply taxed again as tested income.

For taxable years beginning after December 31, 2025, the OBBBA amended section 951A and replaced the prior GILTI computation with net CFC tested income rules. Later-year filings should therefore use the current Form 8992 and current-year guidance rather than carrying forward the 2024 calculation mechanically.

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11. Can a dormant foreign corporation use a simplified Form 5471 filing?

Yes, if it actually satisfies the dormant-foreign-corporation requirements of Revenue Procedure 92-70. The current Form 5471 instructions continue to recognize this summary procedure.

The procedure is narrower than a full Form 5471 and generally uses specified information on page 1 with the required Rev. Proc. 92-70 legend. “No revenue” alone does not establish dormant status; the revenue procedure’s conditions must be tested.

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12. When does an individual have to file an FBAR?

A U.S. person generally files an FBAR when the person has a financial interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year.

The threshold is aggregate, not per account. Use each account’s maximum annual value, not only the December 31 balance.

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13. Does signature authority over the CFC’s account count for FBAR?

Potentially, yes. FBAR applies to qualifying foreign accounts over which the U.S. person has signature or other authority, even when the account belongs legally to the foreign corporation, subject to specific exceptions.

A shareholder who can control the disposition of funds from the CFC’s account should therefore review FBAR separately from the shareholder’s personal accounts.

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14. How is Form 8938 different from FBAR?

FBAR is filed with FinCEN and uses the $10,000 aggregate foreign-account threshold. Form 8938 is filed with the federal income-tax return, covers a broader category of specified foreign financial assets, and uses higher thresholds that depend on filing status and whether the taxpayer satisfies the living-abroad test.

For an unmarried taxpayer living in the United States, the general threshold is more than $50,000 at year-end or more than $75,000 at any time. For an unmarried taxpayer who qualifies as living abroad, the threshold is more than $200,000 at year-end or more than $300,000 at any time.

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15. If the CFC stock is reported on Form 5471, is Form 8938 still required?

Possibly. Form 8938 provides a duplicative-reporting exception for assets already reported on specified international forms such as Form 5471. The taxpayer generally identifies the related Form 5471 in Part IV rather than duplicating all of the asset details.

The value of those assets still counts when determining whether the Form 8938 filing threshold is met. Form 5471 therefore does not automatically eliminate Form 8938.

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16. What if my ITIN is still pending when the filing deadline arrives?

Do not assume you must miss the deadline. The IRS expressly states that a taxpayer does not need an ITIN to request an extension.

To request an extension without an ITIN, mail Form 4868 and write “ITIN TO BE REQUESTED” in the SSN/ITIN field. Do not attach Form W-7 to Form 4868. The extension extends time to file, not time to pay.

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17. What if my ITIN application was rejected or I have only a temporary IRS number?

First determine the rejection reason. Form W-7 commonly fails because of incomplete information, identity-document problems, or improper certification. The IRS generally requires original documents or copies certified by the issuing agency unless an approved verification process applies; a Certifying Acceptance Agent can authenticate qualifying documents.

Do not treat an internal IRS control or temporary number as an ITIN. Preserve any temporary number for correspondence and case tracking, but use the IRS’s prescribed pending-ITIN procedure when no ITIN has been issued.

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18. What penalties can apply if Form 5471 is late or incomplete?

The IRS states that failure to timely file a complete and correct Form 5471 can generally trigger an initial $10,000 penalty for each annual accounting period of each foreign corporation.

If the failure continues for more than 90 days after IRS notice, additional $10,000 continuation penalties can apply for each 30-day period or fraction thereof, generally up to an additional $50,000 per failure. Other consequences, including foreign tax credit reductions in applicable cases, can also arise.

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Common Mistakes and the Better Approach

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Deadlines and Penalty Exposure

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Form 1040 and Form 5471

Form 5471 is attached to the taxpayer’s federal income-tax return and generally shares that return’s due date, including a valid extension. The filing extension does not extend the time to pay income tax.

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FBAR

The FBAR is due April 15. FinCEN provides an automatic extension generally through October 15, so a separate FBAR extension request is ordinarily unnecessary.

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Pending ITIN

A taxpayer may request an individual-return extension without an ITIN by mailing Form 4868 and writing “ITIN TO BE REQUESTED” in the SSN/ITIN field.

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Form 5471 penalty

A required Form 5471 that is late, incomplete, or incorrect can trigger the $10,000 international-information-return penalty framework and continuation penalties after IRS notice.

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Practical Examples

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Example 1 – Three resident aliens own a foreign investment company

Three noncitizen family members each own approximately one-third of a foreign corporation. All are U.S. tax residents for the year. The corporation earns mainly interest and dividends. The company is generally a CFC because U.S. shareholders collectively own more than 50%, and each direct owner exceeds the 10% U.S.-shareholder threshold. Each owner requires a Form 5471 category analysis, and the passive income requires a Subpart F analysis.

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Example 2 – Brokerage statements exist, but the CFC has no books

The CFC has monthly brokerage statements and Forms 1042-S showing dividends and withholding. Those documents are useful source records, but they do not by themselves provide a complete Schedule C income statement, Schedule F balance sheet, E&P computation, shareholder activity, or all information required by Form 5471. The corporation should finalize its books before the return is completed.

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Example 3 – Personal account below $10,000, CFC account much larger

A taxpayer’s personal foreign account reaches only $8,000, but the taxpayer has signature authority over the CFC’s foreign account, which reaches $150,000. The taxpayer can still have an FBAR obligation because signature authority counts and the aggregate foreign-account threshold is exceeded.

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Example 4 – ITIN still pending at the filing deadline

A U.S. resident alien has already applied for an ITIN but has not received the number by the filing deadline. The taxpayer can request an extension using the IRS pending-ITIN Form 4868 procedure, continue monitoring the W-7 application, and complete the return once the ITIN is resolved.

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Authoritative Authorities and Current Source Notes

Authorities reviewed through September 26, 2026. Links below are official IRS or FinCEN sources and are limited to the topics addressed in this guide.

1. IRS Publication 519 (2025), U.S. Tax Guide for Aliens. Substantial Presence Test, resident-alien taxation, residency rules, and Form 8938 overview. Official source

2. IRS Residency Starting and Ending Dates. Rules for determining the end of residency under the Substantial Presence Test and closer-connection conditions. Official source

3. Instructions for Form 5471 (Rev. Dec. 2025). Current Form 5471 filing categories, CFC definition, multiple filers, dormant corporations, Schedule C/Schedule F requirements, Subpart F schedules, PTEP, and penalties. Official source

4. IRS – About Form 5471. Current Form 5471 landing page and recent developments, including September 2026 updates. Official source

5. IRS – About Form 8992. Current Form 8992 information for section 951A calculations and current revisions. Official source

6. IRS Internal Revenue Bulletin 2026-39. 2026 proposed regulations and explanation of OBBBA changes to sections 951 and 951A, including net CFC tested income for post-2025 years. Official source

7. Instructions for Form 8938. Specified foreign financial asset thresholds, living-abroad thresholds, and duplicative reporting for assets reported on Form 5471. Official source

8. FinCEN – Report Foreign Bank and Financial Accounts. FBAR filing threshold, financial-interest and signature-authority rules. Official source

9. FinCEN – New Due Date for FBARs. April 15 FBAR due date and automatic extension to October 15. Official source

10. IRS – Individual Taxpayer Identification Number (ITIN). Current ITIN guidance, including the extension procedure using “ITIN TO BE REQUESTED” on Form 4868. Official source

11. Instructions for Form W-7. ITIN eligibility, identity documentation, certified copies, acceptance agents, and processing guidance. Official source

12. IRS – About Form 4868. Individual income-tax return extension procedures. Official source

13. IRS – International Information Reporting Penalties. Current penalty framework for Form 5471 and other international information returns. Official source

14. IRS – Certain taxpayers related to foreign corporations must file Form 5471. IRS overview of who may be required to file Form 5471, the multiple-filer exception, corrections, and due-date coordination. Official source

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Closing

A foreign corporation owned by U.S. resident aliens can create substantial U.S. tax and information-reporting obligations even when the shareholders are not U.S. citizens, do not hold green cards, live abroad for part of the year, and receive no cash distributions from the corporation.

The cleanest process is to establish U.S. residency first, confirm CFC ownership, complete reliable corporate books, compute Subpart F and the section 951A regime applicable to the filing year, and then coordinate Form 5471 with Form 1040, Form 8938, FBAR, and any ITIN work. When the ITIN is unresolved, use the IRS extension procedure rather than allowing an identification-number issue to create an avoidable late international-information return.

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Professional Disclaimer

This article is for general educational purposes only and does not constitute individualized tax, legal, or accounting advice. International tax obligations vary significantly based on residency, ownership, income, foreign assets, and filing history.

For advice specific to your circumstances, schedule a paid consultation with O & G Tax and Accounting Services.

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