# Form 5471 Help



## jonathan9528 (Mar 9, 2018)

Hello,

I am hoping someone can help answer a technical question on Form 5471 in respect of my wife's UK Ltd company.

Our situation is as follows:

We are both UK nationals and were living and working in New York (me on an L1 and my wife on a spousal visa) from January 2016 to September 15th 2017 last year, when we departed permenantly and returned to the UK. 

On 29th August 2017 last year my wife created a UK Ltd company, of which she is the only Director and shareholder.

Her company received 3 payments (equivalent to $7,000 each time) in October, November and December last year. Unfortunately these payments were for contract work undertaken by my wife and I believe could therefore be considered to be for Personal Services under Subpart F Income. All work was undertaken from the UK. 

The company had no costs or other transactions and my wife did not take a salary or dividend.

We are currently in the process of determining whether we will file jointly or separately. I believe we may be able to elect to file separately and split the year so we are deemed to be resident aliens for the period 1st Jan to 15th September then non-resident aliens 16th September to 31st December.


The two questions I have are:

If we elect to file separately and split the tax year, such that my wife is a resident alien only to 15th September, does Form 5471 still have to cover the full year to 31st December or just to 15th September? Incidentally, her company's tax year end will not be until 29th August 2018.

In the event it needs to cover the full year to 31st December, is she likely to have a personal tax liability on the subpart F income earned and paid whilst she was a non-resident alien post 15th September 2017? Can this be avoided in any way?

Many thanks
Jonathan


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## Bevdeforges (Nov 16, 2007)

Personally, I would just skip any and all mention of your wife's Ltd company. The IRS really gets no information about these sorts of things because they are well outside their realm and in this case, I think it is clear that the company was established in anticipation of your return to the UK.

You will also want to take a look at information on the IRS website about "dual status years" - i.e. when you shift from being resident aliens to being non-resident aliens part way through the year. https://www.irs.gov/individuals/international-taxpayers/dual-status-aliens
Cheers,
Bev


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## jonathan9528 (Mar 9, 2018)

Thanks Bev. I won't go into the detail but skipping mention of it is not an option.


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## Bevdeforges (Nov 16, 2007)

jonathan9528 said:


> Thanks Bev. I won't go into the detail but skipping mention of it is not an option.


'Nuff said. 

But I'm not sure that you would gain any advantage by filing separately in any event as long as neither one of you is a dual national. Do take a look at the information about dual status aliens, because one big risk of filing as a non-resident alien is that all US source income is then subject to a flat 30% tax rate (save a few very limited special categories of income). 
Cheers,
Bev


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