# Tax on my UK company



## ukuscapgain (Apr 10, 2018)

Hello,

I have just started a temporary work contract, and I'm working through a limited company. My accountant has told me I'll only have to include my salary and dividends in my US tax filing, but I've read something about form 5471 and "subpart f" which makes me worry any company earnings that I don't pay as salary or dividends would also be taxed.

Does anyone know the right answer?

Thanks!


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## Bevdeforges (Nov 16, 2007)

To be honest, there is no one, single "right" answer. Form 5471 is for "certain controlled foreign corporations" - a term that doesn't seem to be defined anywhere in the IRS literature (at least not anywhere I can find online). 

The issue is just what the IRS wants to consider as a "corporation" - and it's fairly easy (and logical) to contend that a limited company does not fall into the realm of a "corporation." (Or, rather, that only certain specific types of limited company fall under that heading.) Especially if your limited company is set up so that it pays its own taxes in the UK (i.e. rather than flowing them through your personal tax returns).

I would go with what your accountant is telling you until and unless you hear differently from the IRS. With many of these things they really aren't interested in "small fry" with a one person company.
Cheers,
Bev


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## ukuscapgain (Apr 10, 2018)

I've been googling a bit more

Looks to me like my company probably is a CFC. It provides personal services (mine), and I'm the only shareholder. I think that means the CFC's income is subpart f income? 

But hopefully the UK counts as a "high tax" jurisdiction, and hence the income is excluded after all. The UK rate, at 19%, is more than 90% of 21%.

Have I got this right?


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## Bevdeforges (Nov 16, 2007)

I'm not sure where you found the information about "high tax" jurisdictions and all, but seriously, if your accountant says to just report salary and dividends, I'd go with that and see what happens. Unless your company becomes wildly successful chances are that the IRS will never bother to dig into any of the details of what you file.
Cheers,
Bev


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