# Single-owner UK limited company - form 5471 needed?



## pc__allinone

Hello, 

I have (in the UK) a private limited company, just me for contracting.

I've read several posts on form 5471 for foreign corporations. All very helpful, but a couple of questions remain.

1) My understanding is that in this case, earnings go on form 1040; is this correct? Any other forms needed for company purposes?
2) Do I still have to file form 8832 to check the "disregard" option?
3) I do not have to file form 5471, correct?

Thanks for any help you can provide. 

Pete


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## pc__allinone

Hello? Can anybody confirm these questions, please? Any help would be appreciated. Thanks!!

Pete


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## Bevdeforges

Sorry for the long wait - I apparently missed your original post.

I take it you are a US citizen, and thus are filing your US tax returns. This whole question of when and how a one-person company organized overseas is reportable is a major uncertainty just now, thanks to the FATCA nonsense. How to proceed may depend on your exact situation - how much your business is worth (on paper, at least) and exactly how it is set up, and to be brutally honest about it, how much exposure you feel you have to the IRS.

Because our company here in France is a separately taxable entity and I am recognized in France as being an employee of the company, I report my salary as salary (and thus subject to the FEIE) and I report my signature authority over the company bank account. Period. 

My ownership interest in the company is well under the reporting threshold ($200,000) for the FATCA reporting requirements, even when combined with the rest of my non-US assets, so I feel the IRS has everything they are entitled to know about.

But the way US taxes work, you have to stake out your own position based on the facts and circumstances of the situation. Perhaps someone with experience of a single person UK private limited company would like to weigh in here. 
Cheers,
Bev


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## pc__allinone

Hi Bev, 

Many thanks for your reply. 

I think as a private limited company, I don't have to file 5471, but I'd love confirmation on this. 

I guess my main question is whether I should file form 8832 to check the "disregard" as a separate entity form, and what that means/entails. Can anybody help with this?

Thanks again for your help. 

Pete


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## Bevdeforges

Personally, I'd prefer to have my business entity considered as a separate entity from my personal tax returns. If your company pays its own taxes in the UK, I would maintain that it IS indeed a separate entity, and thus not subject to declaration on your personal tax returns.

But getting a "confirmation" of that could be next to impossible. The IRS likes to leave their options open. You could inquire at the IRS office in the London Embassy. 
Cheers,
Bev


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## pc__allinone

Bev, 

Thanks again. I think I will go ahead and file form 8832, but I have to get an EIN first. I hope that's not a problem. Do you know of any that could arise? 

Which brings me to my next question: are you familiar with for W-8BEN? What it is about, its benefits...?

Pete


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## Bevdeforges

On the W8BEN form it states that you should not use it if you are a US citizen. You use a W9 instead, though I'd check the instructions for whatever form requires an EIN. In some cases you may be able to use your SS number as an EIN.
Cheers,
Bev


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## pc__allinone

Thanks Bev!!


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## pc__allinone

One last question:

If I use form 8332 to disregard the company as separate from its owner, I assume its earnings no longer go on the 1040. Once disregarded, what is the filing process? What forms are required?

Thanks, 

Pete


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## Bevdeforges

If the company is incorporated in the UK, and pays its own taxes in the UK, then it shouldn't need to file tax returns for the US. You declare your "salary" from the business as your personal income on your 1040 and the company is your employer (and responsible for paying any and all national insurance to the UK).
Cheers,
Bev


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## santafe

It is my understanding, as a co owner with my husband of a small UK limited company that:
The UK Limited Company is not a US citizen it is a foreign corporation and therefore if the company invoices a company in the USA you will need to complete a W8BEN in order for the company to be paid without tax withheld in the USA. If you personally are billing a USA company and are self employed on your 1040 you would fill a w-9.
We did not file an 8332 and filed a 5471 with our 1040 this year.

We are both US/UK citizens living in the UK.


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## JungleJim

*Form 5471 needed?*




Bevdeforges said:


> If the company is incorporated in the UK, and pays its own taxes in the UK, then it shouldn't need to file tax returns for the US. You declare your "salary" from the business as your personal income on your 1040 and the company is your employer (and responsible for paying any and all national insurance to the UK).
> Cheers,
> Bev


Bev, I see a different view then you about filing requirements for form 5471 and want you to convince me otherwise! 

As I read it, Form 5471 has to be filed even if a foreign corporation does not have any establishment in the U.S. and does not have any U.S. income... IF I own 10% stock in my Australian company (I do) - Category 2 filer; if I control a foreign corporation for 30 days and more than 50% control (I have 33% and my wife has 33% control) - Cateogory 4 filer; Combined voting power of 10% or more (I do) - meets Catefory 5 filer also.

I have an Australian company which is the trustee for a Unit Trust in Australia, which operates a packing business, which makes little to no profit to date. It doesn't look like profitability enters into it. Unfortunately, I also have a Family Trust which does make a profit from farming, and I am now going to have to file US tax returns now that we no longer are in a "loss" situation, and making a profit. This looks like I will also have to include the 5471 with my 1040 and maybe a 3520. 

I have seen your postings over the past month and you really have a good grasp of the intricacies of expat taxes, so I hope you have a good thought here


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## Bevdeforges

The thing is that US tax regs are not cut and dried. The "problem" with form 5471 is that it is "with respect to certain foreign corporations" - not all foreign corporations. Based on a thorough reading of the instructions for the form (and some of the information on the IRS website regarding the FATCA legislation) you have to decide for yourself if the foreign corporation you own in full or in part falls under the definition of what you are required to file for.

There are a number of factors I would take into consideration. First of all, the FATCA forms aren't required at all for taxpayers living outside the US whose foreign holdings have a valuation of less than $200,000. Then, there are several references in the instructions to "financial investments" or something like that that seems to imply that they are looking for those with passive investments in corporations or other business ventures. The fact of being an employee with the company and having reported your salary for years (all falling well under the FEIE limits) plus any bank accounts on which you may have signature authority also points to the fact that you're not "hiding" anything.

With US tax law you have to stake out your position based on the facts and circumstances of the situation and hope that the IRS will either agree with you - or decide that whatever faults there may be with your returns are not worth pursuing.
Cheers,
Bev


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## JungleJim

Bevdeforges said:


> There are a number of factors I would take into consideration. First of all, the FATCA forms aren't required at all for taxpayers living outside the US whose foreign holdings have a valuation of less than $200,000. Then, there are several references in the instructions to "financial investments" or something like that that seems to imply that they are looking for those with passive investments in corporations or other business ventures. The fact of being an employee with the company and having reported your salary for years (all falling well under the FEIE limits) plus any bank accounts on which you may have signature authority also points to the fact that you're not "hiding" anything.
> 
> With US tax law you have to stake out your position based on the facts and circumstances of the situation and hope that the IRS will either agree with you - or decide that whatever faults there may be with your returns are not worth pursuing.
> Cheers,
> Bev


Thanks Bev - unfortunately, I'm feeling sick with anguish that we will be a target for an audit, and NOT skate under the radar with a "Streamlined" filing. Although for years we lost money establishing our orchard, it now makes a profit and has for three years... And, I neglected to file tax returns and never heard of the FBAR and FATCA stuff until a month ago. We've been Aussie citizens since the 80's, and just hadn't kept up  In farming you can go from feast to famine, and last couple years we have had income around $200k and assets built to close to $2million. I see the target on my back.


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## Bevdeforges

Back file for at least 3 years and get yourself settled up if you want to sleep better at nights. It's always better if you "fess up" than if they somehow find you. Though living and working overseas makes it somewhat less likely that they will come looking for you. There are still loads of Americans living abroad who have never filed from abroad and don't seem to turn up on the IRS radar. 

If you have to, back file to the years when you had your losses and see if anything can be carried forward in your favor for the profitable years.
Cheers,
Bev


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## JungleJim

Bevdeforges said:


> Back file for at least 3 years and get yourself settled up if you want to sleep better at nights.
> Cheers,
> Bev


Thanks Bev for the advice here and elsewhere on expatforum.

I have downloaded the TaxAct software and it helped quite a bit to get a grasp on the forms... but, I can't seem to make sense of how to balance the form 1116 and the Form 2555, let alone where to put my foreign trusts and if I have to file Form 5471, and on it goes. At least this software is one that takes a foreign address, and many don't. 

I will persevere and see how the next several days go, before I give up and hire someone in the U.S. from some expat CPA firm to take over. I have my kids and their families in both countries so I have to get it right. I know you have corresponded with a LOT of hopeless souls on this forum, and hopefully they didn't give up... hoping next week it will all get clearer, or it will get even more expensive! Always welcome any suggestions!

Thanks again... ...Jim


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## JungleJim

Actually... I think I'll go look at Romney's tax return again... that helped me to figure out the flow of what is required. I'm 1/100th of his complexity, income and taxes, but, I still have much of the same problems. :laugh:

We both have uncompleted tax returns too!


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## Bevdeforges

I wouldn't use Romney's 2011 return as a "good" example. It's very incomplete, with notes stating that it's based on estimates because they "don't have the information yet." (Gee, all us poor schlubs have to file by June 15th...)

And, I noticed that just the forms I was most interested in seeing (the FATCA forms) aren't exactly all there. Can't believe he doesn't have to file most of them.

Will have to go searching out the 2010 returns he allegedly disclosed, but I'm half expecting those to be "preliminary" ones, too.
Cheers,
Bev


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## JungleJim

I can't understand how his tax rates are so low... just can't fathom how that much income can come in at that rate, with only 15% tax, and he has all these foreign investments. I'm going to have to analyse what it is that keeps him that low...

I'm paying over 30% tax in Australia and it looks like because 'dividend's from my daily job in my farm which is a Family Trust could be considered passive, because I only pay half my income in wages, and the other have in distributions, the U.S. wants to use AMT and tax me even more! 

I am going to have to reconsider all my tax structures in Australia to comply with US tax evasion laws that have nothing to do with someone like me who has been a naturalised Aussie since the 80's. For years, I didn't make enough to file, but I was building assets and now I can see Australian income tax structures aren't compatible with U.S.

Cheers... ...Jim


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