U.S. International Tax Guide – McGuire Advisory LLC
This guide summarizes the most common U.S. international filings and how they interact. Many are primarily disclosure forms; some affect U.S. tax calculations. Our goal is to explain them clearly and help you stay compliant with confidence.
Table of Contents
1) Introduction
U.S. international tax rules ensure transparency in cross-border activity. If you own, invest in, or transfer assets to foreign entities — or pay U.S.-source income to non-U.S. persons — you may have additional filing duties. Many international forms are information returns rather than tax returns — they disclose ownership and activity without directly determining tax owed, but carry significant penalties if incomplete or late.
This guide covers Forms 5471, 8865, 8858, 8621, 926, 1116/1118, and 1042/1042-S — what they report, who must file, and how we prepare them.
2) Key International Filings Overview
These forms disclose ownership, income, and transactions between U.S. taxpayers and foreign entities. Some interact with income calculations (Subpart F, GILTI, PFIC elections, foreign tax credits), while others are purely informational. Timely, accurate filing avoids steep penalties.
| Form | Purpose |
|---|---|
| 5471 | Filed by certain U.S. shareholders, officers, and directors of foreign corporations meeting ownership or control thresholds; reports ownership, balance sheets, and income statements. |
| 8865 | Filed by U.S. persons with ownership or control in foreign partnerships, including contributions, acquisitions, or dispositions of interests under §6038B and §6046A. |
| 8858 | Filed by U.S. persons that directly, indirectly, or constructively own foreign disregarded entities or operate foreign branches; reconciles activity to U.S. GAAP. |
| 8621 | Filed by U.S. investors in PFICs to report income, elections (QEF or mark-to-market), and basis tracking under §1291–§1298. |
| 926 | Filed for certain transfers of property, cash, or intangible assets to foreign corporations under §6038B and §367. |
| 1116 / 1118 | Computes foreign tax credits for individuals (1116) and corporations (1118) to avoid double taxation; applies §901 and §904(d) category limitations (general, passive, foreign branch, GILTI). |
| 1042 / 1042-S | Filed by U.S. withholding agents reporting U.S-source FDAP payments to foreign persons; applies treaty reductions and FATCA (Chapters 3 & 4). |
3) What to Prepare – Checklist
To begin your international filing engagement, please gather the following supporting materials:
- Ownership information – structure chart, ownership percentages, and any changes during the year
- Foreign financial statements – local GAAP trial balance, income statement, and balance sheet
- Financial detail for U.S. GAAP adjustments – supporting records (depreciation schedules, lease agreements, R&D cost breakdowns, intercompany ledgers) so we can reconcile local books to U.S. GAAP
- Bank and investment statements – foreign cash accounts, brokerage accounts, and supporting detail
- Prior U.S. filings – prior Forms 5471, 8865, 8858, 8621, 926, or 1116/1118 (if any)
- Transfer or contribution details – dates, amounts, and descriptions for property or cash transfers
- Foreign tax documentation – tax assessments, proof of foreign taxes paid, or local tax returns
Don’t worry if some items aren’t ready yet — we’ll guide you through what’s essential and how to obtain missing details.
4) Detailed Form Explanations
Each summary below highlights purpose, triggers, and common pitfalls for key international information returns.
▸ Form 5471 — Foreign Corporations
Who files: Certain U.S. shareholders (≥10% voting power), officers, or directors with reportable ownership events. Categories 1–5 depend on control level, acquisition, or disposition.
Purpose: Reports ownership, earnings & profits, and intercompany transactions for controlled foreign corporations (CFCs).
Common issues: Misapplied category tests, omitted Schedules C/F, and failure to translate local books to U.S. GAAP.
▸ Form 8865 — Foreign Partnerships
Filed by U.S. persons with control, ownership changes, or property transfers involving foreign partnerships under §§6038B & 6046A. Includes balance sheet, income statement, and transaction schedules.
▸ Form 8858 — Foreign Disregarded Entities / Branches
Filed by U.S. persons that directly or indirectly own a foreign disregarded entity or branch. Aligns activity reporting with Forms 5471 or 8865 for consolidated analysis.
▸ Form 8621 — Passive Foreign Investment Companies (PFICs)
For U.S. investors in PFICs to report income and elections (QEF or MTM). Late elections trigger excess distribution interest computations under §1291.
▸ Form 926 — Transfers to Foreign Corporations
Reports certain outbound transfers of property, cash, or intangibles by U.S. persons to foreign corporations under §6038B and §367. Ensures proper recognition and anti-avoidance compliance.
▸ Forms 1116 / 1118 — Foreign Tax Credits
Used to compute foreign tax credits under §901. Filers must allocate income among §904(d) baskets (general, passive, foreign branch, GILTI) and track carryovers accurately.
▸ Forms 1042 / 1042-S — Withholding for Foreign Recipients
Required for U.S. withholding agents making U.S.-source FDAP payments to foreign persons. Reports tax withheld and applies treaty reductions and FATCA rules under Chapters 3 and 4.
5) Staying Compliant
Compliance starts with a clear ownership map, accurate local financials, and U.S. GAAP reconciliation. We prepare thorough workpapers to support every disclosure and simplify future filings.
- Confirm filer categories, thresholds, and attribution rules.
- Translate foreign books to U.S. GAAP and USD.
- Coordinate with foreign accountants to align data and ensure consistency.
- File on time to avoid per-form penalties under §§6038 and 6046.
Related disclosures such as Form 8938 (FATCA) and FinCEN Form 114 (FBAR) may also apply. These are separate filings but often accompany the above forms.
6) FAQs
▸ Will I owe extra tax?
Usually not for information-only forms. However, filings involving Subpart F, GILTI, PFIC, or foreign tax credit computations may affect U.S. tax liability. We evaluate this case by case.
▸ What if I missed a filing?
Relief options exist depending on timing and facts (e.g., delinquent international information return procedures). We map exposure and recommend an appropriate catch-up strategy before submission.
▸ How long does it take?
Most single-entity filings complete within 2–4 weeks of receiving full records. Multi-entity or multi-year projects require longer. A written proposal confirms scope, timeline, and fee before work begins.
▸ Can you work with my foreign accountant?
Yes — we coordinate closely with foreign advisors to align accounting treatment, documentation, and treaty positions, ensuring consistency across jurisdictions.
7) About McGuire Advisory
McGuire Advisory LLC is a boutique CPA practice focused on clarity, precision, and personal attention for cross-border tax matters. You work directly with a CPA who explains each filing before submission.
- Direct CPA access
- Fixed-fee proposals, no surprises
- Encrypted document exchange
- Boston-based, serving clients nationwide
Primary References
📧 michael@mcguireadvisory.com · 📍 Cambridge, MA
© McGuire Advisory LLC