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Learn all about Form 8858: What is it and who must fill it out?

Certain individuals in the United States who own a foreign disregarded entity (FDE) or foreign branch (FB) may utilize this form and its schedules to meet the reporting obligations outlined in sections 6011, 6012, 6031, and 6038, as well as the corresponding regulations.

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Who Must File

If you are a U.S. individual who owns a foreign disregarded entity or operates a foreign branch during the tax year, make sure to complete Form 8858 in its entirety. This includes filling out Schedule M (Form 8858) to report transactions between the FDE, FB, yourself, or other related entities.

or also certain U.S. persons required to file Form 5471 for a Controlled Foreign Corporation (CFC) that owns a Disregarded Foreign Entity (FDE) or operates a Foreign Branch (FB) during the CFC's annual accounting period.

In summary, Form 8858 serves as an information return rather than a tax payment form. Its significance lies in upholding compliance with U.S. tax regulations about foreign business ownership.

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When and Where To File Form 8858

Form 8858 should be submitted by the deadline of your income tax return or information return, including any extensions. If you are the tax owner of the FDE or operate an FB, make sure to include Form 8858 and the corresponding Schedule M (Form 8858), if applicable, with your income tax return or information return.

If you are not the tax owner of the FDE or indirect FB, attach Form 8858 to any Form 5471 or Form 8865 that you are submitting regarding the CFC or the CFP that is the tax owner of the FDE or operates the Foreign Branch.


Penalties for not submitting this form

Failure to provide the required information within the specified timeframe may result in a penalty of $10,000 for each annual accounting period of each CFC or CFP. Additionally, if the information is not submitted within 90 days of receiving a notice from the IRS, an extra penalty of $10,000 (per CFC or CFP) will be incurred for each 30 days that the failure persists after the initial 90 days have passed. The maximum penalty for such non-compliance is capped at $50,000 for each instance.

Any person who fails to file or report all of the information required within the time prescribed will be subject to a reduction of 10% of the foreign taxes available for credit under sections 901 and 960. If the failure continues for 90 days or more after the date the IRS mails notice of the failure to the U.S. person, an additional 5% reduction is made for each 3 months, or fraction thereof, during which the failure continues after the 90 days has expired. 


How we can help you

At H&CO, our experienced team of tax professionals (CPAs) understands the complexities of income tax preparation and is dedicated to guiding you through the process. With a personalized approach, we help you navigate US and international income tax laws, staying updated with the latest changes.

With offices in the US in Miami, Coral Gables, Aventura, Fort Lauderdale, Orlando, Melbourne, and Tampa as well as offices in over 29 countries, our CPAs and International Tax Advisors are readily available to assist you with all your income tax planning, tax preparation and IRS representation needs. To learn more about our accounting firm services, look at our individual tax services, business tax services, international tax services, expatriate tax services, SAP Business One, entity management, human capital, and audit and assurance services.

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