Do I have to report a company I own abroad on my US return?
Almost certainly, and the reporting is usually more work than the tax. A company incorporated in the country you moved to is, from the US side, a foreign entity with a US owner, and ownership above a modest level brings an annual reporting package with it. That package is about the company, not merely about your dividends: its balance sheet, its result for the year, its transactions with you. The first question, though, is not which forms apply but what the entity is treated as for US purposes, because a corporation, a partnership and a disregarded entity each report differently.
Will the IRS tax my company's profits before I take them out?
It can. There are rules that attribute certain profits of a foreign company to its US owner in the year they arise, whether or not anything is distributed, and they were written with exactly this arrangement in mind. Which profits, and how much, depends on what the company does and how it is classified. The result owners find hardest is the timing mismatch: the US taxes the profit in one year and the other country taxes the distribution in a later one, so the tax credited in each country may not line up with the income it relates to unless the position has been planned.
Is my foreign company a corporation for US tax purposes?
That is the classification question, and it is decided by US rules rather than by what the company is called at home. The default treatment depends on the entity's characteristics, chiefly whether the owners have limited liability, and it can differ from the treatment the same entity gets in its own country. Classification is not a detail to settle once the returns are drafted. It determines which reporting package applies, whether the profits are taxed to you as they arise, and whether the tax the company pays abroad can be credited against your US tax at all.
Can I choose how my foreign company is treated in the US?
In many cases yes: an election can change the classification from its default, and that is the main lever available for aligning the two countries' treatment of the same business. Made on time, it can put the profit and the tax in the same place in the same year, which is what makes the credits work. The election is a decision about the future as much as the present, because the treatment you settle on has to suit how you intend to take money out of the business, not only how the current year happens to look.
What happens if I make the classification election late?
The same election that solves the problem on time can create one when it is late. The risk is stranded credits: the US taxes income in a year on one basis while the other country taxed it on another, and a credit that cannot be matched to the right year and the right category of income is often simply lost. A late election may also carry conditions about the years in between. This is why classification is looked at when a business is set up or acquired, rather than when a first US return is being prepared two seasons later.
Does the corporate tax my company pays abroad reduce my US tax?
Sometimes, and the mechanism is narrower than owners expect. Credit is given for foreign tax, but it has to be matched: the right taxpayer, the right year, the right category of income. Tax paid by a company is not automatically tax paid by you, which is why classification matters so much. It decides whether the company's tax is yours for credit purposes or belongs to a separate person the US recognises. Where the match fails, the same profit can be taxed in both countries with no relief, not because the treaty is absent but because the claim cannot be constructed.
What happens if I have not filed for several years?
Missed years are handled as one package, not one at a time, because the route chosen for the first year determines the relief available for the rest. Each country has a disclosure or relief programme with its own conditions, and entering the right one — before the authority contacts you — is usually what keeps penalties down. Filing quietly outside a programme forfeits that protection. See catching up on missed returns.
Is "fund transfer pricing" the same thing as transfer pricing?
No — and if you came here to calculate FTP, this is not it. Fund transfer pricing is a bank's internal allocation of funding costs and benefits between its own business units, a treasury and asset-liability management discipline used to measure branch or product profitability. Tax transfer pricing is about prices between legally separate related parties across borders, and about which country taxes the resulting profit. The words overlap; the fields do not. See our transfer pricing work.
