US Tax Returns, Filed Correctly — From Form 1040 to 1120, 5471 and 5472

Start Here: Status and Entity Decide the Form

Almost every filing question resolves into two facts: what your US tax status is, and what kind of entity (if any) you own. An individual with no business files a Form 1040 or a Form 1040-NR. Add a business and a second return usually appears — Form 1065, Form 1120-S or Form 1120 — with a K-1 that feeds back into the individual return. Add foreign ownership in either direction and information returns such as Form 5471 or Form 5472 attach to that return. Getting these two facts right on day one prevents the majority of penalty situations we’re asked to clean up later.

Individual Returns — Form 1040 and Form 1040-NR

US citizens, green card holders and residents under the Substantial Presence Test report worldwide income on Form 1040, regardless of where they live or where the income arises. Nonresident aliens report only US-source income, on Form 1040-NR. The distinction matters far beyond which PDF gets filed: residents can use the standard deduction and joint filing, and are exposed to foreign reporting rules; nonresidents generally cannot use the standard deduction, are usually limited to single or married-filing-separately status, and face 30% flat withholding on certain fixed and determinable income unless a treaty reduces it.

Substantial Presence and Dual-Status Years

The Substantial Presence Test counts 31 days in the current year and 183 weighted days across three years. Cross that line and you become a US tax resident even on a temporary visa; stay below it and you remain a nonresident even if you spend months in the country. The year you arrive or depart is usually a dual-status year: nonresident for part of it, resident for the rest, with two sets of rules applied to one calendar year. First-year choice elections, closer-connection statements and treaty tie-breakers can all change the outcome, and each requires specific attachments to be filed correctly.

Schedule C, Rentals and Investment Income

Sole proprietors and single-member LLCs owned by individuals report business results on Schedule C of their 1040 and pay self-employment tax on net earnings. Rental owners report on Schedule E and must track depreciation carefully, since it will be recaptured on sale. Investors report capital gains on Schedule D and Form 8949 — including crypto disposals, which are now explicitly reported and matched against broker filings. Nonresidents with US rental property can elect to treat that income as effectively connected, taking deductions instead of flat gross withholding, but the election has to be made properly and consistently.

Business Returns — 1065, 1120-S and 1120

Partnerships and multi-member LLCs file Form 1065 and pass income to partners on Schedule K-1. S-corporations file Form 1120-S and do the same for shareholders, with the added requirement that owner-employees take reasonable W-2 compensation before distributions. C-corporations file Form 1120 and pay federal tax at the entity level, with dividends taxed again to shareholders. Choosing between them is not just a tax-rate exercise: eligibility, ownership restrictions, exit plans and investor expectations all bear on the decision.

Owner Compensation, Basis and K-1s

Three items generate most pass-through disputes. Reasonable compensation: too little S-corp salary invites reclassification and payroll penalties. Basis: distributions above basis become taxable, and losses are suspended when basis is exhausted — which means basis has to be tracked every year, not reconstructed years later. K-1 timing: partners and shareholders cannot finish their personal returns until the entity return is complete, so a late business filing cascades into late individual filings across every owner.

When Foreign Ownership Enters the Picture

Nonresidents cannot be S-corporation shareholders, so a foreign investor entering an S-corp terminates the election. Foreign persons can own C-corporations and partnerships, but foreign ownership triggers reporting: Form 5472 for the corporation, withholding obligations on partnership income allocable to foreign partners, and Form 1042-S reporting on certain payments. These are structural questions worth answering before the investment closes rather than at filing time.

International Information Returns

Information returns rarely create tax by themselves. They create penalties — assessed per form, per year, whether or not any tax was owed. They are the most common reason an otherwise compliant taxpayer receives a five-figure IRS notice, and the reason cross-border filings deserve a specialist rather than a seasonal preparer.

Form 5472 — Foreign-Owned US Entities

Form 5472 reports transactions between a US entity and its foreign related parties. It applies to US corporations with 25% foreign ownership and, critically, to foreign-owned single-member LLCs — which must file Form 5472 attached to a pro forma Form 1120 even when the LLC has no revenue, no employees and no activity beyond being formed. Capital contributions and payments made on the entity’s behalf are themselves reportable transactions. The penalty for failing to file is $25,000 per year, per entity, and it applies automatically.

Form 5471 — US Persons With Foreign Corporations

Form 5471 runs in the opposite direction: a US person who is an officer, director or shareholder of a foreign corporation reports that company to the IRS. Which of the filing categories applies determines which schedules are required, and controlled foreign corporation status can push GILTI or Subpart F income onto the owner’s personal return long before any dividend is paid. Elections under Section 962 and foreign tax credits can soften the result substantially, but only if claimed in the year they arise. The base late-filing penalty is $10,000 per form, per year, with escalation for continued failure.

FBAR, Form 8938 and Related Filings

FBAR (FinCEN Form 114) is required when the aggregate value of your foreign financial accounts exceeds $10,000 at any point in the calendar year, including accounts you merely have signature authority over. It’s filed with FinCEN, separately from your tax return, by April 15 with an automatic extension to October 15. Form 8938 covers a broader asset set under FATCA at higher, status-dependent thresholds and attaches to your return. Foreign mutual funds usually bring PFIC reporting on Form 8621, and interests in foreign partnerships bring Form 8865. Most cross-border clients file several of these together.

Deadlines at a Glance

These are the calendar-year dates we track for every client. An extension postpones filing, not payment — interest and late-payment penalties run from the original due date on any unpaid balance.

Late, Missing or Incorrect Returns

Unfiled years are fixable, and they get more expensive the longer they wait. Delinquent income tax returns can be filed for prior years, with failure-to-file and failure-to-pay penalties often reduced through first-time abatement or a reasonable-cause request. Errors on filed returns are corrected by amendment — Form 1040-X for individuals, and amended or superseding returns for entities. Missing international information returns have dedicated procedures, including delinquent information return submission with a reasonable-cause statement. The one constant: relief options narrow sharply once the IRS opens contact, so voluntary correction is almost always the cheaper path.

Why a CPA Matters More Than Software

Consumer tax software handles a straightforward W-2 return well. It does not test your residency status, decide between an S-election and a C-corporation, track shareholder basis across years, prepare a Form 5471 schedule set, or notice that your dormant LLC owes a Form 5472. Those judgments require someone who has filed the form before and who will still be reachable when a notice arrives. At Manay CPA you get a licensed US CPA who prepares your individual and business returns together, files the international forms that come with them, keeps the multi-year continuity that basis and carryforwards depend on, and represents you before the IRS if questions come up.