Green card holder with a company in China: Form 5471 and US tax

Do green card holders living in China still file US tax returns?

Yes. A green card holder is a US tax resident under the green card test for as long as lawful permanent resident status lasts, wherever they live. That status continues until it is taken away or is administratively or judicially found abandoned; a Chinese address or a long absence does not by itself end it, though you, USCIS or a US consular officer can start an abandonment determination (IRS Publication 519). A US resident reports worldwide income, including income from a company in China.

What makes this case not simple:

• A company in China. It brings Form 5471 and may put part of its profit on your US return each year, even with no dividend paid.
• Two countries. Chinese tax on the company and on you must be matched against US rules and credits.
• A treaty claim. Claiming to be a Chinese resident under the treaty changes how US tax is figured and, for a long-time green card holder, can trigger the exit-tax rules.
• Missed years. Each unfiled Form 5471 carries its own penalty, and the IRS can assess tax for that year until three years after the form is filed (26 USC 6501(c)(8)).

What to gather: the company's business licence (it shows the company type), articles and shareholder register, financial statements and Chinese tax returns for each year, records of dividends and Chinese tax withheld, your salary and individual income tax records, year-end and highest balances of every Chinese account you own or can sign on, the date your green card was issued and any year you filed as a nonresident, and the days you spent in the US and in China each year.

Form 5471 is attached to your Form 1040 and due with it, including extensions (Form 5471 instructions); due dates for someone living abroad are in filing while living abroad.

Is a Chinese company a corporation for US tax?

It depends on the company type on the business licence. A gufen youxian gongsi (company limited by shares) is on the US list of foreign entities that are always corporations (26 CFR 301.7701-2(b)(8)). A youxian zeren gongsi (limited liability company) is not on that list. It is an "eligible entity": by default a foreign eligible entity whose members all have limited liability is treated as a corporation, and it may elect another classification on Form 8832 (26 CFR 301.7701-3).

Whatever the company is called in English, such as a WFOE, the type printed on the licence decides. An individual business (个体工商户) or a partnership (合伙企业) is not on this table. Choosing or changing the US classification has lasting effects; see which form applies to a foreign business.

Which forms come with a company in China?

A green card holder who owns a Chinese company usually files Form 5471 with the US return, and often an FBAR and Form 8938 as well. Which category of Form 5471 applies, and which schedules, depends on how much of the company you own and control (Form 5471 instructions).

The company's shares count toward the Form 8938 threshold; if you reach it, you file Form 8938 and name the Form 5471 in Part IV instead of describing the shares again (Form 8938 instructions). For married couples filing jointly who meet the same tests, the Form 8938 threshold is $400,000 at year end or $600,000 at any time. A spouse who is not a US citizen or resident can file jointly only by choosing to be treated as a US resident, which brings their income and accounts in too; see married to a nonresident. Whether a payment app balance or a family joint account counts on the FBAR is covered in which accounts go on the FBAR. Form 5471 categories and schedules are covered in US owners of foreign companies.

Shares held in a relative's name: whose ownership counts on Form 5471?

Form 5471 does not stop at the name on the share register. Its instructions ask each filer to report shares owned directly, indirectly (through other foreign entities, under section 958(a)(2)) and constructively (attributed from related people and entities, under section 958(b)), and they measure control by stock owned that way (Form 5471 instructions). The instructions excuse two kinds of constructive owner: one with no direct interest whose shares are attributed from another US person who files a complete Form 5471, and one with no direct or indirect interest who would file only because of shares attributed from a nonresident alien, such as a parent living in China. That exception does not help if the shares are in fact yours and a relative holds them only in name.

Family attribution rules are explained in US owners of foreign companies. Where shares sit in someone else's name, have the ownership reviewed before filing.

Does Chinese company tax keep the profit out of US tax?

Not always. A Chinese company more than 50% owned by US shareholders is a controlled foreign corporation (CFC), and each US shareholder may have to include a share of its profit, called net CFC tested income, on their US return each year, whether or not a dividend is paid. An election can exclude income taxed abroad at an effective rate above 18.9% (26 CFR 1.951A-2; Form 5471 instructions, Schedule Q).

The test is the company's effective Chinese rate on that income, not the headline corporate rate. A company that pays tax at a reduced or preferential rate can fall below the US threshold, and its profit can then be taxed in the US as well. An individual owner generally gets no US credit for the company's Chinese tax on that inclusion unless they make the section 962 election (26 USC 960; 26 USC 962). Compare the company's Chinese tax actually paid with its income under US rules before assuming no US tax. How the inclusion is figured, and the section 962 election, are covered in US owners of foreign companies.

Dividends from a Chinese company: withholding, qualified status and credit

China may withhold tax on a dividend paid to a US resident, but under Article 9 of the treaty no more than 10% of the gross dividend when the US resident is the beneficial owner (US–China agreement). The cap protects only an owner who is a US resident under the treaty; an owner living in China who is also a Chinese resident is not covered by it unless residence is settled in favor of the US. On the US side, a dividend from a company eligible for treaty benefits can be a qualified dividend: China is on the list of treaties that meet the test in Publication 550, Table 1-3 (Publication 550).

One limit matters here: dividends from a CFC qualify only when paid out of profits not already taxed in the US and the other requirements are met (Publication 550). Chinese tax withheld can be claimed as a foreign tax credit within limits, which are tighter on a dividend paid out of profits already taxed under the CFC rules. How the dividend is taxed in detail, including profits already taxed under the CFC rules, is in dividends from your foreign company.

Can a green card holder use the US–China tax treaty to be taxed as a nonresident?

Only if you are also a Chinese tax resident and residence is settled in China's favor; even then you still file a US return, as a nonresident. The US–China treaty sets no fixed test for individuals. Article 4 says that when an individual is a resident of both countries, the two countries' tax authorities decide residence through consultation, guided by the United Nations model treaty's tie-breaker rules (Protocol, paragraph 5) (US–China agreement). How a taxpayer supports a claim without such a decision is not spelled out in the treaty; Publication 519 notes that a dual resident may ask the US competent authority for help (Publication 519).

Because the treaty leaves the decision to the two tax authorities, a nonresident claim made on the return alone may be challenged; whether it holds depends on the facts.

If the claim is made, the green card holder:

1. Files Form 1040-NR instead of Form 1040 and figures tax as a nonresident alien, attaching Form 8833 (26 CFR 301.7701(b)-7; Publication 519).
2. Is still treated as a US resident for other purposes of the tax code, including whether a foreign corporation is a CFC (26 CFR 301.7701(b)-7(a)(3)). The claim therefore does not by itself remove the company's US status as a CFC; how it changes the owner's own Form 5471 and income inclusions needs review on the facts. That regulation and Publication 519 predate the statute's rule (below) that a notified treaty claim ends lawful-permanent-resident treatment, and how the two fit together is unsettled; have your status, the company's CFC status and your Form 5471 duties reviewed before filing the claim. One exception: Form 8938 is not required for the part of the year covered by a timely Form 1040-NR with Form 8833 attached (Form 8938 instructions).
3. Risks the separate penalty of $1,000 if Form 8833 is missing (Form 8833).

The regulation also warns that filing Form 1040-NR may affect whether the person keeps permanent resident status; immigration consequences are outside this page.

What does a treaty nonresident claim do to a long-time green card holder?

It can end US residence for tax and trigger the expatriation rules. A green card holder for at least 8 of the last 15 tax years is a long-term resident; a year in which you were treated as a treaty resident of another country, without waiving the treaty benefits, does not count (Form 8854 instructions). Under the statute, any green card holder who begins to be treated as a Chinese resident under the treaty, does not waive the treaty benefits and notifies the IRS stops being a lawful permanent resident for tax (26 USC 7701(b)(6)). For a long-term resident that ending is an expatriation, and the notice is given on Forms 8833 and 8854 (IRS expatriation tax; Publication 519).

That date is an expatriation date. If the person is a covered expatriate, all property, including the Chinese company's shares, is treated as sold at fair market value the day before (IRS expatriation tax). This choice is hard to undo; weigh it before filing a single Form 1040-NR. The covered-expatriate tests and Form 8854 are covered in the exit tax guide.

Salary from your own Chinese company while living in China

Salary your own Chinese company pays you for work in China is foreign earned income on your US return. If your tax home is in China and you meet the bona fide residence or physical presence test, you may exclude up to $132,900 with the foreign earned income exclusion, or instead claim a credit for Chinese individual income tax on that salary. The choice affects other credits and is hard to reverse; see the exclusion or the credit. Chinese tax on income after a move back is covered in moving back to China.

Example

All figures are illustrative, in renminbi (RMB) and US dollars, with rates chosen for the example only.

A Shanghai company taxed at a reduced rate

A green card holder living in Shanghai owns 100% of a youxian zeren gongsi. The company earns RMB 2,000,000 and pays RMB 100,000 of Chinese tax, an effective rate of 5%. The company is a corporation by default and a CFC. Its effective rate is below the US high-tax threshold, so the owner may have to include its profit, figured under US rules, on the US return for the year, with no dividend paid. The owner files Form 5471, an FBAR for the company's accounts and their own, and Form 8938 if the threshold is met.

The same owner takes a dividend

Later, after moving back to the US, the owner has the company pay a RMB 1,000,000 dividend. China may withhold up to RMB 100,000 (10%, the treaty limit for a US resident who is the beneficial owner). On the US return, the part paid out of profits already included in earlier years is generally not taxed again; any part paid out of profits not yet taxed may be a qualified dividend, because China's treaty qualifies. The Chinese tax withheld may be claimed as a foreign tax credit, subject to the limits in the dividend guide.

A long-time green card holder weighs a treaty claim

A green card holder since 2014 has lived in Beijing since 2021.

• 2025: files Form 1040 as a resident with Form 5471, FBAR and Form 8938.
• 2026: has held the card for 13 of the last 15 years, so is a long-term resident. If the owner validly claims Chinese residence under the treaty, files Form 1040-NR with Form 8833 plus Form 8854, and does not waive the treaty benefits, lawful permanent residence would end for tax and that date would be an expatriation date.
• Before filing: the owner tests the covered-expatriate rules, including net worth with the company's shares at fair market value, and decides whether the claim is worth that cost.

Different for you?

• Your company is in Hong Kong, not mainland China: see US owner of a Hong Kong company.
• Your company pays a reduced Chinese rate and its profit was never on your US return: see US owners of foreign companies and get cross-border tax help.
• You never filed Form 5471 for the company: see the late foreign company information return and get cross-border tax help.
• You are behind on US returns and FBARs while living abroad: see the Streamlined Foreign Offshore Procedures and get cross-border tax help.
• You are thinking of claiming treaty nonresidence or giving up the green card: test the exit tax rules first and get cross-border tax help.
• Shares are held in a relative's name, or you own the company with others: see US owners of foreign companies and get cross-border tax help.
• You want to change how the company is classified: see which form applies to a foreign business.
• You are deciding between the exclusion and the credit on your salary: see the exclusion or the credit.