Who this is for
- Foreign owners of a US single-member LLC who are moving to the US
- Founders of a US corporation who get a green card or start a long US stay
Not covered here
- Visa, work permit and other immigration questions
- Moves between Canada and the US
- Preparing the first-year dual-status return line by line
What happens to my US LLC or corporation when I move to the US?
Your US company's tax position changes on your residency starting date: the day the US starts treating you as a resident alien (Publication 519). Before that date you are a foreign owner. From it, you are a US person, and the company's filings follow.
| Item | Before your residency starting date | From your residency starting date |
|---|---|---|
| Single-member LLC (default tax status) | Foreign-owned: pro forma Form 1120 with Form 5472; generally no self-employment tax | Profit on your own Form 1040, usually Schedule C, with self-employment tax; Form 5472 can still be due for the year you arrive, not later |
| C corporation | Form 1120, plus Form 5472 if a foreign person owns 25% or more | Form 1120; Form 5472 still due for the year you arrive, then only if another foreign person owns 25% or more |
| S corporation election | Not allowed: a nonresident alien cannot be a shareholder | Possible, usually from the start of the next tax year |
| Your US income tax | US-source and US-business income only | Worldwide income |
| Foreign accounts and companies | Generally not reported by you | FBAR, Form 8938 and Form 5471 may apply |
| Dividends from your US corporation | 30% withholding unless a treaty lowers it; the company owes any tax it fails to withhold (26 USC 1461) | No nonresident withholding; give the company Form W-9 |
An LLC that elected to be taxed as a corporation follows the corporation rows; an LLC with two or more owners is a partnership (see the LLC section below).
When it is not simple: you arrive mid-year, so one year has a foreign-owned part and a resident part; you hold the US company through a foreign company; you still own a business abroad; you plan a dividend, share sale or payout from a company abroad, whose US tax can turn on whether you receive it before or after your residency starting date; you want an S election; or you have held a green card for years and the company still files as foreign-owned. Each changes which forms are due and when.
What to gather: your US entry and exit dates for this year and the two before, the date on your green card or the start of your US stay, the company's formation papers and EIN letter, past Forms 5472 and 1120, books that can be cut at your residency starting date, and a list of foreign accounts and companies with their highest balances and values.
When do I become a US tax resident: green card or substantial presence test?
You become a US tax resident under the green card test if you are a lawful permanent resident at any time in the calendar year. You become one under the substantial presence test if you are in the US on at least 31 days this year and 183 days over three years, counting every day this year, one-third of last year's days and one-sixth of the days the year before that (IRS).
The test you meet sets your residency starting date (Publication 519):
| How you qualify | Residency starting date |
|---|---|
| Substantial presence test | The first day you are in the US that year; up to 10 days of earlier presence can be left out if on them your tax home and closer connection were abroad and you file a signed statement |
| Green card test | The first day that year you are in the US as a lawful permanent resident |
| Both tests | The earlier of the two dates |
| Either test, and you were a resident for any part of last year | January 1 |
Days as an exempt individual, such as a student on an F, J, M or Q visa, do not count toward the substantial presence test. If your home country also treats you as its resident, a tax treaty may decide which country taxes you as a resident; a treaty claim to be a nonresident is filed on Form 1040-NR with Form 8833 (Publication 519). The full first-year rules are in your first US tax return.
Foreign-owned LLC owner gets a green card or becomes a US resident: does Form 5472 stop?
Yes, from the first full year you are a resident, if you own the LLC directly with no other owner: it no longer files a pro forma Form 1120 or Form 5472, unless a case below applies. From your residency starting date the LLC is no longer foreign-owned. Its profit goes on your Form 1040, usually on Schedule C, and you owe self-employment tax on it as a sole proprietor would (IRS).
The arrival year is split. Form 5472 applies to a US disregarded entity wholly owned by a foreign person, and a corporation counts as foreign-owned if it had a foreign owner of 25% or more at any time during the tax year (Form 5472 instructions). So for the year you arrive, the LLC can still owe a pro forma Form 1120 with Form 5472. Pro forma means a Form 1120 filed only to carry Form 5472. For a foreign-owned LLC, reportable transactions include money you put in or take out and amounts paid to form it (instructions). The instructions do not say how to report the months after your residency starting date; settle that with your preparer before filing. A missing Form 5472 carries a $25,000 penalty. The yearly filing itself is explained in what a foreign-owned single-member LLC files.
On your own return that year, the LLC's profit splits at the same date. The part before is taxed only if it is US-source income or connected with a US business (when foreign owners owe US tax); the part after goes on Schedule C. Self-employment income you receive while a resident is subject to self-employment tax, even for work done before you arrived. Most social security agreements cover the self-employed in the country where they live; some exempt a temporary move of the business, proven with a certificate of coverage from the home country (Publication 519).
Watch for these:
- Your LLC elected to be taxed as a corporation. If it filed Form 8832 or Form 2553, it is not a disregarded entity: its profit does not go on your Schedule C, and the corporation sections below apply (IRS).
- The LLC has two or more owners. By default it is a partnership that files Form 1065, not a pro forma Form 1120 with Form 5472 (IRS). Withholding on a foreign partner's share of its US business income stops for you once you are a resident (Form W-8BEN instructions), but not for a co-owner who is still a foreign person; see foreign partners and withholding and LLC with a spouse living abroad.
- The LLC's member is your foreign company, not you. The LLC stays wholly owned by a foreign person and keeps filing Form 5472 after you move (Form 5472 instructions).
- You are married and choose to file jointly for the arrival year. With that joint-return choice in effect, you are not a foreign person for Form 5472 (instructions), so the arrival-year filing may differ; see the first-year return section below.
- Old Forms W-8BEN on file. Banks, platforms and payers holding your Form W-8BEN must be told within 30 days that you became a resident, and may ask for Form W-9 (Form W-8BEN instructions).
Green card holder: does my C corporation still file Form 5472?
Only if a foreign person still owns at least 25% of its vote or value, directly or indirectly, at some time in its tax year, and it had reportable transactions with a related party (Form 5472 instructions). Once you are a resident, your own shares no longer make it foreign-owned. The corporation still files Form 1120 every year; only the Form 5472 attachment depends on ownership.
| Situation once you are a resident | Form 5472 |
|---|---|
| You own all the shares directly | Due for the tax year that includes your residency starting date if it had reportable transactions; not after |
| A foreign co-founder or investor owns 25% or more | Still due for transactions with that owner and related parties |
| You hold the shares through a foreign holding company | Still due: the holding company is a foreign shareholder |
| Your spouse, child or parent is a foreign person | Can still be due: the ownership rules in the instructions treat family members as owning each other's shares; a spouse with a joint-return election in effect is not a foreign person |
A foreign holding company you own can also bring Form 5471 for you (see the reporting section below). Forms 5472 missed in the years before you moved are a separate catch-up: see missed Form 5472 filings and penalties. The full list of a foreign-owned corporation's filings is in foreign-owned C corporation filing.
Can my LLC or corporation become an S corporation after I get a green card?
Yes, once every shareholder qualifies. An S corporation cannot have a nonresident alien as a shareholder (26 USC 1361); a green card holder or a resident under the substantial presence test is not one. If you claim a tax treaty to be taxed as a nonresident, the regulations leave the effect on S status unsettled (26 CFR 301.7701(b)-7); get advice before electing. An LLC can elect directly on Form 2553 without filing Form 8832 first (Form 2553 instructions).
Timing is where arrivals go wrong. Form 2553, signed by an officer with every shareholder's consent (Form 2553 instructions), is filed no more than 2 months and 15 days after the start of the tax year it is to take effect, or at any time in the year before. An election made early in a year is treated as made for the next year if, on any day of that year before the election, the company did not qualify (26 USC 1362). So if you were a nonresident on the first day of the company's tax year, the earliest S year is usually the next one.
The election ends if the company stops qualifying, for example if you leave and become a nonresident alien again (26 USC 1362). Who else may own shares is in S corporation eligibility; whether the election pays off is in should you elect S corporation status; a missed deadline is in late S corporation election relief.
How do I pay myself after moving to the US?
Once you are a resident, a single-member LLC's profit is your self-employment income whether or not you take it out (wages from your own LLC). No one withholds tax on it, so you may need quarterly estimated tax payments on Form 1040-ES (IRS; quarterly estimated tax payments). A corporation pays salary through payroll, with withholding and a Form W-2. Dividends from a C corporation stop being subject to 30% nonresident withholding once you are a resident (Form W-8BEN instructions) and go on your Form 1040. An S corporation must pay a working shareholder reasonable pay before other distributions (IRS; S corporation owner salary). The rules while you still live abroad are in paying yourself as a foreign owner. Whether you may work for your own company at all depends on your immigration status, a question for an immigration lawyer.
What foreign income, companies and accounts must I report once I'm a US resident?
From your residency starting date you are taxed on worldwide income, the same as a US citizen (Publication 519). A salary from abroad, foreign rent, and interest and dividends from foreign accounts go on your Form 1040 for that period. Ownership and accounts abroad bring their own forms:
| Form | What triggers it for a new resident |
|---|---|
| Form 5471 | You become a US person while owning at least 10% of a foreign corporation; then every year you control it (more than 50%) or it is a controlled foreign corporation and you own 10% or more (instructions); a missed form carries a $10,000 penalty per company per year |
| Form 8865 | You control a foreign partnership (more than 50%), or own 10% or more of one controlled by US persons who each own 10% or more (instructions) |
| FBAR (FinCEN Form 114) | Your foreign accounts total more than $10,000 at any time in the calendar year, counting accounts you can sign on and accounts of a company you own more than 50% of (FinCEN) |
| Form 8938 | Your foreign financial assets pass the threshold, counted from your residency starting date; living in the US, more than $50,000 at year end or $75,000 at any time if unmarried or filing separately, or $100,000 and $150,000 on a joint return (instructions) |
For the FBAR, a US resident is found with the same green card and substantial presence tests (FBAR instructions), but the FBAR covers the whole calendar year and its instructions do not address the months before your residency starting date. Ask before your first filing. Which accounts count is in FBAR: which accounts count; which form a business abroad files is in information forms for a foreign company.
Does my new state tax me and my company?
Your state tax follows your new state's own residency rules, not the federal tests. California, for example, treats you as a resident if you are in the state for other than a temporary or transitory purpose, and taxes residents on all income regardless of source (California Franchise Tax Board). A federal treaty position does not carry over by itself: California taxes income a treaty exempts federally unless the treaty specifically excludes it from California tax (FTB Publication 1031). Other states use other tests; see remote work and state income tax.
The company can also owe tax or need to register where you now run it. California, for example, counts a company as doing business there if it is organized or commercially domiciled in California, among other tests, and a company doing business there is subject to its tax laws (California Franchise Tax Board; California LLC fee and minimum tax). Registering an out-of-state company where you now live is covered in registering in another state.
Dual-status return or first-year choice: which return do I file the year I arrive?
If you are a resident on the last day of the year but were not on the first, you usually file a dual-status return: Form 1040 with "Other" checked at the top and "Dual Status Return" entered, plus a statement for the nonresident part of the year, for which Form 1040-NR can be used (Publication 519; IRS). A dual-status return cannot use the standard deduction or be filed jointly (Publication 519).
Two choices can change that year. The first-year choice can make you a resident for part of the arrival year when you meet neither test that year or the year before but will meet the substantial presence test the next; you make it in a statement attached to Form 1040, which you cannot file until you meet that test (Publication 519). The joint-return choice, for someone married at year end to a US citizen or resident, treats both spouses as residents all year on a joint return, with a statement both spouses sign attached to it (26 USC 6013; Publication 519); while it is in effect you are not a foreign person for Form 5472, which can change the LLC's arrival-year filing (Form 5472 instructions). Who qualifies and how to prepare the return is in your first US tax return.
Should I keep or restructure my companies before I move?
Moving does not by itself change your US company's legal form; what changes is how it and you file, from your residency starting date. What needs advice before that date is what you own abroad. Foreign-source income not connected with a US business is not taxed by the US if you receive it while still a nonresident, but it is taxed if you receive it while a resident, even if you earned it before (Publication 519). A gain on shares you sell after that date is generally measured from what you paid (26 USC 1012), so growth from before you arrived can be taxed too; see founder moving to the US.
- A company abroad you still own: from your residency starting date it can bring Form 5471, and if US owners control it (a controlled foreign corporation), part of its profit can be taxed to you each year even when it pays you nothing (26 USC 951; 26 USC 951A); see US owners of foreign companies.
- Funds and ETFs abroad: see PFIC rules when moving to the US.
- A foreign holding company above your US company: it keeps Form 5472 on the US company and can add Form 5471 for you.
- Your home country: leaving may bring its own exit tax or reporting, which needs advice under that country's rules.
Example
All figures are in US dollars and illustrative.
Germany to the US with a Wyoming LLC
An unmarried founder in Germany owns a Wyoming single-member LLC that earns $80,000 profit in the year: $40,000 by June 30 and $40,000 after. He was not a US resident last year. He moves to the US on a work visa on July 1, with no earlier US days that year, and stays. His 184 days meet the substantial presence test, so his residency starting date is July 1.
- January to June: the LLC is foreign-owned. A pro forma Form 1120 with Form 5472 is due for the year if it had reportable transactions with him. The $40,000 is taxed by the US only if it is US-source or connected with a US business.
- July to December: the $40,000 goes on Schedule C of his dual-status return, with self-employment tax because he received it as a resident, unless a certificate of coverage from Germany keeps him in its system.
- Next year: the whole profit goes on Schedule C. No Form 5472.
Green card for a Delaware corporation owner
A founder owns 100% of a Delaware C corporation with a calendar tax year. She was not a US resident last year and has no earlier US days this year. She enters the US as a lawful permanent resident on March 10, her residency starting date.
- Arrival year: the corporation was foreign-owned until March 9, so it attaches Form 5472 to that year's Form 1120 if it had reportable transactions with her. A Form 2553 filed by March 15 cannot make this an S year, because she was a nonresident alien shareholder before the election.
- Next year: no Form 5472 if no foreign person owns 25% or more. With Form 2553 filed after March 10 of the arrival year and by March 15 of the next year, the company can be an S corporation from January 1, if every shareholder qualifies.
- Dividends: from March 10 she gives the company Form W-9 instead of Form W-8BEN, and no nonresident withholding applies.
Keeping a company in Singapore
A founder moves to the US and keeps 100% of a Singapore company whose bank account holds $60,000.
- Form 5471: he becomes a US person while owning at least 10% of a foreign corporation, so Form 5471 is due with his arrival-year return, and every year after while he controls it. At 100% the company is a controlled foreign corporation, so part of its profit can be taxed to him each year before any dividend.
- FBAR: he owns more than 50% and can sign on the account, so it goes on his FBAR; at $60,000 it alone passes the $10,000 threshold.
- Form 8938: his foreign assets, including the Singapore shares, are tested from his residency starting date; unmarried and living in the US, the thresholds are $50,000 at year end or $75,000 at any time.
Different for you?
- You arrived mid-year and the LLC's books do not split at your residency starting date: get bookkeeping help and cross-border tax help before the arrival-year filings.
- You still own a company or funds abroad: see founder moving to the US and PFIC rules when moving to the US, and get cross-border tax help before your residency starting date.
- You want the company taxed as an S corporation: see S corporation from day one and should you elect S corporation status; if a deadline passed, see late S corporation election relief. Get corporate tax help before filing Form 2553.
- You have held a green card for years and the company still files as foreign-owned, or Form 5472 was never filed before you moved: see missed Form 5472 filings and penalties and get cross-border tax help.
- Your corporation paid you dividends before you moved and withheld nothing: see paying yourself as a foreign owner and get corporate tax help.
- You missed an FBAR or Form 8938 after becoming a resident: see catching up on missed foreign reporting and get FBAR help.
- You are moving between Canada and the US: see moving across the border with a company.
- You are on an F-1, H-1B or H-4 visa and forming your first LLC: see starting an LLC on a visa.
- You now run the company from a state other than where it was formed: see registering in another state.
- You hold a green card and own a company in mainland China: see green card holder with a company in China.
Figures on this page
| Figure | Value | Source |
|---|---|---|
| Foreign ownership that makes a US corporation a Form 5472 reporting corporation At least this share of vote or value held by one foreign person, directly or indirectly, at any time in the tax year. A single-member LLC wholly owned by one foreign person is treated as such a corporation. | 25% | IRS: Instructions for Form 5472 Checked |
| Withholding rate on US-source FDAP income paid to foreign persons Applies to the gross amount of US-source FDAP income not effectively connected with a US trade or business; a treaty may lower it. Also the rate on pay to non-resident independent contractors for services performed in the US. | 30% | IRS: Fixed, determinable, annual, or periodical (FDAP) income Checked |
| Days in the US in the current year needed for the substantial presence test Also needs 183 weighted days over three years | 31 days | IRS: Substantial presence test Checked |
| Weighted three-year US days that meet the substantial presence test Current-year days plus one-third of last year's days plus one-sixth of the year before's days | 183 days | IRS: Substantial presence test Checked |
| Days of presence that can be left out when setting a substantial-presence residency starting date Only days on which the person had a closer connection to, and a tax home in, a foreign country; a signed statement is required. The days still count toward the substantial presence test itself. | 10 days | IRS: Publication 519, U.S. Tax Guide for Aliens Checked |
| Form 5472 penalty for failure to file or keep records For tax years beginning after December 31, 2017. Per reporting corporation, per tax year. A substantially incomplete Form 5472 counts as a failure to file. IRC 6038A(d)(1); Treas. Reg. 1.6038A-4(a). | $25,000 | IRS: Instructions for Form 5472 Checked |
| Time to notify a payer when a change makes Form W-8BEN incorrect Notify the withholding agent or payer and provide a new W-8BEN or appropriate form after a change in circumstances | 30 days | IRS: Instructions for Form W-8BEN Checked |
| Form 2553 ordinary election deadline File after the effective tax year begins; filing during the preceding tax year is also permitted | 2 months and 15 days | IRS: Instructions for Form 2553 Checked |
| Form 5471 Category 2 and 3 stock ownership requirement 10% or more of the total value of the foreign corporation's stock, or of the total combined voting power of all classes of voting stock (Regulations section 1.6046-1(i)) | 10% | IRS: Instructions for Form 5471 (12/2025) Checked |
| Foreign corporation control threshold Ownership must be more than this share of voting power or value for Category 4 control or the general CFC test | 50% | US Code: section 957 Checked |
| Initial penalty for failure to file required Form 5471 information Per annual accounting period of each foreign corporation for information required by section 6038(a) | $10,000 | IRS: Instructions for Form 5471 Checked |
| Foreign partnership control threshold for Form 8865 Category 1 Control is ownership of more than this share of capital, profits, or deductions or losses, counting constructive ownership | 50% | IRS: Instructions for Form 8865 Checked |
| Form 8865 10% interest in a foreign partnership Share of capital, profits, or deductions or losses used for Categories 2, 3 and 4, counting constructive ownership | 10% | IRS: Instructions for Form 8865 Checked |
| FBAR filing threshold Total maximum value of all foreign financial accounts at any time in the calendar year; an FBAR is required when the total is more than this | $10,000 | FinCEN: Report Foreign Bank and Financial Accounts Checked |
| FBAR ownership level for an entity's accounts You have a financial interest in the foreign accounts of a corporation, partnership or other entity you own more than this share of, directly or indirectly | 50% | eCFR: 31 CFR 1010.350, Reports of foreign financial accounts Checked |
| Form 8938 threshold, unmarried or married filing separately, living in the US, year end Total value of specified foreign financial assets on the last day of the tax year; also applies to married filing separately | $50,000 | IRS: Instructions for Form 8938 Checked |
| Form 8938 threshold, unmarried or married filing separately, living in the US, any time Total value at any time during the tax year; also applies to married filing separately | $75,000 | IRS: Instructions for Form 8938 Checked |
| Form 8938 threshold, joint, living in the US, year end Married filing jointly; total value on the last day of the tax year | $100,000 | IRS: Instructions for Form 8938 Checked |
| Form 8938 threshold, joint, living in the US, any time Married filing jointly; total value at any time during the tax year | $150,000 | IRS: Instructions for Form 8938 Checked |
Primary sources
- IRS: Publication 519, US Tax Guide for Aliens
- IRS: Substantial presence test
- IRS: Taxation of dual-status individuals
- IRS: Instructions for Form 5472
- IRS: Single member limited liability companies
- IRS: Limited liability company (LLC)
- IRS: Estimated taxes
- IRS: Instructions for Form W-8BEN
- 26 USC 1361: S corporation defined
- 26 USC 1362: Election; revocation; termination
- 26 CFR 301.7701(b)-7: Coordination with income tax treaties
- IRS: Instructions for Form 2553
- 26 USC 6013: Joint returns of income tax by husband and wife
- IRS: S corporation compensation and medical insurance issues
- IRS: Instructions for Form 5471
- 26 USC 951: Amounts included in gross income of United States shareholders
- 26 USC 951A: Net CFC tested income included in gross income of United States shareholders
- 26 USC 957: Controlled foreign corporations
- 26 USC 1461: Liability for withheld tax
- California Franchise Tax Board: Publication 1031, Guidelines for Determining Resident Status
- 26 USC 1012: Basis of property, cost
- IRS: Instructions for Form 8865
- IRS: Instructions for Form 8938
- FinCEN: Report of Foreign Bank and Financial Accounts
- FinCEN: FBAR line item filing instructions
- California Franchise Tax Board: Residents
- California Franchise Tax Board: Doing business in California
About this guide
Published by Cloud Accounting under standing professional approval. This version has no separately recorded personal review. It explains general rules for the tax year shown. It is not advice for your situation.
Changes
- : First published.