Form 8992: How U.S. Shareholders Report Foreign Business Income to the IRS

Got a stake in a company outside the U.S.? Then Form 8992 is about to become your new paperwork frenemy. This IRS form is what U.S. shareholders use to report certain types of foreign business income—especially if you own part of a controlled foreign corporation (CFC). If you’re a business owner, part of a U.S. corporation, or even just holding shares in a foreign company, you’ll want to know when (and why) IRS Form 8992 is required—before the Internal Revenue Service comes knocking.

What is Form 8992?

Think of Form 8992 as the IRS’s way of keeping tabs on your share of foreign business profits—specifically, something called Global Intangible Low-Taxed Income (GILTI). If you’re a U.S. shareholder in a controlled foreign corporation (CFC), you’re required to calculate and report your slice of that foreign income each year.

What does Form 8992 actually do?

• Calculates your GILTI inclusion amount: This is your pro rata share of tested income (and losses) from a CFC—think of it as “the IRS wants to know how much of that overseas pie is yours.”
• Captures all the details: The form tracks not only tested income, but also tested loss, tested interest expense, and tested interest income, making sure nothing falls through the cracks.
• Connects to the bigger picture: Form 8992 works alongside other U.S. tax forms like Form 1040 (your personal return) and Form 8993 (for deductions), forming part of the post–Tax Cuts and Jobs Act (TCJA) rules about foreign income, Subpart F income, and the foreign tax credit.

In short: If you have foreign business interests, Form 8992 is the paperwork the IRS uses to make sure you’re paying U.S. tax on your fair share—no matter where your company operates or how far your profits travel.

Who must file Form 8992?

If you’re a U.S. person with a stake in a foreign corporation, you might be on the IRS’s Form 8992 guest list. But not everyone with overseas shares needs to file—here’s who actually must pay attention:

You must file Form 8992 if you:

• Are a U.S. shareholder (individual, corporation, or certain trusts and estates) who directly, indirectly, or constructively owns at least 10% of the total vote or value of a controlled foreign corporation (CFC) at any point during the tax year.
• Need to report your pro rata share of the CFC’s GILTI income on your income tax return—using your taxpayer identifying number (like a Social Security Number or EIN) so the IRS knows exactly who’s responsible.
• Are part of a U.S. consolidated group, where the group as a whole (not just individuals) may have to calculate and report GILTI for all its CFC holdings.

Common scenarios include:

• U.S. citizens and residents who own a significant slice of a foreign company.
• U.S. corporations with overseas subsidiaries.
• Any U.S. shareholder of a CFC who’s on the hook for foreign income, gross income calculations, and corporate tax compliance under current tax laws.

Completing Form 8992: Step-by-step guide

Filling out Form 8992 isn’t anyone’s idea of a good time, but here’s how U.S. shareholders of CFCs can break it down:

Part I: The Basics

• Enter your identifying info (name, EIN or SSN, tax year)
• Add the CFC’s details—so the IRS knows exactly which foreign company you’re talking about

Part II: The GILTI Math

• Start with your CFC’s numbers: Enter net CFC tested income, aggregate tested loss, and your pro rata share of any tested loss.
• Deemed Tangible Income Return (DTIR): Calculate your share—this determines how much income escapes the GILTI net.
• Add up interest expenses: Both “specified” and “tested” interest expense come into play.
• Crunch the final GILTI inclusion: The result is the amount you’ll report on your U.S. tax return.
• Schedule I-1: Used to break out more detail on your share, losses, and specific CFC items.

Don’t Miss the Schedules

• Schedule A: Net CFC tested income and Qualified Business Asset Investment (QBAI).
• Schedule B: Extra info about your CFC ownership and related entities.
• Schedule I-1: For all the nitty-gritty of pro rata shares and tested losses.

References and Connections

• Form 8993: Use this if you want to claim the GILTI deduction (a must for many filers).
• You might need to attach other related forms, depending on your situation.

Key GILTI calculations and terms explained

Let’s be honest: GILTI calculations can sound like a foreign language. But once you break down the core terms and formulas behind Form 8992, things get much clearer. Here’s what every U.S. shareholder needs to know—minus the jargon.

Global Intangible Low-Taxed Income (GILTI)

This is the slice of foreign company income the IRS wants U.S. shareholders to report—even if the profits never cross the Atlantic. It’s calculated using a special formula that takes into account all your CFC’s relevant income, losses, and deductions.

Tested Loss and Pro Rata Share of Tested Loss

Not all CFCs make a profit! If your company posts a tested loss, your share reduces the GILTI amount you have to include. So, a bad business year can (for once) help at tax time.

Deemed Tangible Income Return (DTIR)

Think of this as a “safe harbor”—a certain portion of your CFC’s return on tangible assets (like factories or equipment) is shielded from GILTI tax. The IRS lets you exclude this part so you’re not taxed on routine, brick-and-mortar business earnings.

Tested Interest Expense and Tested Interest Income

These are the interest amounts your CFC pays or earns. They’re factored into your GILTI calculation—so interest expenses can lower your GILTI, while interest income may bump it up.

Specified Interest Expense

This is the part of your interest expense that gets special attention for GILTI math—important for figuring out your final inclusion amount.

Filing deadlines, due dates, and penalties

Filing Form 8992 isn’t just a “nice to have”—it’s a must if you’re a U.S. shareholder in a CFC, and the IRS takes these deadlines seriously.

Key Dates to Know

• The due date for Form 8992 matches your federal tax return—April 15 for individuals (with Form 1040), or the standard deadline for your corporation or partnership (like Form 1120 or 1065).
• Filing for an extension on your main return? That also extends your deadline for Form 8992.

What Happens If You Miss the Deadline or Make a Mistake?

• Late or incorrect filing can lead to significant penalties, especially if you’re part of a U.S. consolidated group or have multiple CFC interests.
• The IRS may send compliance notices, assess fines, or in extreme cases, disallow certain deductions and credits.

How to Fix Errors

• Amended returns are your friend—if you spot a mistake or need to update your GILTI calculations, file an amended return with the corrected Form 8992 as soon as possible.
• Respond quickly to any IRS compliance notices to minimize penalties and interest.

Stay GILTI-savvy and IRS-ready

Form 8992 may sound intimidating, but getting it right is crucial if you own shares in a foreign corporation. Between GILTI, tested losses, and all those “pro rata” details, even seasoned filers can feel outmatched. Don’t let the paperwork—or the IRS—keep you up at night.

If you’re scratching your head over pro rata shares, tested losses, or the endless GILTI math, Bright!Tax is here to help. We specialize in guiding U.S. expats, global taxpayers, and cross-border businesses through the trickiest IRS forms—so you can focus on your business, not just your tax return. Get in touch and let us make foreign income filing a breeze!

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