GILTI Tax eff Jan 1st, 2018

GILTI (Global Intangible Low-Taxed Income) effective January 1, 2018


Form 8992 is used to disclose the calculation. It basically is your share of Controlled Foreign Corporation (CFC)** Income which, prior to 2018, was just disclosed on Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations). It was a Balance Sheet and Income Statement. Just a disclosure, no tax. Until the profits were paid there was no tax on a personal tax return Form 1040.

          Effective January 1, 2018, this income is now taxed. The good part of that is, when you take it out later, it is not taxed.

                The final regulations (318 pages) were issued June 14, 2019.

          The Form 5471 is still required. The figures are taken from it to prepare the Form 8992.

          GENERALLY for individuals this income is taxed at the taxpayer's highest marginal rate including this income. If a taxpayer’s marginal rate is higher than 21%, in order to obtain this lower rate an election has to be made under Section 962 (just a statement included with the Form 1040).

          The above is presented more as a concept. The law is extremely complex. Many of the 318 pages also refer to other code sections that are hundreds of pages!


** CFC Controlled Foreign Corporation is when U.S. shareholders have 50 percent or more of the control of that corporation. If control is less than 50%, The Form 5471 may still apply (for disclosure) but the GILTI tax Form 8992 is not required.