IRS Form 8992, which helps certain U.S. shareholders calculate income from controlled foreign corporations. The rules are especially important for U.S. taxpayers who own interests in foreign companies, because some foreign earnings may need to be reported on a U.S. tax return even when the money has not been distributed. The IRS currently provides Form 8992 and related schedules for this calculation.

What Is IRS Form 8992?

Owning a business outside the United States can create additional tax reporting responsibilities for U.S. taxpayers. Even if a foreign company keeps its profits overseas rather than paying them to its U.S. owners, certain income may still have to be reported on a U.S. tax return.

IRS Form 8992, U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI), is used to calculate certain income inclusions associated with controlled foreign corporations (CFCs). The calculation is part of the federal rules designed to address income earned through foreign corporations controlled by U.S. shareholders.

For taxpayers with foreign business interests, understanding Form 8992 can help prevent reporting errors and identify when professional international tax assistance may be necessary.

The terminology and underlying rules have changed over time. For tax years beginning in 2026, taxpayers should review the latest IRS guidance and current law rather than automatically relying on prior-year calculations.

What Is a Controlled Foreign Corporation?

A controlled foreign corporation is generally a foreign corporation in which U.S. shareholders collectively own more than 50% of the total voting power or value, applying specific tax-law ownership rules.

A U.S. shareholder for these purposes generally includes a U.S. person who owns at least 10% of the foreign corporation’s voting power or value, subject to the applicable rules.

Ownership can involve more than directly holding shares. Certain indirect and constructive ownership rules may affect whether a person qualifies as a U.S. shareholder and whether a foreign corporation is classified as a CFC.

For example, an American business owner might hold shares in a corporation organized in another country. If the ownership structure meets the applicable requirements, the foreign company may be a CFC, and the U.S. owner may have additional tax filing obligations.

These rules can apply to individuals, domestic corporations, and certain other U.S. taxpayers. The correct treatment depends on the taxpayer’s ownership, entity structure, and applicable tax year.

Why Does GILTI Matter?

GILTI was designed to prevent certain foreign earnings from escaping current U.S. taxation simply because the earnings remain inside a foreign corporation.

Under the rules applicable to earlier tax years, qualifying U.S. shareholders generally calculate their share of net CFC tested income under Section 951A. That calculation can create a U.S. income inclusion even when the foreign company does not distribute a dividend.

For tax years beginning after 2025, legislation has changed aspects of the Section 951A rules, including terminology and the calculation framework. Taxpayers should therefore confirm the rules that apply to the specific tax year being filed.

The important practical point is that foreign business income is not automatically exempt from U.S. tax just because it is earned or retained overseas.

Who May Need to File Form 8992?

Form 8992 generally applies to a U.S. shareholder who meets the relevant ownership and CFC requirements for the foreign corporation’s tax year.

Taxpayers who may need to investigate their filing responsibilities include:

• U.S. individuals who own qualifying interests in foreign corporations.
• Domestic corporations with controlled foreign subsidiaries.
• U.S. shareholders with indirect ownership through other entities.
• Certain shareholders who receive information from foreign companies or related entities about their earnings and losses.
• Members of a U.S. consolidated corporate group with interests in CFCs.

Not every person who owns a foreign investment needs Form 8992. For example, a small investment in a publicly traded foreign company will not automatically make the investor a U.S. shareholder of a CFC. The specific ownership and control rules matter.

Also, filing Form 8992 is only one part of international tax compliance. Depending on the circumstances, other forms—such as Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations—may also be required.

How Do You Complete Form 8992?

Form 8992 relies on detailed information about foreign corporations, ownership percentages, tested income, tested losses, and related calculations. It should be completed using the form and instructions applicable to the tax year.

Step 1: Identify the foreign corporation and ownership structure

Determine which foreign corporations may be CFCs and whether the taxpayer qualifies as a U.S. shareholder. Review direct, indirect, and constructive ownership where applicable.

Step 2: Gather the foreign company’s financial information

Obtain the records needed to determine the relevant income, losses, deductions, and other tax items. Foreign financial statements may require adjustments to follow U.S. tax rules.

Step 3: Complete the appropriate schedule

For a shareholder who is not part of a U.S. consolidated group, Schedule A generally reports information for each applicable CFC and helps determine the shareholder’s share of the relevant amounts.

A U.S. consolidated group generally uses Schedule B to calculate the amounts attributable to its members, following the applicable instructions.

The IRS also provides specific reporting rules for domestic partnerships. Under the published instructions, domestic partnerships generally report relevant information through Schedule K-2 and Schedule K-3 rather than completing Form 8992 or Schedule A themselves.

Step 4: Calculate the income inclusion

Use the applicable Form 8992 calculation to determine the amount that must be included under the relevant Section 951A rules. The computation can involve net tested income, net tested losses, and other adjustments specified by law.

Do not assume that a foreign company’s accounting profit automatically equals the amount included on the U.S. tax return.

Step 5: Transfer the result to the appropriate tax return

The final amount is reported on the applicable U.S. tax return or schedule, depending on the taxpayer’s type. Individuals and corporations may report the amount differently.

Certain corporations may also need to evaluate whether a deduction under Section 250 is available and complete Form 8993, subject to the current eligibility and calculation rules.

Common Form 8992 Mistakes to Avoid

International tax reporting can become complicated when a taxpayer owns multiple foreign entities or receives incomplete financial information. Common problems include:

• Failing to recognize that a foreign corporation meets the CFC definition.
• Overlooking indirect or constructive ownership.
• Assuming that retained foreign earnings never affect a U.S. tax return.
• Using foreign accounting income without the required U.S. tax adjustments.
• Confusing Form 8992 with Form 5471 or Form 8993.
• Reusing prior-year calculations without checking changes in the law.
• Missing related international information-return requirements.

Organizing ownership records, financial statements, tax workpapers, and foreign-company information early can make tax preparation more accurate and efficient.

How AIM Financial Can Help With Tax Preparation

Foreign business ownership can create tax obligations that are not obvious from an ordinary U.S. income tax return. Identifying the right forms and understanding the applicable tax rules are important steps in preparing an accurate filing.

AIM Financial helps taxpayers organize tax information and address their tax preparation needs. If you live or operate a business in Grand Rapids, Kentwood, Wyoming, or elsewhere in West Michigan, contact AIM Financial to discuss your tax preparation questions and determine what information may be needed for your return.

If you have foreign business interests, ownership in an overseas corporation, or questions about international tax reporting, gathering your ownership documents and foreign financial records before filing can be a useful first step.

Contact AIM Financial for tax preparation assistance and help understanding the records needed for your federal tax return.

Disclaimer: This article is for general educational purposes and is not individualized tax or legal advice. Form 8992 requirements depend on ownership, entity structure, the tax year, and current law. Consult the latest IRS forms and instructions or a qualified international tax professional for advice about your circumstances.