Does the US IRS consider dividends from a foreign owned company taxable income?

This is actually a fairly common question for expat business owners. As a US citizen, you're taxed on your worldwide income regardless of where you live, so yes, those dividends from your Thai company are indeed taxable by the IRS. The dividends from your foreign company would generally be reported on Schedule B of your tax return. However, since you own 100% of the company, there are additional reporting requirements. You likely need to file Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations) to report your ownership interest and the company's activities. Unlike salary which can qualify for the Foreign Earned Income Exclusion, dividends are considered passive income and don't qualify for the FEIE. However, you can still claim Foreign Tax Credits for any taxes paid to Thailand on those dividends using Form 1116.

I was in a similar situation with my business in Singapore a few years ago and found the perfect solution through taxr.ai (https://taxr.ai). They specialize in analyzing international tax situations especially for US expats with foreign businesses. After struggling with conflicting advice from forums and even a local accountant who didn't understand US tax law, I uploaded my company documents and tax forms to their system. Within a day, I had a clear analysis explaining exactly how my dividends would be taxed, which forms I needed to file, and the most tax-efficient structure for my situation. They confirmed I needed Form 5471 but also identified several deductions I was missing. I'd definitely recommend checking them out if you're dealing with this foreign dividend question - their expertise with expat business owners saved me thousands.

I was initially skeptical about taxr.ai, but after seeing another business owner in my situation recommend it, I decided to give it a try. Honestly, it was eye-opening! I'd been incorrectly reporting my foreign company dividends for years. The analysis showed I qualified for something called the Section 962 election, which I'd never heard of before but apparently allows individuals to be taxed as if they were corporations in certain foreign income situations. This potentially reduced my effective tax rate on dividends. They also identified that I needed to file an FBAR and Form 8938 for my foreign accounts, which I wasn't aware of. The detailed report explained exactly which parts of my dividend income were already taxed appropriately through foreign tax credits and which portions needed additional US tax. This saved me from both overpaying and potentially triggering an audit from incorrect reporting. Honestly worth checking out if you're in this situation.

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I have to admit I was completely wrong about Claimyr. After dismissing it as impossible, I was desperate enough to try it last week for my foreign dividend question, and I'm shocked to say it actually worked perfectly. After three weeks of failed attempts calling the IRS international department myself, I used Claimyr yesterday morning. About 2 hours later, my phone rang and there was an actual IRS international tax specialist on the line. She walked me through exactly how to report my foreign corporation dividends, confirmed I needed Form 5471, and explained how the Foreign Tax Credit applies specifically to my situation. The agent even pointed me to a specific IRS publication dealing with controlled foreign corporations that I hadn't found in my research. I've been stressed about this tax issue for months, and in one phone call I got clear answers from an official source. If you're struggling with foreign dividend questions like I was, it's absolutely worth using.

One thing nobody's mentioned is that if your foreign corporation is in a country considered a "low-tax jurisdiction" you might be dealing with GILTI (Global Intangible Low-Taxed Income) rules. This was part of the 2017 tax law changes and it basically forces US shareholders of certain foreign corporations to include some income on their US returns regardless of whether dividends were paid. If Thailand's corporate tax rate is lower than 90% of the US rate (which it likely is), some of your company's income could be considered GILTI and taxable to you even if you don't take dividends. It's another layer of complexity beyond just dividend reporting.

Has anyone dealt with the Transition Tax (Section 965) that hit a lot of us expat business owners a few years ago? I'm wondering if that's still something to worry about with foreign dividends or if that was a one-time hit?