IRS Form 8992 – In today’s global economy, U.S. taxpayers with interests in foreign corporations often face complex tax obligations. One key provision is the Global Intangible Low-Taxed Income (GILTI) regime, introduced under the Tax Cuts and Jobs Act (TCJA) of 2017. IRS Form 8992 plays a crucial role in helping U.S. shareholders compute their GILTI inclusion, ensuring compliance with U.S. tax laws. This article breaks down everything you need to know about Form 8992, including its purpose, who must file it, and step-by-step calculation guidance. Whether you’re a business owner, tax professional, or expat with foreign investments, understanding GILTI can help minimize surprises during tax season.
What Is Global Intangible Low-Taxed Income (GILTI)?
GILTI is a tax on the excess income earned by controlled foreign corporations (CFCs) that exceeds a routine return on tangible assets. It’s designed to prevent U.S. companies from shifting profits to low-tax jurisdictions through intangible assets like patents, trademarks, and copyrights. Essentially, GILTI ensures that U.S. shareholders pay tax on certain foreign earnings annually, even if those profits aren’t distributed as dividends.
Under section 951A of the Internal Revenue Code, GILTI is calculated as the U.S. shareholder’s net CFC tested income minus a 10% return on qualified business asset investment (QBAI), adjusted for specified interest expenses. This provision applies to U.S. persons who own at least 10% of a CFC, including individuals, corporations, partnerships, and trusts. For expats running businesses abroad, GILTI can significantly impact their tax liability, but strategic elections—like the high-tax exception under section 962—may reduce or eliminate the tax.
Who Must File IRS Form 8992?
Not every taxpayer needs to file Form 8992, but it’s mandatory for specific U.S. shareholders of CFCs. Here’s a breakdown:
- U.S. Shareholders: Any U.S. person owning 10% or more (by vote or value) of a foreign corporation that qualifies as a CFC at any point during the tax year. This includes direct, indirect, or constructive ownership under section 958.
- Consolidated Groups: Members of a U.S. consolidated group file a single consolidated Form 8992 with their group return, but prepare separate forms for internal calculations.
- S Corporations and Partnerships: S corps electing entity treatment and partners in domestic partnerships must file if they meet the U.S. shareholder criteria.
- Exemptions: If the net CFC tested income is zero or negative, you may stop after Part I, line 3. However, filing is still required if you own CFC stock.
Form 8992 must be attached to your income tax return (e.g., Form 1040, 1120, or 1120-S) by the due date, including extensions. Failure to file can result in penalties under sections 6038(b) and (c).
For U.S. expats, GILTI often applies to small business owners with foreign corporations. If you’re an American living in Indonesia (like in Medan), consult a tax advisor familiar with both U.S. and local laws to navigate dual tax obligations.
Key Components of IRS Form 8992
Form 8992 is structured into two main parts, with supporting schedules:
- Header: Includes the filer’s name, identifying number (SSN or EIN), and details about the U.S. shareholder.
- Part I: Net CFC Tested Income
- Line 1: Sum of pro rata share of net tested income from Schedule A or B.
- Line 2: Sum of pro rata share of net tested loss.
- Line 3: Net CFC tested income (Line 1 minus Line 2). If zero or less, stop here.
- Part II: Calculation of GILTI
- Line 1: Net CFC tested income from Part I.
- Line 2: Deemed Tangible Income Return (DTIR) – 10% of QBAI.
- Line 3: Specified interest expense (tested expense minus income).
- Line 4: Net DTIR (Line 2 minus Line 3c).
- Line 5: GILTI inclusion (Line 1 minus Line 4).
Supporting Schedules
- Schedule A: For non-consolidated filers. Reports pro rata shares of tested income, loss, QBAI, and interest items for each CFC. Columns include CFC name, EIN, tested income/loss, QBAI, and GILTI allocation ratios.
- Schedule B: For consolidated groups. Details per-member and per-CFC data, with aggregations for the group.
Data for these schedules comes from Schedule I-1 of Form 5471, which must be filed for each CFC.
Step-by-Step Guide to Calculating GILTI on Form 8992
Calculating GILTI requires gathering data from Form 5471. Here’s a simplified process:
- Determine Pro Rata Shares: Use regulations under section 1.951A-1(d) to calculate your share of tested income, loss, QBAI, and interest items.
- Complete Schedule A or B: Enter CFC details and totals.
- Fill Part I: Compute net CFC tested income.
- Fill Part II (If Applicable): Calculate DTIR (10% of QBAI), subtract specified interest, and arrive at GILTI.
- Report on Your Return: Include the GILTI amount on your tax form (e.g., Form 1120 Schedule C, line 17 for corporations).
| Key Term | Definition | Source on Form 5471 |
|---|---|---|
| Tested Income | Positive amount from line 6, Schedule I-1 | Line 6 |
| Tested Loss | Negative amount from line 6, Schedule I-1 | Line 6 |
| QBAI | Qualified business asset investment (tested income CFCs only) | Line 8 |
| Tested Interest Expense | From line 9d, Schedule I-1 | Line 9d |
| Tested Interest Income | From line 10c, Schedule I-1 | Line 10c |
For corrections, file an amended return marked “Corrected” with a statement of changes.
Related Forms and Reporting Requirements
GILTI reporting doesn’t stop at Form 8992. You’ll likely need:
- Form 5471: Information return for foreign corporations, including Schedule I-1 for GILTI data.
- Form 8993: For the section 250 deduction on GILTI and foreign-derived intangible income (FDII).
- Form 8833: If claiming a treaty-based position to reduce GILTI.
U.S. shareholders may also qualify for a 50% deduction under section 250, effectively taxing GILTI at 10.5% for corporations (as of 2026 rates).
Recent Updates and Compliance Tips
As of 2026, there are no major changes to Form 8992, but always check the IRS website for updates. The form was last revised in December 2022. For compliance:
- Use computer-generated forms that match IRS specifications (see Pub. 1167).
- Maintain records of calculations, as differences between Form 8992 and related studies may occur.
- Consider professional help, especially for complex ownership structures or expat scenarios.
- Explore elections like the GILTI high-tax exclusion to potentially exempt income taxed above 18.9% abroad.
Conclusion
IRS Form 8992 is essential for U.S. shareholders navigating GILTI rules, helping ensure accurate reporting of foreign income. By understanding the calculations and filing requirements, you can avoid penalties and optimize your tax position. For the latest form, download it from the IRS website. If your situation involves international business, consult a qualified tax advisor to tailor strategies to your needs. Staying informed on GILTI can turn a complex obligation into a manageable part of your financial planning.