My Spouse Owns a Canadian Corporation. Do I File Form 5471?

Yes, most likely. If you are a US person (citizen, green card holder, or US tax resident) and your spouse owns 10% or more of a Canadian corporation, IRC 958(b)(1) treats you as owning those same shares. That attributed ownership can make the corporation a controlled foreign corporation, which triggers Form 5471, a potential GILTI inclusion, and everything that goes with them. You do not need to hold a single share directly.

How does the attribution work?

Two provisions, read together. IRC 958(b)(1) says that for the purpose of determining who is a US shareholder under IRC 951(b), the constructive ownership rules of IRC 318(a) apply “to the extent that the effect is to treat any United States person as a United States shareholder.” And IRC 318(a)(1)(A)(i) says an individual is considered as owning the stock owned, directly or indirectly, by or for their spouse.

“For purposes of sections 951(b), 954(d)(3), and 956(c)(2), section 318(a) (relating to constructive ownership of stock) shall apply to the extent that the effect is to treat any United States person as a United States shareholder.” IRC 958(b)(1)

“An individual shall be considered as owning the stock owned, directly or indirectly, by or for — (i) his spouse (other than a spouse who is legally separated from the individual under a decree of divorce or of separate maintenance)” IRC 318(a)(1)(A)(i)

So the chain runs: your spouse owns shares of a foreign corporation, IRC 318(a)(1) attributes those shares to you, IRC 958(b)(1) uses that attribution to test whether you are a US shareholder, and if the attributed ownership reaches 10% or more of vote or value, you are one.

A US shareholder, under IRC 951(b), is a United States person who owns 10% or more of the total combined voting power of all classes of stock entitled to vote, or 10% or more of the total value of all shares. A controlled foreign corporation, under IRC 957(a), is a foreign corporation where US shareholders together own more than 50% of vote or value. When your spouse owns 100% of the corporation and attribution gives you 100%, both tests are met on your attributed ownership alone.

What are the consequences?

The consequences are the same as if you owned the shares directly, because the attribution makes them yours for these purposes.

Form 5471. Category 4 (you control the corporation: more than 50% of vote or value at any time) or Category 5 (you are a US shareholder of a CFC). The filing attaches to your US income tax return. Missing it carries a $10,000 penalty per year, per corporation, and the statute of limitations on your entire return stays open until you file it.

GILTI (net CFC tested income from 2026). Under IRC 951A, a US shareholder of a CFC includes in income its pro rata share of the CFC’s tested income. For a Canadian operating company with real employees, real assets, and income taxed by Canada at corporate rates, the section 250 deduction (40% from 2026), the section 960(d) deemed paid credit, and for 2025 the qualified business asset investment can reduce or eliminate the US tax. But the reporting is owed regardless. The mechanics live in the GILTI guide.

Subpart F income. If the Canadian corporation earns passive income (investment income, rent from related parties, certain service income), IRC 951(a) can pick it up as Subpart F income, included in your US income on a current basis regardless of whether the corporation distributes anything.

Form 8992. The form that computes GILTI, attached to your return alongside the 5471.

Does it matter that my spouse isn’t American?

No. The attribution runs from your spouse’s ownership to you, and it is your US-person status that makes the result matter. Whether your spouse is Canadian, a dual citizen, or a non-resident alien does not affect the attribution itself. What matters is that you are a United States person and, through attribution, you own 10% or more.

One fact pattern that makes things worse rather than better: if your non-US spouse elects under IRC 6013(g) or (h) to file a joint return with you, that election treats them as a US resident for the year, which makes them a United States person for the purposes of IRC 951(b). Now the corporation has a US shareholder both through your attributed ownership and through your spouse’s direct ownership. Both of you may owe Form 5471. The first-year election guide flags this as one of the trade-offs.

Can anything reduce the US tax on my spouse’s corporation’s income?

For a Canadian corporation paying combined federal-provincial corporate tax in the 25% to 27% range, the deemed paid credit under section 960(d) can be large enough to push the net US tax to zero or close to it. But a section 962 election is often needed for an individual shareholder to access the corporate-rate mechanics and the deemed paid credit, and that election has its own reporting. The GILTI guide works through the numbers.

For 2025, three things work together: the qualified business asset investment (QBAI) shelters a routine return on the corporation’s tangible depreciable assets, the section 250 deduction takes 50% of the GILTI inclusion off the top, and the deemed paid credit picks up 80% of the Canadian corporate tax already paid on the tested income.

For 2026 and later, the QBAI is gone. The section 250 deduction drops to 40%. The deemed paid credit percentage rises from 80% to 90%. Whether the Canadian corporate tax rate still washes the US inclusion depends on the specific facts, and the answer changed with the July 2025 Act.

Reducing the tax to zero does not reduce the filing to zero. Form 5471 and Form 8992 are owed regardless of the tax outcome.

What should I do next?

Confirm the ownership. If your spouse owns 10% or more of a Canadian corporation and you are a US person, attribution applies and the filing is owed. Check whether you have been including Form 5471 with your US returns. If not, the 5471 guide covers the penalty exposure and the catch-up routes. If you and your spouse are considering a joint-filing election under IRC 6013(g), factor in what that does to the corporation before you make the election.

• Do I have to file Form 5471 for my Canadian corporation?, the full 5471 rundown including penalties and catch-up
• GILTI / net CFC tested income for a Canadian corporation, the income inclusion mechanics
• What happens to a Canadian corporation when you move to the US?, the broader corporate story on a cross-border move
• Dual-status return or full-year election in your first US year, where the 6013(g) trade-off lives

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.