Cross-Border Tax
US Tax for Startups and Founders with Cross-Border Ties
A Delaware parent with a foreign subsidiary, founders with bank accounts and funds abroad, money from family overseas: each one comes with US filings that carry fixed-dollar penalties, whether or not any tax is owed. We handle the US side and work alongside your accountant abroad on the rest. Our cross-border practice covers the US-India corridor today.
The short answer
If your startup has a foreign subsidiary, the US parent files Form 5471 every year with its federal return, and its pricing for work the subsidiary does needs US-side transfer pricing support. If you are a US person with foreign bank or investment accounts totaling more than $10,000 at any time in the year, you file an FBAR, and often Form 8938, plus Form 8621 for foreign mutual funds. Missing these forms triggers penalties starting at $10,000 per form, even when no tax is due.
Today our cross-border practice covers the US-India corridor, and US-India cross-border tax splits cleanly into two halves. The India side (Indian returns, GST, TDS, corporate filings) belongs to your Indian Chartered Accountant. The US side belongs to us: information returns for the company, reporting for founders and employees, and the planning that keeps the two sides consistent. We cover two groups: companies with an Indian subsidiary, and the founders and team members with accounts, funds, or family in India.
For Companies with an Indian Subsidiary
Most of these companies started in India and flipped to a Delaware C-corp parent to raise US venture capital. The flip makes the Indian company a controlled foreign corporation of the US parent, and the US filings start that year.
Form 5471
Your foreign subsidiary, reported every year
The US parent reports the Indian subsidiary as a controlled foreign corporation (CFC): its income statement and balance sheet in US terms, shareholder and intercompany transactions, and the Subpart F and NCTI (formerly GILTI) schedules. Required from the first year after a Delaware flip, profit or no profit.
Why it matters: $10,000 per foreign corporation per year, up to $50,000 more after an IRS notice, a reduction in foreign tax credits, and an open statute of limitations on the whole return.
Transfer pricing
US-side intercompany pricing
When the Indian subsidiary builds product or runs support for the US parent, the US side needs an intercompany services agreement and a cost-plus markup that holds up under section 482. We set the US-side method, benchmark the markup, and keep the bookkeeping entries matching the agreement.
Why it matters: If the IRS adjusts your pricing, accuracy-related penalties of 20% or 40% of the resulting underpayment can apply when documentation is not in place by the time the return is filed.
Form 5472
When the US company is 25%+ foreign-owned
If an Indian founder, family member, or Indian parent company owns 25% or more of the US entity, the US company reports its transactions with that foreign owner and other foreign related parties on Form 5472. Single-member LLCs owned by a non-US person file it too, with a pro forma Form 1120.
Why it matters: $25,000 per form, plus $25,000 for each 30 days the failure continues more than 90 days after an IRS notice.
Form 1042 / 1042-S
Withholding on payments to foreign persons
When the US company pays US-source income such as interest, dividends, or royalties to foreign people or companies, it acts as the withholding agent. Form 1042 is the annual return; each recipient gets a Form 1042-S. We also collect and review the W-8 forms that support treaty rates.
Why it matters: The company is liable for tax it should have withheld, plus penalties and interest.
Forms 8858 / 8865
Foreign branches and partnerships
Less common for India structures, but required when the US company owns a foreign disregarded entity or branch (Form 8858) or an interest in a foreign partnership, such as an Indian LLP (Form 8865).
Why it matters: These carry the same $10,000 per form per year penalty framework as Form 5471.
For Founders and Employees with India Ties
Once you are a US person, the US taxes your worldwide income and wants to see your foreign accounts. These are the filings that catch Indian founders and team members most often.
FBAR (FinCEN 114)
Foreign bank and investment accounts
US persons report foreign accounts when the combined value is more than $10,000 at any time in the year: savings, NRE, NRO, FCNR, PPF, EPF, demat, and brokerage accounts. Filed with FinCEN, not the IRS.
Why it matters: Non-willful: up to $16,536 per report per year (inflation-adjusted; Bittner v. United States makes it per report, not per account). Willful: the greater of $165,353 or 50% of the balance.
Form 8938
Specified foreign financial assets
Filed with your Form 1040 when foreign assets cross the FATCA thresholds: for single filers living in the US, more than $50,000 at year end or $75,000 at any time; double that for joint filers; $200,000 and $300,000 for single filers living abroad.
Why it matters: $10,000, plus up to $50,000 more after an IRS notice, and a 40% penalty on any underpayment tied to an undisclosed asset.
Form 8621 (PFIC)
Foreign mutual funds, including Indian funds and ULIPs
Indian mutual funds are generally PFICs for US tax purposes. Under the default rules, gains and large distributions are taxed as ordinary income with an interest charge for the years you held the fund. Each fund gets its own Form 8621. We explain and report the tax treatment only.
Why it matters: An unfiled Form 8621 can keep the statute of limitations open on your entire return.
Form 3520
Gifts and inheritances from family abroad
A US person who receives more than $100,000 in a year in gifts or bequests from a nonresident individual or foreign estate, such as parents in India, reports it on Form 3520. The gift is usually not taxable income; the filing is still required.
Why it matters: 5% of the gift for each month the form is late, up to 25%.
Forms 1116 / 8833
Tax treaties and foreign tax credits
Tax you pay in India on Indian income, such as rent, interest, or capital gains, is usually credited against US tax on Form 1116 so the same income is not taxed twice. Where you rely on the India-US treaty to change the US result, Form 8833 discloses that position.
Why it matters: Missed credits mean paying tax twice; an undisclosed treaty position can draw its own penalty.
Residency and catch-up
NRIs, returning NRIs, and missed years
We work through the substantial presence test (31 days this year and 183 weighted days over three years), dual-status years when you move to or from the US, and the US side of a return to India while your CA handles RNOR status. Missed FBARs or foreign income go through the delinquent or streamlined procedures.
Why it matters: Streamlined filing for US residents: a 5% penalty based on the highest aggregate balance of the affected assets, instead of open-ended exposure.
Which Forms Do I Need?
Find your situation, then the form, when it is due, and what we charge to prepare it. Prices are starting points, quoted after a short review.
| Your situation | Form | Due date | Starting at |
|---|---|---|---|
| US C-corp owns a foreign subsidiary (for example in India, including after a Delaware flip) | Form 5471, each subsidiary, each year | With the corporate return: April 15 for calendar-year C-corps, October 15 on extension | Quoted with return |
| Foreign subsidiary provides services to the US parent at cost plus a markup | US-side transfer pricing analysis and intercompany agreement | In place by the time the corporate return is filed | |
| A foreign person or company owns 25% or more of the US company | Form 5472 | With the corporate return, extensions included | Quoted with return |
| US company pays interest, dividends, royalties, or other US-source income to foreign persons | Form 1042 and Form 1042-S | March 15 for the prior calendar year | |
| US person with foreign accounts (such as Indian NRE, NRO or PPF) totaling more than $10,000 at any time | FBAR (FinCEN Form 114) | April 15, automatic extension to October 15 | |
| Foreign financial assets above the Form 8938 thresholds | Form 8938 | With your Form 1040, extensions included | Quoted with return |
| You hold foreign mutual funds (such as Indian mutual funds or certain ULIPs) | Form 8621, one per fund | With your Form 1040 | Quoted with return |
| You received more than $100,000 in gifts or inheritance from family abroad | Form 3520 | April 15, extends with your income tax return | Quoted with return |
| You paid foreign tax on foreign income, or rely on a tax treaty (such as India-US) | Form 1116, and Form 8833 for treaty positions | With your Form 1040 | Quoted with return |
| You missed FBARs or left foreign income off past returns | Delinquent FBAR submission or Streamlined Filing Compliance Procedures | As soon as possible, before the IRS contacts you | Quoted after a short review |
Due dates assume a calendar tax year. For every federal date in one place, see the 2027 startup tax deadline calendar.
How Pricing Works
Cross-border work depends on how many entities, accounts, funds and years are involved, so we quote it for your situation rather than publish a rate card.
Quoted with your return
Forms filed with a tax return: Form 5471, Form 5472, Form 8938, Form 8621 (PFIC), Form 3520, Forms 1116 and 8833, and Forms 8858 and 8865.
Call for quote
Work filed or scoped on its own: FBAR, US-side transfer pricing, Form 1042 and 1042-S, residency questions, and catch-up filings for missed years.
How this fits with a plan
Plans start at $199/mo for Launch (bookkeeping), $349/mo for Foundation, and $799/mo for Growth. Every plan includes a 50% discount on preparation of 1 federal and 1 state return, and cross-border forms are quoted on top. You can also engage us for the forms alone as a one-time project. Every item gets a written quote: 50% is due when the Master Service Agreement and Statement of Work are signed and 50% on completion, and if the work changes, we quote the additional fees by email and bill them on a subsequent invoice once you approve (see our terms). Compare plans.
What We Do Not Do
We handle US-side compliance and planning only. Your Indian Chartered Accountant keeps the India side, and we coordinate with them directly so both sets of filings tell the same story.
- Indian income tax returns
- GST and TDS filings
- ROC and MCA filings
- FEMA and RBI reporting
- Indian transfer pricing documentation
If you do not have an Indian CA yet, ask us on the review call and we can tell you what to look for.
Who Does the Work
Girija Srinivasan, CA
Partner, Cross-Border Tax & Corporate FP&A
Girija leads US-India cross-border tax at StartupCFO. She is a Chartered Accountant with the Institute of Chartered Accountants of India, holds the Grad CWA (Cost Accountant) designation, and brings 15+ years in finance leadership and cross-border compliance. Because she knows both systems, the working sessions with your Indian CA are short and specific.
Aparna Devalla, CPA
Head of Tax & Accounting
Aparna is a Certified Public Accountant who leads the tax and accounting practice at StartupCFO, covering corporate returns, multi-state compliance, and audit-readiness for venture-backed startups. US returns and the cross-border forms filed with them go out under her review.
Short review
A free call where we map your entities, accounts, and India ties to the forms that apply, including any years that were missed.
Fixed quote
You get a price per form and per entity, starting at the rates on this page, before any work starts.
Coordinate with your CA
We collect Indian financials and account statements, agree exchange rates and intercompany numbers with your Indian CA, and build the US filings.
File and calendar
Forms are reviewed and filed with the return, and next year's deadlines go on the calendar so nothing is missed again.
Go Deeper
- The foreign founder's guide to US startup taxes: 5472, 5471, FBAR, and the penalties
- Form 5472 for startups: who files, what to report, and the $25,000 penalty
- International expansion tax: CFCs, Subpart F, and GILTI (now NCTI)
- Form 5472 for foreign-owned US companies
- Missed filings or a penalty notice? Our tax resolution service
- Startup tax and compliance at StartupCFO
Frequently Asked Questions
What does cross-border tax cover for a US startup?
The US filings triggered by anything outside the US: Form 5471 for a foreign subsidiary, transfer pricing for work between the US parent and that subsidiary, Form 5472 when a foreign person owns 25% or more of the US company, Form 1042 for US-source payments to foreign persons, and for founders, FBAR and Form 8938 for foreign accounts, PFIC reporting for foreign funds, Form 3520 for gifts from abroad, and treaty and foreign tax credit positions. These forms are the same whichever country is involved, and most carry penalties of $10,000 or more per form even when no tax is due.
Which countries do you cover?
Today our cross-border practice serves the US-India corridor: US companies with Indian subsidiaries, and founders with Indian accounts, investments, income or family. We handle the US side and coordinate with your Indian Chartered Accountant on the India side. If your ties are to another country, ask us: the US forms are the same, and we will tell you plainly whether we can take it on.
Do I need to file FBAR for my NRE account?
If you are a US person (a citizen, green card holder, or someone who meets the substantial presence test) and the combined value of all your foreign financial accounts was more than $10,000 at any point in the year, yes. NRE, NRO, and FCNR accounts all count, and PPF, EPF, demat, and brokerage accounts often do too. The $10,000 test is aggregate, so three Indian accounts at $4,000 each trigger it. Interest on an NRE account is tax-free in India, but a US resident still reports it as income on the US return. The FBAR is due April 15 with an automatic extension to October 15.
Does a Delaware company with a foreign subsidiary, such as in India, need to file Form 5471?
Yes. A US corporation that controls a foreign corporation files Form 5471 for that subsidiary every year, attached to its own federal return, even if the subsidiary made no profit and paid no dividends. This is the standard result after a Delaware flip, where the Indian company becomes a wholly owned subsidiary of the US parent. The penalty for a missing or incomplete form is $10,000 per foreign corporation per year, plus up to $50,000 more if it is not fixed after an IRS notice, and the statute of limitations on the whole return can stay open until the form is filed.
Are Indian mutual funds PFICs?
Generally, yes. Indian mutual funds are usually foreign corporations for US tax purposes that hold mostly passive assets, which makes them passive foreign investment companies (PFICs) for US shareholders. Some ULIPs raise the same question depending on how they are structured. Under the default PFIC rules, gains and large distributions are taxed as ordinary income and spread back over your holding period with an interest charge, and each fund is reported on Form 8621. A small-holdings exception can apply when total PFIC value is $25,000 or less ($50,000 on a joint return) and nothing was sold or distributed. We explain and report the tax treatment; whether to hold or sell any fund is your decision.
What happens if I missed FBAR filings?
It depends on whether income was also left off your US returns and whether the miss was non-willful. If all the income was reported and you are not under IRS examination, the delinquent FBAR submission procedures let you file the late FBARs with a statement explaining why. If income was unreported and the miss was non-willful, the Streamlined Filing Compliance Procedures are usually the path: for US residents that means 3 years of amended returns, 6 years of FBARs, and a 5% penalty based on the highest aggregate balance of the affected foreign assets. Since Bittner v. United States (2023), the non-willful FBAR penalty applies per report, not per account. See our tax resolution service for help with a missed-filing cleanup.
Do you file my Indian tax return?
No. We handle US-side compliance and planning only. Your Indian Chartered Accountant files your Indian income tax return and handles GST, TDS, ROC and MCA filings, FEMA and RBI reporting, and Indian transfer pricing documentation. We work directly with your CA so the two sides use the same numbers, the same exchange rates, and consistent treaty positions.
Does GILTI still apply to my Indian subsidiary?
The One Big Beautiful Bill Act (Public Law 119-21) renamed GILTI to net CFC tested income (NCTI) for foreign corporation tax years beginning after December 31, 2025, and changed the calculation, most notably by removing the exclusion for a deemed return on tangible assets. The core idea is the same: a US shareholder can owe current US tax on certain income of a controlled foreign corporation even when no cash comes back. For many early-stage Indian subsidiaries run on a cost-plus basis the inclusion is small, but it is computed every year on Form 5471 and the related schedules.
Do we file Form 1042 when we pay contractors in India?
Usually not for the services themselves. Payments for services performed entirely outside the US are generally foreign-source income, so there is no US withholding, though you should still collect a Form W-8BEN or W-8BEN-E from each contractor. Form 1042 and Form 1042-S come in when a US company pays US-source income such as interest, dividends, royalties, or fees for work done in the US to a foreign person. They are due March 15 for the prior calendar year.
Do I need a StartupCFO plan to use this service?
No. Cross-border forms can be a one-time project or an add-on to a plan. Plans start at $199/mo for Launch (bookkeeping, no CFO), $349/mo for Foundation, and $799/mo for Growth, and every plan includes a 50% discount on preparation of 1 federal and 1 state return. Cross-border forms are quoted separately: with your return for forms filed with it, or after a short call for everything else.
Get the US Side Right
Book a free cross-border review. We will map your entities and accounts to the forms that apply, flag anything missed in past years, and quote each filing before any work starts.
Keep learning
International Expansion Tax: GILTI, Subpart F, and Transfer Pricing for Your First Foreign Subsidiary
Setting up a UK, Canadian, or Singaporean subsidiary changes your US tax position dramatically. GILTI, Subpart F, and transfer pricing rules turn 'we have a foreign office' into a multi-jurisdiction tax compliance burden.
InsightThe Foreign Founder's Guide to US Startup Taxes: Forms 5472, 5471, FBAR, and the Penalties That Actually Hit
Foreign founders of US startups face fixed-dollar information reporting penalties that ignore income: $25,000 for a missed Form 5472, $10,000 for Form 5471, FBAR exposure for foreign accounts. Here is every form, deadline, and penalty, and how to stay clean.
GlossaryTransfer Pricing
IRS rule requiring related-party transactions to be priced at arm's length.
GuideForm 5472 for Foreign-Owned Startups: The 25% Test and the $25,000 Penalty
One foreign person at 25% of vote or value, or a foreign-owned single-member LLC, triggers Form 5472. The filing takes an afternoon; missing it costs $25,000 per year with an uncapped continuation penalty.
InsightForm 5472 for Startups: Who Files, What Counts, and the $25,000 Penalty
Form 5472 carries a $25,000 penalty that ignores income entirely. Here is who must file, what a reportable transaction is, how the pro forma 1120 works for foreign-owned LLCs, and how to fix a missed year.
