I have non-U.S. mutual funds. Do I need to file as a PFIC?

Non-U.S. mutual funds carry additional filing requirements under the PFIC regime.

" A mutual fund that is invested in European stocks, but incorporated in the US may be taxed at a long-term capital gains rate of 15%, but if the US taxpayer buys an identical fund listed outside the US, they will find their investment may be taxed at up to 50%"

The De minimis Exception 

You are not required to report if, on the last day of the year, the aggregate value of all PFIC stocks owned directly or indirectly by the shareholder is $25,000 or less ($50,000 if married filing jointly).

According to the Instructions for Form 8621, "In determining value of these funds, the shareholder may rely on periodic account statements unless they have actual knowledge or accessible information that such statements do not reflect a reasonable estimate of the PFIC’s value."

Where should such investments be indicated on the Tax Questionnaire?

Please go to Passive Income > Investments, then answer Yes to the Do you have investments in a Non-U.S. mutual fund(s) held through a foreign brokerage firm? question.

I have filed a tax return every year but have never filed Form 8621 for my foreign mutual funds (PFIC). What should I do?

To become compliant you’ll need to file Form 8621 to report any PFIC holdings for each year after 2012 (starting with 2013). Then, you’ll need to file amended returns for each of those years, attaching PFIC forms and reporting PFIC income or loss for each year.

The good news: there is no penalty for late PFIC filing.

However, any additional tax owed after the inclusion of PFIC income will be subject to penalties.

Fees for filing Form 8621

Please see www.taxesforexpats.com/fees

Did this answer your question? Thanks for the feedback There was a problem submitting your feedback. Please try again later.

Still need help? Contact Us Contact Us