Why is PFIC reporting necessary?
Passive Foreign Investment Companies (PFICs) must be reported at the fund level on Form 8621.
- Each fund being reported will have its own copy of Form 8621.
- Gains and losses are calculated per fund. This means the loss of one fund will not affect the gain of another fund.
Why is this only needed occasionally?
- If you invest in US-regulated mutual funds, the mutual fund's financial institution will handle this reporting and send you a US Tax Form 1099.
- For foreign-pooled funds, you are responsible for reporting (but you have us to help!).
How does Form 8621 work?
- Form 8621 requires us to track the USD cost basis (using the spot rate) of each purchase to determine any applicable capital gains and losses.
- Additionally, all income (distributed or reinvested into the fund) is also seen as taxable income.
Form 8621 is a complex form that requires a Tax Professional. Our tax team will review your information and prepare the required Form 8621 for each of your PFICs. Please note: there is an additional fee for each copy of Form 8621, as detailed in our Pricing Plans.
How to report PFICs in a Transaction Spreadsheet
We need a transaction history for all your foreign mutual funds, dating back to their initial investments.
- Log in to your account.
- Go to the “PFIC” page.
- Download the “PFIC Transaction Template” spreadsheet: MyExpatTaxes-PFIC-Transaction-Template
- Add your complete transaction history to the template, including:
- All purchases.
- All dividends, reinvestments, and other distributions of any kind.
- All sales.
- Investment
- Date
- Transaction
- Units
- Original Amount
- Local Currency
- Exchange Rate/USD
- Reported this transaction on a US Tax Return
- Upload the completed template.
b. The template should be filled out with rows of your transaction information. The columns are categorized with the following:
This is the fund name.
This is for the INITIAL date of a transaction (even if the transaction is processed or booked later).
This is for listing the type of transaction. We suggest you limit your transaction history reporting to the following transaction types:
Transaction Type | Definition |
Purchase | Buying initial or additional units |
Distribution | Earnings that are distributed (paid out). These earnings are not reinvested (automatically used to purchase additional units of the fund). |
Reinvestment | When the fund’s earnings are automatically used to purchase additional fund units. These earnings are not distributed (paid out). |
Sale | Selling units. |
This is the number of shares added or removed.
This is required when there is a purchase, reinvestment, or sale.
This is not required for distributions, as there should be no change in number of units.
This is the monetary value of the transaction in the original (local) currency.
Transaction Type | Definition |
Purchase | Total purchase price = (purchase price per unit) x (number of units purchased) |
Distribution | The total income earned (dividend, interest, etc.) on this date. |
Reinvestment | Total income earned (dividend, interest, etc.) on this date used to purchase additional units. |
Sale | Total sale price = (sale price per unit) x (number of units sold) |
This is the original (functional) currency of the fund.
No need to fill this out; we fill this out for you!
This is an optional column.
This informs us if you reported this PFIC transaction in previous years.
Typically, we could figure this out based on your prior year’s tax returns.
Is it really necessary to fill in the spreadsheet?
Yes. A completed transaction spreadsheet is essential for us to accurately prepare Form 8621. We know it's a lot of information, but we can only prepare Form 8621 if we have a fully completed transaction history.
You can upgrade for a Tax Professional to provide tailored support on how to fill out this template. However, you are still responsible for completing the entire transaction history.
If you are not able to provide the transaction history, we need to refer you to a PFIC partner. These partners typically charge $165+/hour to convert your fund statements into a template suitable for reporting.
Can I see some examples?
Here are two sample Transaction Spreadsheets.
Example 1: ISA Stock & Shares Spreadsheet
- Income Distribution = Distribution of 314.22 GBP on 2023-12-07
- Income Distribution = Distribution of 136.86 GBP on 2023-07-06
- Rebalance Out = Sale of 41.719 units for 15.27 GBP per unit = 637.05 GBP on 2023-04-13
- … Rebalance In = Purchase of 2,152.74 units for 9.12 GBP per unit = 19,633 GBP on 2020-03-17
Example 2
There are no reinvestments in this example, but if a transaction were used to repurchase units, it would look like a Reinvestment of 135.86 GBP on 2023-07-06 to purchase X units.
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