What is Form 8621 and do US expats need to file it?

Published on: May 11, 2026

In this article

You need to file Form 8621 if you own foreign investments classified as PFICs, such as many non-US mutual funds or ETFs. For the 2025 tax year filed in 2026, a separate form is required for each PFIC, even if no income was received in some cases.

The form itself isn’t the real issue. The underlying investment is. Form 8621 is simply how the IRS keeps track of those holdings.

Do I need to file Form 8621 as a US expat?

You need to file Form 8621 if you own shares in a foreign corporation classified as a Passive Foreign Investment Company (PFIC). If your investments include foreign pooled funds, there’s a strong chance this applies to you.

You likely need Form 8621 if:

You own foreign mutual funds or ETFs
You invested through a non-US brokerage account
You hold funds inside foreign accounts like the UK’s ISAs or similar structures
You received distributions or sold foreign fund shares

Some expats assume small investments are ignored. There are thresholds, but they are narrower than expected and don’t always apply if income or gains are involved.

Do I need to file Form 8621 if I didn’t receive any income?

Yes, filing may still be required even if you didn’t receive income or sell the investment. This happens because some PFIC reporting rules are based on ownership rather than activity. Many assume that filing Form 8621 is only triggered by dividends or capital gains. That’s not always the case.

Here are some situations where filing may still apply:

The investment remained in your portfolio for the entire year
No dividends or distributions were paid
No shares were sold

There are exceptions, especially for smaller holdings, but these do not always apply, especially if the investment generates income in future years.

Threshold-based exceptions for filing Form 8621:

Filing status	Threshold
Single filer	Up to US$25,000 total PFIC value
Married filing jointly	Up to US$50,000 total PFIC value

These thresholds generally apply to the total value of your PFIC holdings, not each individual fund. They may not apply if you received an excess distribution, sold or disposed of PFIC shares, or made certain PFIC elections. Full details are available in the IRS instructions for Form 8621.

Some expats rely heavily on these thresholds, especially for smaller portfolios. Others prefer to file regardless, simply to keep their tax records consistent. Both approaches exist, but the latter tends to avoid complications later.

Do I need to file Form 8621 for each investment?

Yes, you must file a separate Form 8621 for each PFIC investment you own. The IRS treats each fund as a separate reporting unit, even if all investments are held in the same account.

Indirect ownership can also count. If your investment is held through another structure, it may still require reporting depending on the underlying assets.

This is one reason PFIC reporting feels disproportionate for many expats. A relatively simple portfolio can result in multiple forms.

What is a PFIC and why does it trigger Form 8621?

A PFIC is a foreign corporation that earns mostly passive income or holds passive assets, which triggers special US tax and reporting rules. In short, if an investment is classified as a PFIC, it falls under a separate set of US tax rules.

PFIC classification tests:

Test	Criteria
Income test	75% or more of income is passive (e.g., dividends, interest, or capital gains)
Asset test	50% or more of assets produce passive income or are held for the production of passive income.

You don’t always need to calculate this yourself. In practice, many foreign pooled investments already meet these conditions.

PFIC rules were created to stop people from delaying US tax by investing through foreign companies. However, in practice, they often affect everyday investors using local funds, not just those intentionally trying to avoid tax. This is something we see regularly with US expats who invest through non-US platforms.

What types of foreign investments require Form 8621?

Foreign mutual funds, ETFs, and pooled investment vehicles are the most common investments that require Form 8621. These are widely used outside the US and are often recommended by local advisors.

Common investments that trigger Form 8621:

Foreign mutual funds
Non-US ETFs
Managed investment portfolios

Investments that do NOT trigger Form 8621:

Individual foreign stocks
Direct real estate ownership
Cash accounts

The key difference is structure. Investment funds pool investor money and mainly earn passive income, which often makes them PFICs. Individual stocks are less likely to be PFICs, but a foreign company can still be treated as a PFIC if it meets the passive income or passive asset test.

Quick guide: Do I likely need Form 8621?

Situation	Likely result
I own a non-US ETF	Likely Form 8621 filing
I own a UK ISA with foreign funds	Likely Form 8621 filing
I own individual foreign company shares	Usually not a PFIC
I only hold foreign cash bank accounts	Usually no Form 8621, but FBAR may apply
I sold a foreign mutual fund	Likely Form 8621 reporting

How do I know if my investment is a PFIC?

You determine if an investment is a PFIC by reviewing its income and asset composition, although in practice, many foreign funds are assumed to qualify.

How to assess if an investment may be a PFIC:

Identify the type of investment
If it is a foreign mutual fund or ETF, it is often treated as a PFIC under US tax rules.
Review the fund’s official documents
Check annual reports or prospectuses to understand how the fund earns income. Look for references to passive income, such as dividends or interest.
Check for a PFIC statement
Some funds provide a PFIC Annual Information Statement. This document confirms PFIC status and helps with IRS reporting.
Seek professional advice if the classification is unclear
If the investment structure or income type is difficult to interpret, a tax professional can confirm whether PFIC rules apply.

Note: Some foreign fund providers do not explicitly state whether their investments are PFICs. This makes it harder to determine PFIC status, especially for self-directed investors who rely on publicly available information.

What is an example of a PFIC?

A common example of a PFIC is a foreign mutual fund or ETF held through a non-US brokerage account.

Example 1: Foreign mutual fund (clear PFIC case)

A US expat living in the UK invests in a UK-based mutual fund through a local brokerage account. The fund pools money from many investors and invests in a range of stocks. It earns income mainly from dividends and capital gains.

Because the fund’s income is primarily passive and it is structured as an investment vehicle, it is generally classified as a PFIC under US tax rules.

Example 2: Foreign ETF (same logic, different label)

A US expat in Australia buys shares in an Australian ETF listed on the local exchange. The ETF tracks a stock index and earns returns from dividends and market gains rather than running an active business.

Since the income is mostly passive and the ETF pools investor funds, it is typically treated as a PFIC.

Example 3: Investment that may not be a PFIC

A US expat buys shares in an individual foreign company, such as a manufacturing business. The company generates income through active business operations and product sales.

Because the company earns active business income rather than primarily passive income, this type of investment is generally less likely to be classified as a PFIC. However, PFIC status ultimately depends on the company’s income and asset composition under IRS rules.

How is PFIC income taxed for US expats?

PFIC income is taxed under special rules that can lead to higher tax and more complex calculations unless specific elections are made.

There are three main methods, each with different outcomes.

PFIC taxation methods:

Method	Description
Default (excess distribution)	Income allocated across prior years, often resulting in higher tax
QEF election	Taxed annually on your share of the fund’s income
Mark-to-market	Annual taxation based on changes in market value

What this means in practice:

The default method is usually the least favorable and applies automatically if no election is made
The QEF election can simplify timing, but requires detailed reporting from the fund
The mark-to-market method works best for publicly traded funds

Most expats fall into the default system simply because the other options are not always available.

Why is PFIC taxation considered complex or unfavorable?

PFIC taxation is considered complex because it combines detailed reporting, multiple tax methods, and potentially higher tax outcomes.

Key challenges:

Multiple reporting requirements
Different tax treatment depending on the method
Calculations that may span multiple years
Separate reporting for each investment

Many expats don’t anticipate this level of complexity when investing locally. The system is not intuitive, especially when compared to domestic investment rules.

There is some debate around this. Some see the rules as necessary to prevent offshore tax deferral. Others argue they affect ordinary investors more than intended.

What happens if I don’t file Form 8621?

Failing to file Form 8621 can keep your tax return open indefinitely for IRS review. This is because the statute of limitations does not fully close until all required forms are filed.

There is no standard standalone penalty for missing Form 8621 in every case. However, not filing it can lead to broader issues, such as extended audit risk and complications in reporting PFIC income correctly.

Potential outcomes:

Tax return remains open for review
Increased scrutiny from the IRS
Delays in resolving tax matters

The bigger issue is uncertainty. An incomplete filing can remain open for years, which is not ideal from a compliance standpoint.

What should I do if I forgot to file Form 8621?

You may need to amend your tax return or use IRS compliance procedures if you forgot to file Form 8621.

Here’s what to do if you forgot to file Form 8621:

If you missed Form 8621 for one year:
Amend your original tax return using Form 1040-X. This is usually enough if the rest of your filing was accurate.
If you missed Form 8621 for multiple years:
You may qualify for the IRS Streamlined Filing Compliance Procedures if your failure to file was non-willful and you meet the program requirements.
If your situation involves large investments or complex PFIC calculations:
Consider working with a tax professional. Multi-year corrections and PFIC tax methods can be difficult to handle without guidance.

How do I fill out Form 8621?

Filling out Form 8621 involves reporting each PFIC investment, determining how it should be taxed, and completing only the sections that apply to your situation.

Here are the steps for filling out Form 8621

Step 1: Identify each PFIC investment

List every foreign fund or investment that qualifies as a PFIC. A separate Form 8621 is required for each one.

Step 2: Determine your reporting requirement

Confirm whether you need to file based on ownership, income received, or elections made for the PFIC.

Step 3: Select a tax method (if applicable)

Choose how the PFIC will be taxed, such as the default excess distribution method or an election like Qualified Electing Fund (QEF) or mark-to-market (MTM), if available.

Step 4: Complete the relevant sections of the form

Fill in only the parts that match your reporting method. Different tax methods require different sections of Form 8621.

Step 5: Attach Form 8621 to your tax return

Include the completed form with your annual Form 1040 when you file.

Note: Not all sections apply to every filer. The form is modular, which means only certain parts are completed depending on your situation.

When is Form 8621 due for US expats in 2026?

Form 8621 is due with your 2025 tax return, typically April 15, 2026, with an automatic filing extension to June 15, 2026, for qualifying US expats abroad.

Key deadlines:

April 15, 2026: standard deadline
June 15, 2026: automatic filing extension for qualifying expats
October 15, 2026: extended deadline if requested

The June 15 automatic extension applies to filing, but any US tax due is generally still payable by April 15 to avoid interest.

What changed in Form 8621 for the 2025 tax year?

The December 2025 revision of Form 8621 adds clearer reporting fields in Part V for distributions and dispositions, including currency-related fields and US dollar reporting.

What changed:

You now need to specify the currency used
You must convert all reported amounts into US dollars
The form includes clearer fields to guide how this information is entered

Why it matters:

These updates improve reporting consistency but do not change PFIC tax rules. You may need to pay closer attention to exchange rates and how amounts are reported.

Can I avoid Form 8621 as a US expat?

You may avoid Form 8621 by investing in assets that are not classified as PFICs, such as US-based funds or individual stocks.

Common approaches:

Use US-based investment platforms/brokers
Avoid foreign mutual funds and ETFs
Invest directly in individual securities

This is more of a forward-looking strategy. Once a PFIC is already held, reporting requirements usually remain. There is no universal solution. Investment access, residency, and financial goals all influence what is practical. However, understanding PFIC rules early can prevent complications later.

Frequently Asked Questions

What is the threshold for Form 8621?
There is no single filing threshold for Form 8621, but limited exceptions may apply if your total PFIC holdings are below US$25,000 (US$50,000 for joint filers).

These thresholds may remove certain annual ownership reporting requirements, but they do not generally apply if you received a distribution, sold shares, or made an election.
What is the penalty for not filing Form 8621?
What is the purpose of Form 8621?
Can I file Form 8621 electronically?
Yes, Form 8621 can generally be filed electronically when submitted with your tax return through supported e-filing software. However, not all software handles PFIC reporting well. In more complex cases, filers often rely on professional preparation to ensure the form is completed accurately and attached correctly.

At Expat Tax Online, Form 8621 support is available for expats who need help with PFIC reporting, particularly for multiple funds or more complex filings.
What is the difference between FBAR and 8621?
FBAR reports foreign bank account balances, while Form 8621 reports ownership and income from foreign investment funds (PFICs).

Key difference:

FBAR (FinCEN Form 114): Reports the value of foreign financial accounts

Form 8621: Reports the tax treatment of foreign investment funds

They serve different purposes and are often required at the same time.

What is the difference between Form 8621 vs FBAR vs Form 8938?

Form	What it reports	Common trigger
Form 8621	PFIC investments, such as many foreign mutual funds and ETFs	Ownership of PFIC investments
FBAR (FinCEN Form 114)	Foreign financial account balances	Foreign accounts exceeding US$10,000 combined
Form 8938	Specified foreign financial assets	Foreign asset values exceeding FATCA thresholds

The same foreign investment account may trigger more than one reporting requirement.

For example, a foreign brokerage account holding non-US mutual funds could potentially require:

Form 8621 for PFIC reporting
FBAR for foreign account disclosure
Form 8938 for FATCA reporting

How much investment income needs to be reported?
All PFIC-related income must generally be reported, regardless of amount.

This includes:

Distributions

Gains from sales

Income under certain tax elections

Thresholds do not eliminate reporting if taxable events occur.
Do I have to file 8621 every year?
What happens if I don't declare my foreign income?
Failing to declare foreign income can lead to additional tax, penalties, and extended IRS review periods. The consequences depend on the situation, but may include:

Interest on unpaid tax

Accuracy-related penalties

Ongoing scrutiny of your filings

In more serious cases, compliance programs may be needed to correct past omissions.

Prefer to talk it through? Schedule your free callback today.

BOOK MY FREE CALL

Clark Stott has been with Expat Tax Online since 2015. Being a dual national based in the UK, Clark has unique experience helping US citizens (and Accidental Americans) become tax compliant via the Streamlined Tax Amnesty program. Clark likes to help Americans in the UK keep their tax situations as simple as possible to avoid harsh IRS treatment.