Can I e-file form 8621 for PFIC investments or do I need to mail it in?

Thanks for the info! I'm curious - does making the MTM election have any downsides? I've heard something about it being irrevocable, but I'm not sure what that means practically. Also, what happens if the foreign company doesn't provide me with all the required information?

The Mark-to-Market election is indeed irrevocable unless you get specific permission from the IRS to change it. The main practical implication is that you'll have to recognize annual gains or losses on the investment each year regardless of whether you've sold it. This means you could owe taxes on "paper gains" before you've actually received any money, which can create a cash flow issue for some people. If the foreign company doesn't provide all the information you need, you still have to make reasonable estimates based on the information available to you. Many foreign companies don't produce the specific PFIC annual information statements that would make this process easier, so it's a common problem. In those cases, you'll need to work with what you have - public financial information, your brokerage statements, etc. The software should walk you through the available options when complete information is missing.

That sounds interesting - I've got investments in a few European index funds that I just found out are PFICs. Does it work for all types of foreign investments or only certain countries? I'm really struggling with getting the right beginning/ending values.

I'm a bit skeptical about these services. How much does it cost? And how do you know they're getting it right? I've been burned before by "expert" services that ended up creating more problems with the IRS.

It works for pretty much all types of foreign investments that qualify as PFICs. They have specific expertise with European, Asian, and Canadian investments, and their system can process documents in multiple languages. The tool specifically handles the calculation of beginning and ending values, which was a huge help for me. As for accuracy, they actually show you exactly where they're pulling the numbers from in your documents and explain why certain elections make sense for your situation. I was initially skeptical too, but they provide detailed explanations of all their recommendations. I can't speak to the cost comparison with other services since everyone's situation is different, but the peace of mind knowing my PFIC reporting was handled correctly was worth it to me - especially since the penalties for incorrect PFIC reporting can be severe.

How does that even work? The IRS phone lines are notoriously impossible to get through. Are you saying this service somehow jumps the queue or something?

Sounds like a scam to me. If it was that easy to get through to the IRS, everyone would be doing it. Plus, are you sure the "IRS agent" you spoke to was actually legitimate? I'd be very careful about services claiming to get you special access.

It doesn't jump the queue or do anything underhanded. The service basically automates the process of calling, navigating the phone tree, waiting on hold, and then connects you when a real person is actually available. They have a system that continuously redials and navigates the IRS phone system during periods when wait times are typically shorter. I was skeptical at first too. But the agent I spoke to was definitely legitimate - they verified my identity using the standard IRS verification process and were able to pull up my account information. The service just handles the frustrating part of getting through the initial barriers and waiting on hold. Once you're connected, it's a standard IRS call. I understand the skepticism, but for me, it saved hours of frustration and I got definitive answers about my PFIC reporting requirements.

Thank you so much for this specific list! Just to be clear - for the beginning fair market value, if I owned it at the start of the year, I should use the value as of January 1st, correct? Not the value from when I first purchased it several years ago?

That's correct. If you owned the PFIC at the beginning of the tax year, you should use the fair market value as of January 1st of the tax year you're filing for. Your purchase price from several years ago isn't relevant for this calculation. If you've already made the Mark-to-Market election in previous years, you should have been reporting the annual changes in value on your tax returns all along. The ending value from last year's Form 8621 should match the beginning value on this year's form. This consistency is important to maintain proper reporting of the investment's performance over time.

You're definitely not alone! I actually sold all my foreign investments last year specifically to avoid the PFIC reporting nightmare. The potential tax advantages weren't worth the annual headache and anxiety for me. The US tax system really punishes small investors who try to diversify internationally.

If your foreign fund is held in an IRA or 401k, you might not need to file Form 8621 at all. There's an exception for PFICs held in retirement accounts. Worth checking if that applies to your situation.

This is incredibly helpful information! I'm new to PFIC reporting and had no idea about the deemed sale adjustment for first-time Mark-to-Market elections. Could you elaborate on what that typically looks like tax-wise? I'm considering making the MTM election for a European fund I've held for about 3 years, but now I'm worried about a big tax hit in the first year. Also, do you have any specific tips for finding historical NAV data for European funds? The fund company website I'm dealing with only shows current values.

The deemed sale adjustment can definitely be significant, especially if your fund has appreciated substantially since you acquired it. Essentially, when you make the MTM election for the first time, the IRS treats it as if you sold and immediately repurchased the investment at fair market value on the election date. You'll owe tax on any unrealized gains as if you had actually sold the fund, but you get to step up your basis to the current market value going forward. For a fund you've held for 3 years, this could create a substantial tax bill in the election year, but it also means future MTM reporting will be based on the stepped-up basis rather than your original purchase price. You'll want to calculate the potential tax impact before making the election - it might make sense to spread this over multiple years if you have other funds to elect on. For European fund NAV data, try checking Bloomberg, Morningstar International, or the fund company's institutional/professional sections of their website. Many European fund companies also maintain historical data through their transfer agents. If you're still stuck, some brokerage platforms like Interactive Brokers maintain historical pricing data that you can access even if you didn't originally purchase through them. The key is finding the fund's ISIN number and using that to search these databases.

This is such valuable practical advice, thank you! I'm particularly interested in your point about state tax implications - I hadn't even considered that. I'm in California and have been assuming my state return would just follow whatever I do on the federal level. Can you elaborate on what "states don't conform to federal PFIC elections" actually means in practice? Also, your tip about currency conversion timing is spot on. I made an error last year using year-end rates for everything instead of the specific dates, and it caused a discrepancy that I had to amend. The IRS Publication 538 has the official exchange rates if anyone needs them, but I've found the Federal Reserve's historical data is often easier to navigate for the exact dates you need. One thing I'd add to your excellent list - if you're working with a tax preparer, make sure they actually understand PFIC reporting. I went through two different preparers who claimed they could handle it but clearly didn't understand the nuances. The specialized knowledge required really makes a difference in getting it right the first time.

This is exactly the kind of comprehensive information I wish I'd had when I first discovered my foreign index funds were PFICs! The retirement account exemption is such a game-changer - I've been considering rolling some of my taxable investments into my IRA specifically to avoid the annual Form 8621 headache. Your point about the calendar reminders is brilliant and something I'm definitely going to implement. I've been trying to reconstruct historical values from old screenshots and brokerage statements, which is incredibly time-consuming and error-prone. One question about the sale complications you mentioned - if someone has been non-compliant with PFIC reporting in previous years, is there a way to catch up without facing massive penalties? I'm asking for a friend who may have unknowingly held PFICs for a couple years before realizing the reporting requirements. The IRS penalty structure for unreported PFICs seems pretty severe, and I'm wondering if there are any relief procedures available for unintentional non-compliance.