Form 8621
Forms

Form 8621: Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund

A U.S. person may be required to file Form 8621 with the Internal Revenue Service to report information with respect to their ownership of a Passive Foreign Investment Corporation (PFIC), such as a Qualifying Electing Fund (QEF) or a section 1291 fund.

What is Form 8621?

Form 8621 is an IRS form used by certain US taxpayers to report information on their direct or indirect ownership of a Passive Foreign Investment Corporation (PFIC). Generally, US persons must file Form 8621 for each tax year if they receive distributions from a PFIC, recognize gains on a sale of PFIC stock, report information with respect to a Qualified Electing Fund, or they are required to file an annual report pursuant to section 1298(f). The form is generally required for direct and indirect shareholders of a PFIC, as well as interest holders of pass-through entities. Exceptions include tax-exempt organizations or accounts described in section 501(a) or 529 of the Internal Revenue Code. Depending on the shareholder’s holding period of the PFIC stock, portions of an excess distribution may be taxed as ordinary income or subject to a separate tax and interest charge. Alternatively, a US taxpayer may opt to mark the PFIC stock to market under section 1296; the taxpayer would then either include in income the excess of the fair market value of the PFIC stock as of the close of the tax year over the shareholder’s adjusted basis in such stock or be eligible for a deduction.

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IRS Form 8621 – Who Needs to Fill It Out?

U.S. persons that own stocks of a foreign corporation and opt to treat it as a qualifying insurance corporation must file an IRS limited-information Form 8621. Additionally, a form must be filed if a U.S. person is a direct or indirect shareholder of a PFIC, receives certain distributions, recognizes gain, is making an election reportable in Part II of the form, or is required to make an annual report under section 1298(f). Indirect shareholders (e.g. a domestic corporation owning a section 1291 fund) are also expected to fill out the form. Tax-exempt organizations or accounts are exempt from the filing requirements. Filing must be done annually, and may be done with an individual’s existing income tax return.

Step-by-Step: Form 8621 Instructions For Filling Out the Document

Filling out Form 8621 involves taking the time to understand who must file, the PFIC and QEF definitions and taxes, and the special rules that apply in various situations. Generally, U.S. persons that indirectly own PFIC stock, are shareholders in a PFIC, or own stock of a foreign corporation with a PFIC must complete the form. For each PFIC, a separate form is required and a single form can be used to include information from parts III-VI as well as to make elections in Part II. Depending on the situation, a portion of an excess distribution may be included in income as ordinary income or be subject to a separate tax. Additionally, adjustments may need to be made to the basis in the stock of a QEF. Form 8621 must be attached to the shareholder’s tax return or filed directly to the IRS if there is no return to be submitted.

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Below, we present a table that will help you understand how to fill out Form 8621.

Form 8621 Instructions
Filling out Form 8621 involves taking the time to understand who must file, the PFIC and QEF definitions and taxes, and the special rules that apply in various situations.
  • Identify if you fall into the category of U.S. persons that must complete the form based on indirect ownership, shareholder status, or stock ownership.
  • Learn about the requirements for separate forms for each PFIC and elections in Part II.
  • Understand the taxation of excess distributions and adjustments to basis for QEF stock.
  • File the form with your tax return or directly to the IRS if applicable.
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Do You Need to File Form 8621 Each Year?

A U.S. person must file a limited-information Form 8621 if they own stock of a foreign corporation that meets certain qualifications. Generally, a shareholder of a Passive Foreign Investment Corporation (PFIC) must file Form 8621 in at least five circumstances: receiving distributions, recognizing gain, making a QEF election, making elections reportable in Part II, and filing an annual report. Interest holders of pass-through entities may be required to file Form 8621, and exempt organizations may be subject to the filing requirement if a dividend from the PFIC would be taxable. Shareholders of a section 1291 fund may be required to file to report excess distributions, and a mark-to-market election may led to income recognition and basis adjustment. Generally, the Form 8621 should be attached to the taxpayer’s tax return, or filed directly with the IRS if no return is filed.

Download the official IRS Form 8621 PDF

On the official IRS website, you will find a link to download Form 8621. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8621

Sources:

https://www.irs.gov/forms-pubs/about-form-8621

https://www.irs.gov/instructions/i8621

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