PFIC & Form 8621 – Frequently Asked Questions

Yes, legally you can (IRC § 6012).

The practical challenge, however, is immense. While some users on forums like Bogleheads.org document successfully creating spreadsheets after 40+ hours, many more discussions end with the conclusion that the risk and effort are too great, prompting a search for a qualified CPA.

Within the tax profession, the PFIC §1291 regime is notorious for its complexity—a reputation earned through convoluted rules that make manual calculation exceptionally time-consuming and prone to error, earning it the reputation of a Taxpayer Trap & CPA Nightmare .

Our calculator is a mechanical tool built to automate these complex computations, significantly lowering the technical barrier to DIY preparation.

Default rule:

If you own a PFIC during the tax year, Form 8621 must be filed unless a specific statutory exemption applies.

Under Treas. Reg. §1.1298-1(c)(2), a limited de minimis (small-amount) exemption may apply only if all required conditions are met. In general terms, this requires that:

• The aggregate value of all PFIC stock does not exceed the de minimis threshold ($25,000, or $50,000 for MFJ),
• No excess distributions are received during the year,
• No disposition of PFIC stock occurs during the year,
• No QEF or mark-to-market election is in effect, and
• Any indirect PFIC ownership remains within the applicable regulatory limits.

If any one of these conditions is not satisfied, the statutory exemption does not apply and Form 8621 must be filed for that tax year.

Short answer: If you cannot reconstruct a complete and accurate transaction history, you should not calculate PFIC or file Form 8621 using this tool.

PFIC §1291 calculations are inherently multi-year. They depend on knowing every purchase, reinvestment, distribution, and sale from the very first acquisition onward. If your broker only shows limited years and the missing history cannot be reliably recovered, the calculation cannot be made correct—there is no shortcut.

8621Calculator.com requires a complete transaction history. If you cannot rebuild that history with reasonable certainty, this calculator is not suitable, and the calculation should be explicitly rejected, not approximated or guessed.

Trying to “fill the gaps” or estimate missing years defeats the entire purpose of PFIC compliance. In §1291, partial data does not produce a “rough answer”—it produces a wrong answer, often in ways that are not obvious on the surface.

Bottom line:

• ✅ Complete, reconstructable history → calculation is possible
• ❌ Missing, unrecoverable history → do not calculate

This is not a limitation of this tool. It is a limitation of the PFIC rules themselves.

For PFIC and Form 8621 calculations, you should use transaction-date (spot) exchange rates from a publicly available source, applied consistently across all years and transactions.

Commonly accepted public FX sources include OANDA, XE, and X-Rates.

8621Calculator.com uses daily exchange rates published by OANDA and applies them consistently to all non-USD purchases, distributions, and dispositions. No manual exchange-rate lookup or currency conversion is required.

Form 8621 is a reporting framework, not a calculator. PFIC calculations are performed outside the form, and the results are reflected in Part V based on their nature.

Part V (§1291) — conceptual structure:

• Lines 15a–15d: Reflect current-year PFIC distributions.
• Line 15e: Reflects the excess distribution portion of those distributions, if any.
• Line 15f: Reflects gain on disposition of PFIC shares. Any positive amount is treated as an excess distribution.
• Line 16: If Line 15e or Line 15f is greater than zero, the excess-distribution regime applies and the calculation proceeds to Line 16, where the excess amount is allocated and taxed.

In simple terms: Lines 15 determine whether an excess distribution exists; Line 16 determines how it is taxed.

One Form 8621 per PFIC—this is a firm IRS requirement.

• If you have 3 different PFIC funds, you file 3 separate Form 8621s
• Even if held through the same broker
• Even if you made the same election for all of them

De Minimis Exception: You may avoid filing only if your total aggregate PFIC value is under $25,000/$50,000 AND you have no distributions or sales.

It depends on your software.

• Many standard DIY programs (like TurboTax) do not support the Form 8621 workflow at all.
• Some e-file systems allow you to attach Form 8621 as a PDF.
• If your software cannot handle it, you must paper file the entire return or file it as an "information-only" return if that's permitted.

Attach Form 8621 to your main tax return (Form 1040, 1120, etc.) for the same tax year.

E-file: If your tax software supports Form 8621, file it electronically together with the return, including any required supporting statements (such as the Line 16a statement for excess distributions).

Paper file: If e-filing is not supported, paper file the entire return, with Form 8621 and all required statements attached, to the appropriate IRS Service Center.

If you are not otherwise required to file a tax return:

Mail Form 8621 separately (with all required statements attached) to:
Internal Revenue Service Center
Ogden, UT 84201-0201

Top "Gotcha" Errors:

1. Using Excel or manual spreadsheets to compute §1291
2. Aggregating multiple distributions or dispositions into a single annual calculation
3. Failing to track and compute PFIC positions at the lot level
4. Applying annual or average FX rates instead of transaction-date FX
5. Failing to prepare a proper Line 16a supporting statement
6. Offsetting PFIC losses against PFIC gains
7. Assuming the $25,000 exception eliminates Form 8621 filing
8. Ignoring reinvested distributions
9. Combining multiple PFICs on one Form 8621
10. Using incorrect acquisition or holding-period dates
11. Failing to compute §6621 daily compounding interest in compliance with the statute
12. Failing to compute §1291 separately for each PFIC distribution or disposition

No—this is common.

First: file the current year correctly.

Next: assess what happened in prior years (distributions, dispositions, excess distributions).

If you missed multiple years: don’t DIY the catch-up filings—use an experienced PFIC CPA or EA to choose the correct remediation path and prepare the prior-year filings.

Yes. Switching between DIY and CPA from year to year is common and does not by itself trigger IRS scrutiny.

What matters is consistency:

• Factual consistency: Do not change acquisition dates, lot history, or prior-year facts.
• Election consistency: QEF or MTM elections, once made, remain binding unless IRS rules allow a change.

Best practice when switching:

• Moving to DIY: Obtain prior-year returns and Form 8621 workpapers.
• Moving to a CPA: Provide all past Forms 8621 and calculation history.

Yes—but only if all conditions are met.

The $25,000 / $50,000 De Minimis Exception applies only if:

• Single filers: Aggregate value of all PFIC stock is ≤ $25,000 at year-end
• Married filing jointly: Aggregate value is ≤ $50,000
• No excess distributions were received during the year
• No gain treated as an excess distribution arose from any PFIC disposition
• No QEF or Mark-to-Market election has ever been made for any PFIC

Important notes:

• The threshold is tested on an aggregate basis across all PFICs, not per PFIC.
• A single excess distribution eliminates the exception, regardless of total value.
• The value test is measured at year-end, not on an average basis.