Form 8621
Information Return by a Shareholder of a Passive Foreign Investment Company (PFIC)
Who Must File
US persons who are shareholders of a Passive Foreign Investment Company, including most Canadian mutual funds and Canadian-domiciled ETFs.
Deadline
Filed with Form 1040 by April 15 (or extended deadline)
Penalty
No specific penalty for non-filing, but punitive PFIC tax regime applies without a QEF or mark-to-market election
Step-by-Step Filing Instructions
Identify all Canadian mutual funds, Canadian ETFs, and other pooled investments you hold.
Determine if each fund qualifies as a PFIC (most Canadian funds do).
Choose a reporting method: QEF election, mark-to-market election, or default Section 1291 treatment.
Gather income and gain information for each PFIC.
Complete a separate Form 8621 for each PFIC holding.
Attach all Forms 8621 to your Form 1040.
Tips & Best Practices
US-listed ETFs (e.g., VTI, SPY) are NOT PFICs. Consider switching to US-domiciled funds.
The default Section 1291 treatment results in punitive tax and interest charges on excess distributions.
A QEF election requires the fund to provide an Annual Information Statement, which Canadian funds rarely do.
Mark-to-market is often the most practical election for Canadian-held funds.
You must file a separate 8621 for each individual PFIC.
Frequently Asked Questions
Are all Canadian mutual funds PFICs?
Nearly all. A PFIC is a foreign corporation where 75%+ of income is passive or 50%+ of assets produce passive income. Most Canadian funds meet this definition.
What if I only hold Canadian ETFs listed on the TSX?
TSX-listed ETFs domiciled in Canada are still PFICs. Only ETFs domiciled in the US (trading on NYSE, NASDAQ) avoid PFIC classification.
Should I sell my Canadian mutual funds?
Many advisors recommend liquidating Canadian PFICs before becoming a US tax resident and reinvesting in US-domiciled equivalents to avoid ongoing 8621 complexity.
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