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This document serves as a tax form for shareholders of Passive Foreign Investment Companies (PFICs) to report income, distributions, and elect various tax treatments related to the PFIC or Qualified
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How to fill out form 8621
How to fill out Form 8621
01
Obtain Form 8621 from the IRS website or your tax preparation software.
02
Begin by filling in your personal information, including your name, address, and taxpayer identification number.
03
Indicate the tax year for which you are filing the form at the top of the page.
04
Complete Part I to report your ownership of passive foreign investment companies (PFICs). Include the name of the PFIC, its identifying number, and other relevant details.
05
Move to Part II to provide financial information on the PFIC, including the income and capital gains it generated during the tax year.
06
Fill out Part III if you are electing to treat the PFIC as a Qualified Electing Fund (QEF) and report the earnings and gains accordingly.
07
Review the instructions carefully for any additional parts that may need to be completed depending on your specific situation, such as Part IV for elections.
08
Sign and date the form at the bottom and include it with your tax return when filing.
Who needs Form 8621?
01
U.S. taxpayers who own shares in a foreign corporation classified as a passive foreign investment company (PFIC) are required to file Form 8621.
02
Individuals who receive distributions from a PFIC or who sell shares of a PFIC must also complete this form.
03
This form is necessary for those who wish to elect to treat the PFIC as a Qualified Electing Fund (QEF) for tax purposes.
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How much is the fee for form 8621?
How much does it cost? The base fee is $165 USD / $220 CAD per form when the transactions are submitted in an excel format.
What is the penalty for failing to file 8621?
Penalties for Related Forms: While Form 8621 lacks direct penalties, the IRS may impose penalties for non-compliance with related forms, such as Form 5471 (Information Return of U.S. Persons With Respect To Certain Foreign Corporations), which can impact PFIC reporting.
What is the penalty for failing to file S Corp return?
S Corporation Late Filing – IRC 6699 — We charge a penalty when you file your S Corporation return late. The penalty is $220 for each person who was a shareholder at any time during the tax year, for each month or part of a month that the return was filed late, for up to 12 months.
What is the penalty for filing form 8621?
While there is no Form 8621 penalty, most filers fail to simultaneously file Form 8938 to report the investment. The failure to report the PFIC interest on Form 8938 gives rise to a $10,000 penalty for failure to file, per incidence penalty.
How much is the fee for form 8621?
Our fee is $150 USD per form, with discounts starting on the 11th form. If you wish to make a mark to market or QEF election we will do that for no additional fee. No matter which option is right for you, our services provide a seamless continuity from year to year.
What is the difference between form 8621 and 8938?
Meanwhile, Form 8621 falls under the IRS regulation that requires expat taxpayers to report investments in mutual funds and other pooled investments. It is a more specific report of a source of income compared to the general scope of Form 8938.
What is the penalty for not reporting foreign income?
Learn about what to do if you have unreported foreign income and accounts. Non-Compliance with foreign asset reporting can lead to some hefty penalties such as: Failure to file FBAR: $10,000 for each non-willful violation. Failure to willfully file FBAR: the greater of $100,000 or 50% of the account's highest balance.
What is IRS form 8621 used for?
A U.S. person that is a direct or indirect shareholder of a passive foreign investment company (PFIC) files Form 8621 if they: Receive certain direct or indirect distributions from a PFIC. Recognize a gain on a direct or indirect disposition of PFIC stock.
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What is Form 8621?
Form 8621 is a U.S. Internal Revenue Service (IRS) form used by U.S. persons to report their ownership of stock in a Passive Foreign Investment Company (PFIC) or Qualified Electing Fund (QEF) and certain distributions from these entities.
Who is required to file Form 8621?
U.S. persons who own shares in a PFIC or a QEF, or who receive distributions from such entities, are required to file Form 8621. This includes individuals, partnerships, corporations, and trusts.
How to fill out Form 8621?
To fill out Form 8621, you need to provide information about your ownership stake in the PFIC, including identification details of the PFIC, your shares, any income received, and the current fair market value of the shares. Guidance from the IRS instructions for Form 8621 should also be followed to ensure proper completion.
What is the purpose of Form 8621?
The purpose of Form 8621 is to ensure U.S. persons report their interests in PFICs and comply with U.S. tax laws regarding income and distributions from such entities. It helps to prevent tax avoidance and ensures proper taxation on foreign investments.
What information must be reported on Form 8621?
The information that must be reported on Form 8621 includes the name and address of the PFIC, the number of shares owned, the date of acquisition, the income received from the PFIC, the fair market value of the shares at year-end, and any distributions received during the tax year.
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