US taxes while living abroad
Which US forms can apply to foreign funds, companies and trusts?
Last reviewed .
Several can, depending on what you own and how. Publication 54 points to Form 8621 for some non-US mutual funds and ETFs, and to separate information returns for foreign corporations, partnerships, disregarded entities, trusts and gifts. A local investment account is therefore more than an FBAR question. A licensed tax professional should apply these rules to your own facts.
Key facts
| Fact | What the source says | Source |
|---|---|---|
| Foreign funds and ETFs | Possible Form 8621 reporting as a passive foreign investment company | Official source |
| Foreign corporations | Form 5471 for certain US persons | Official source |
| Foreign partnerships | Form 8865 for certain US persons | Official source |
| Foreign disregarded entities | Form 8858 for certain US persons | Official source |
| Foreign trusts and gifts | Forms 3520 and 3520-A in specified cases | Official source |
Why is a foreign investment account not only an FBAR question?
The FBAR reports the account. The products inside it can raise their own US rules. Publication 54 identifies possible Form 8621 issues for non-US-domiciled mutual funds and ETFs, which may be treated as passive foreign investment companies. The account, the product, the ownership structure and each transaction can each create a different reporting question.
Which forms can apply to a foreign business you own?
Publication 54 lists information returns that can arise from foreign entities. Which one applies depends on the entity's US tax classification and your ownership, not on its local name.
| Situation | Form | What decides it |
|---|---|---|
| Interest in a foreign corporation | Form 5471 | Your ownership, role and the filer categories in the instructions |
| Interest in a foreign partnership | Form 8865 | Your ownership and the filer categories |
| Foreign disregarded entity or branch | Form 8858 | Entity classification and ownership |
| Shares in a passive foreign investment company | Form 8621 | The fund or company and what happened in the year |
| Foreign trust or large foreign gift | Form 3520 or 3520-A | Your relationship to the trust, or the gift amount and source |
Does reporting the income cover the entity?
Not always. A foreign business can require entity-specific reporting even when you already reported its income on your return. Do not decide a form requirement from an article title. Use each form's current instructions for the filer categories and thresholds.
What should a first inventory include?
List each account, then each product or entity under it. Record the facts the instructions ask about, so a preparer can test each form.
- Legal form and country of each entity
- Your ownership percentage, and family members' holdings
- Acquisition dates and cost
- Distributions, sales and transfers during the year
- Gifts or inheritances received from people outside the US
- Statements from each fund, broker or trust
Checklist before you start
- List every foreign account and every fund or ETF inside it.
- Collect annual statements, including purchase and sale history.
- Write down each foreign company or partnership you own and your percentage.
- Find formation documents for any foreign entity.
- Note any foreign trust you created, fund or benefit from.
- Record gifts or inheritances from people outside the US, with dates and amounts.
Common questions
Is a foreign ETF a PFIC?
Many non-US funds can be passive foreign investment companies. The Form 8621 instructions set out the tests and when the form is needed.
Do I file Form 5471 for a small company I own abroad?
Possibly. Form 5471 has several filer categories based on ownership and role. A preparer should check your facts against the current instructions.
Do I report a gift from my parents abroad?
Large gifts from foreign persons can require Form 3520. The instructions set the thresholds.
Official sources
- Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad. IRS.
- About Form 8621. IRS.
- Comparison of Form 8938 and FBAR requirements. IRS.
Sources checked . Official pages change. Use the source over this summary if they differ.
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General information from IRS and FinCEN publications, not tax advice. Rules depend on your facts and the tax year. Confirm with a licensed tax professional before you file. US Expat Desk is a private company. We are not affiliated with the US government, the State Department, or the FBI.