US citizens and NISA

[TokyoWart]

I don't really understand the PFIC rule but I think at 2000 yen you are well below the de minimis threshold for completing form 8621:

"De minimis exceptions – The final regulations retain an exception to PFIC reporting if: (i) the shareholder has not made a QEF or mark-to-market election, (ii) is not treated as receiving an excess distribution or recognizing gain treated as such during the shareholder’s tax year, and (iii) either (A) the aggregate value of all PFIC stock owned at year-end does not exceed $25,000 ($50,000 for a joint return), or (B) the PFIC stock is owned through another PFIC, and the shareholder’s proportionate share of the upper-tier PFIC’s interest in the lower-tier PFIC does not exceed $5,000 in value."

https://expattaxprofessionals.com/blog/ ... -reporting

(ii) is not treated as receiving an excess distribution or recognizing gain treated as such during the shareholder’s tax year

From what I can tell, this means I'm going to get hit very hard once I decide to start withdrawing money from that account since the excess distribution would almost certainly exceed the dividends and interest I am have been receiving over the past 3 years.

Again, I cannot claim to be an expert on PFIC’s so I don’t own them, but the example of a 2000 yen total investment isn’t going to generate a lot of tax even at the punitive top 37% tax rate. The real punishment is being required to complete form 8621.

[judomarshall]

Yes, I read somewhere that the 8621 form takes accountants up to 40 hours to complete....I guess you could try doing it yourself, but that would be a bear of a task.

[TJKansai]

Reading this thread, it seems that a US citizen can invest in a NISA, while holding only individual Japanese stocks to avoid the PFIC taxation issues. Surely, investing in individual Japanese stocks, it will be much harder to diversify, but given the tax advantage of the NISA, it might still be a worthwhile path to explore, am I missing something?

I too have this same question. Any Americans here using NISA for the Japan-side tax advantages, and if so, what are you investing in?

[runmanTX]

Reading this thread, it seems that a US citizen can invest in a NISA, while holding only individual Japanese stocks to avoid the PFIC taxation issues. Surely, investing in individual Japanese stocks, it will be much harder to diversify, but given the tax advantage of the NISA, it might still be a worthwhile path to explore, am I missing something?

I too have this same question. Any Americans here using NISA for the Japan-side tax advantages, and if so, what are you investing in?

Yes, yes. I'm very interested in knowing this as well. To open the NISA or not to open the NISA as an American? That is the question.