RetireJapan

US citizen here, realizing last night that I may have made a huge mistake with my son's investment account (Junior NISA).
He is also a US citizen and I have been purchasing the e-maxis all country fund for him (https://emaxis.jp/fund/253425.html).

I was initially told by the monex representative that we couldn't buy vanguard funds, but that these would be okay for American citizens.
It is now occurring to me that he wasn't aware of form 8621 (https://www.irs.gov/forms-pubs/about-form-8621) and now I am pretty nervous.

As of now, I don't need to file the papers because I am under 25,000USD in that account, but I assume I will go past the 25,000 mark at some point this year.

It looks like I'm in trouble as the forms are complicated and the tax rate 37%, but the one thing that could make this all go away is if the e-maxis fund does not qualify as a PFIC.

Is there any way I can verify?

Thank you in advance!

All Japan-domiciled mutual funds, ETFs and Real Estate Investment Trusts (J-REITs) are considered by the US to be a passive foreign investment company. The taxation on these by the US is extremely unfavorable. To avoid having to deal with PFIC issues, a US taxpayer would need to stick with US-registered funds and ETFs, and/or individual stocks and bonds.

https://www.bogleheads.org/wiki/Investi ... _residents


As of January 22, 2018, the only US-domiciled ETF trading on the Tokyo Stock Exchange is SPY (1557). This appears to be a direct cross-listing rather than a Japan Depositary Receipts (JDR).

Note that most discount brokers will not allow US persons to purchase JDRs. As of August 2015, it is known that SMBC Nikko will permit it, and it is presumed that Nomura, and perhaps Daiwa, will permit it.

Thanks for the quick answer. That was what I thought. Not looking forward to filing form 8621!