Is that fund a PFIC? Here's how to tell.

Below the de minimis exception - $25,000 of PFIC stock, or $50,000 filing jointly, with no distribution or disposal that year - no Form 8621 is required at all. Above it, a small holding generates the same annual form as a large one.

It only affects the tax at stake, which is why small legacy holdings are often worth disposing of on administrative grounds alone.

Treat it as a starting point. If it says an obligation applies, the next question is what the filing actually involves and whether earlier years are affected.

If it says nothing applies, it is worth re-running whenever your circumstances change - a move, a property, a new account.

Broadly, a non-US company whose income or assets are mostly passive. In practice that captures most UK unit trusts, OEICs and investment trusts.

It is the fund's structure that matters, not the wrapper it sits in, so an ISA offers no protection.

Elections such as mark-to-market usually improve the outcome substantially compared with default treatment.

Timing matters, because elections generally have to be made in the right year rather than retrospectively.

It covers the common cases and will tell you reliably whether the basics apply to you. It is a guide, not a filing position.

Edge cases - trusts, business ownership, unusual residence patterns - can change the answer, which is why the result flags when a position is worth checking properly.