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Foreign Mutual Funds & Passive Foreign Investment Companies

By Bethany Bouw

Many with foreign investments have ownership of foreign mutual funds. This can cause a world of problems from a US tax perspective. There are significant differences between the US tax treatment of domestic mutual funds and foreign mutual funds. Foreign mutual funds are almost always considered to be passive foreign investment companies (PFICs). PFICs are a serious matter and require great consideration with reporting and elections. There are serious disadvantages to each method of treatment so it is vital to contact a tax professional who can assist. Read more