Spoiler: Far more than most taxpayers expect.
Taxpayers often assume that a small PFIC investment—especially one with no sales and modest dividends—should be quick and cheap to file. But PFIC reporting under Form 8621 doesn't scale with account size. It scales with workload.
Even the simplest PFIC can demand 6–20+ hours of professional effort. Here’s where the time actually goes.
Before any calculations can begin, the raw brokerage data must be converted into a clean, structured format.
Key reality: No software can automate judgment. A human must classify each transaction correctly.
Every purchase—including dividend reinvestments—creates a new PFIC lot that must be tracked individually.
A “simple” PFIC held for 5–10 years may still generate dozens of lots.
For every distribution event:
There is no shortcut. Every distribution must be tested—even if tax owed is zero.
Form 8621 is only the tip of the iceberg. Behind it sits:
Form 8621 isn’t the work — the workpapers are.
| PFIC Scenario | Estimated Hours |
|---|---|
| No distributions, no reinvestments, no sales | 2–4 hours |
| Annual distributions or reinvestments, no sales | 3–6 hours |
| Reinvestments + partial sale (FIFO required) | 5–10+ hours |
Critical Rule: PFIC workload is driven by events — once a distribution or disposition occurs, Form 8621 filing becomes mandatory, regardless of account size.
Note: These estimates assume a single PFIC — multiple PFICs multiply the workload.
Once there is a distribution or disposition—even with a tiny balance—Form 8621 filing is mandatory.