Form 8938 vs. Form 8621

A new worrisome form has come up, applicable from this tax year –Form 8938. The IRS (Internal Revenue Service) has created this form for its offshore bank accounts. Navani tells NRIs to be cautious of this new form. He says, "In Form 8938, in Part IV, you must check that you have filled up Form 8621. If you inadvertently declare holdings in Indian mutual funds in your Form 8938, the IRS would automatically check for Form 8621. Consult your CPA or tax advisor."

These points highlight the basic function of PFICs. However, many variations any exist in individual cases. It is best to consult a tax advisor or your CPA for your case.