Hello, for context, I am a Japanese citizen currently studying in the United States. I have been living in the U.S. for about 8 years and meet the substantial presence test. I also have a U.S. taxpayer ID, so I file U.S. taxes as a resident.
My question is about investments I hold in Japan:
- I have a NISA account with Rakuten Securities.
- Inside this account, I hold both individual U.S. stocks and also Japanese mutual funds (e.g., eMAXIS Slim S&P500, 楽天・全世界株式インデックス・ファンド).
- I also hold an All-Country World ex-USA fund (楽天・VXUS） that is managed through a Japanese mutual fund structure.
- I understand that while individual stocks are treated normally, the mutual funds may be considered PFICs under U.S. tax law.
- Since NISA is recognized as tax-free in Japan but not in the U.S., I am concerned that PFIC reporting (Form 8621) and additional taxation may apply.
I would like advice on:
- Whether I should sell the Japanese mutual funds now to avoid future PFIC complications.
- The best way to structure future investments to remain compliant. For example, using a U.S. brokerage like Fidelity instead.
I want to ensure I stay compliant with both U.S. and Japanese tax obligations. Thanks.
by Walmartpancake