JJapan Finance

Seeking Advice: US citizen with PFIC

  • April 28, 2026

Hi all,

Posted this in the RetireJapan forum, but looking to gain input from the reddit community as well.

I have been investing in my NISA account for the past 3 years and was aware that PFIC is troublesome for US citizens, however I was not aware the punitive tax was so punishing…
This is likely my last year I fall within the Form 8621 exception so I would like to hear some advice on my current status and possibly revise my portfolio.

【Profile】
・Dual citizenship (US and JP)
・Salaryman wage (well within FEIE)
・Age: 30s, living in Japan for ～10 years, investing for ～3 years
・Own a house and do not plan to go back to the US (aside from business trips)
・Only use NISA accounts (SBI)
　⇒Tsumitate　：～3M JPY (PFIC)
　⇒Seicho　　：～7M JPY (Mix of US and JP stocks)
　⇒Invest in Tsumitate on a monthly basis and Seicho periodically
　⇒Looking at long-term investments
・Filing status: MFS
・Have been filing taxes every year
　⇒Form 1040, Schedule 1, Schedule B, Form 2555, FBAR
　　※No Form 8621 as PFIC value is >25k USD, no dividends, have not sold

【Options】
1. Continue investing in Tsumitate until 6M JPY
　⇒Punitive tax really sucks, but profit is profit…right?
　⇒Will file Form 8621 once above 25k USD
　⇒Continue investing in Seicho until 12M JPY
　⇒Possible to renounce US citizenship before I sell?
　　I am fully tax compliant so no exit taxes will apply…?

  1. Stop investing in Tsumitate ASAP and keep the 3M JPY
    　⇒Not much merit? Mind as well invest up to 6M JPY?
    　⇒Continue investing in Seicho until 12M JPY

  2. Stop investing in Tsumitate and sell PFIC ASAP
    　⇒Only merit would be that I don't have to file Form 8621 in the future?
    　⇒Continue investing in Seicho until 12M JPY

For Japanese citizens, using the Tsumitate account is pretty much a no brainer in the long run, but for US expats is it better to ignore Tsumitate and put those funds towards individual stocks, even if they are outside of Seicho and subject to the 20% JP tax?
(Gains from Tsumitate @ 30% PFIC tax < Gains from individual stocks @ 20% JP tax after 20-30 years?)

The above 3 options are what I can think of, please let me know if there are any other options I can take (still have a lot to learn about investing).
It would be great if I could get some insight on what others would do if they were in my position. Let me know if you need any other additional info.

by shuna_di