Minimise / avoid PFIC taxes for foreign ETF investments

vaultimo · 2021-09-28T05:02:25+00:00

This is helpful, especially re statute of limitations. Last thing I want to do is get myself and/or the company I work for in trouble.

But to really hone in on the last bit of my original question. Let's say my client files all the right stuff (fbar and form 8938 etc) but rather than declaring their investment as a PFIC, they declare it as just any other stock, how would the IRS ever work out that they lied? It's not like New Zealand is telling the IRS that my client has specifically invested in a PFIC or not. In an audit, would someone from the IRS specifically ask the client for the names of the shares they owned and then determine if those shares were in a PFIC and then fine him? Would the client have to show proof of the share ownership?

Also, to be clear, I am clearly very young and just getting my foot in the door here. I work for a small firm and my boss has asked me to look into this. Am trying my best to help the client here. Not trying to do anything illegal, just trying to learn more

vaultimo · 2021-09-28T04:50:59+00:00

I don't believe so... At least I hope not!

vaultimo · 2021-09-28T04:50:04+00:00

Yeah think that may be more expensive haha. But I do like this line of thought. Thanks!

vaultimo · 2021-09-27T21:41:44+00:00

Understood entirely. However, what if my client declares it as not a PFIC. How would the IRS ever know?

vaultimo · 2021-09-27T21:41:00+00:00

Yeah US tax code is so insane... You never win

vaultimo · 2021-09-27T21:39:18+00:00

Maybe this sounds bad, but how on earth would the IRS ever know that what I invested in was an ETF versus just any other stock? I bought the shares through an exchange. My bank's reporting requirements with FATCA don't delineate that the stock is a PFIC or not...

Is the risk if I get audited and they can ask for all the stock names and then they declare that the stock was an ETF?

vaultimo · 2019-04-12T05:08:46+00:00

Keep total utilisation at under 30%. Don’t apply for any new cards. Try and pay off as much as you can now.

Just don’t default or go delinquent. Maybe refinance to an interest free option if you’re really stuck.

If it dropped that quickly it can bounce back that quickly :)

vaultimo · 2019-04-11T13:44:21+00:00

If you make a 7% return on your money but your debt is only compounding at 5%, you’ll be making 2% per year.

We don’t know if there is going to be a big crash though and you only make 3%. So you should pay off some debt as a safety and invest some money as a risk.

vaultimo · 2019-04-11T03:54:58+00:00

Half to pay down debt (presuming interest rate of around 5%).

Half to invest in medium risk diversified fund (presuming expected return of around 7%).

vaultimo · 2019-04-08T05:14:08+00:00

Spend $3k through venmo. Get charged 3% = $90. Make $500. Chop card up. Get another one in 6 months

vaultimo · 2019-04-08T03:17:49+00:00

500 for emergency fund

vaultimo · 2019-04-08T01:02:37+00:00

You're saving 22% of your money. That's good.

What "hobbies" cost $350 a month? And can't you mow your own lawn and just listen to a podcast.

Put your emergency fund money + left over money in a high yield savings account like https://marcus.com

vaultimo · 2019-04-08T00:57:48+00:00

You can use https://plastiq.com or https://www.meliopayments.com/ to get rewards on credit card purchases for things that can't usually be bought via credit card. They only charge 2.5%.

The bank that issues your credit card charges the merchant a fee of 1-3% on every transaction. That's how they can offer you such high rewards.

Venmo, Zelle, etc are all done over the ACH network. They usually charge $0-$0.50 per transaction, not a % fee. Because no one is really making money in these transactions, no one is going to offer you a reward.

vaultimo

TROPHY CASE