TaxSlayer and Form 8621: “Not Supported,” and What “When Permitted” Means

By Edward Parsons, CPA · licensed since 2009

Key takeaways

• TaxSlayer doesn’t support Form 8621. Its own Unsupported Forms article lists the form with the status “Not supported” for its individual tax software.
• Among the options it suggests is to file the required form separately with the IRS when permitted. For Form 8621, the IRS instructions describe filing the form on its own only when you aren’t required to file a return. Everyone else attaches it to the return.
• TaxSlayer Pro, the company’s software for tax professionals, has help pages that describe entering the tax calculated on Form 8621 Part V as a figure. The calculation happens somewhere else, even at that level.
• The same fund can trigger other foreign reporting that TaxSlayer handles only partly: its help pages say it doesn’t file the FBAR, and that a completed Form 8938 can be uploaded.
• Compute Part V first, with a tool built for the section 1291 calculation, such as the PFIC Calculator & Form 8621 Generator.

Most tax software leaves you to work out from silence whether it supports Form 8621. TaxSlayer doesn’t. It says so in writing, which is more helpful than it sounds. It also suggests what to do instead, and one of those suggestions needs a careful look before you rely on it.

Does TaxSlayer support Form 8621?

No. TaxSlayer’s help center has an article titled Unsupported Forms, for its individual tax software. Form 8621 is on it with the status “Not supported”, alongside Form 3520 and Schedule K-3. Two of TaxSlayer’s state-specific help articles repeat the point.

So a personal return prepared in TaxSlayer won’t produce a Form 8621. That is the same position TurboTax users are in, and my guide to what to do when TurboTax doesn’t do Form 8621 explains why consumer software leaves the form out, and which tax software supports Form 8621 sets every program side by side.

What does “file it separately when permitted” mean for Form 8621?

TaxSlayer’s article lists options for forms it doesn’t support. One is to file the required form separately with the IRS when permitted. The words “when permitted” are doing a lot of work.

The Form 8621 instructions say to attach Form 8621 to the shareholder’s tax return. They describe filing it directly with the IRS, on its own, for a shareholder who isn’t required to file a return. That is the exception, not the rule.

So for most people who hold a PFIC and file a return, sending Form 8621 by itself is not the route the instructions describe. The form belongs with the return. How that works when your software can’t produce the form, and whether the return can still go electronically, is a question to settle before you file.

None of this means TaxSlayer’s advice is wrong. “When permitted” is accurate. It just doesn’t tell you whether it applies to you, and for most people who file a return, the Form 8621 instructions point the other way.

Does professional tax software compute Part V?

Not always. TaxSlayer’s own professional product is a useful example.

TaxSlayer Pro is the version the company sells to tax preparers. Its help pages describe a screen where the tax calculated on Form 8621, Part V, line 16e is entered, and another where the interest from line 16f is entered. In other words, the preparer types in the results.

That says something about the calculation. For a fund taxed under the default rules of section 1291, Part V needs every block of shares, a 125% test against the three prior years, an allocation across every day you held the shares, the top rate for each prior year, and interest compounded daily at the IRS rate for each quarter under section 6621. Even software built for professionals can expect that work to arrive finished.

If a professional product leaves the calculation to the preparer, a consumer product isn’t going to do it for you.

What other foreign forms does the same fund trigger?

Often two more, and TaxSlayer covers them only partly.

• The FBAR. TaxSlayer’s help pages say its program does not support filing FinCEN Report 114. A fund held in a foreign account can count toward the FBAR, which is filed separately from the return.
• Form 8938. TaxSlayer’s help pages say you can upload a completed Form 8938 in the program. The Form 8938 instructions let you leave a PFIC off Form 8938 only if you report it on Form 8621, and ask how many Forms 8621 you filed.

My guides to what goes on the FBAR for foreign funds and how the FBAR, Form 8938 and Form 8621 differ explain the overlap.

What should I do before I file?

1. Start with the fund, not the software. Run it through the free PFIC Analyzer, and read whether your foreign mutual fund is a PFIC if the result surprises you.
2. Check which years need a form, using the rules on who must file Form 8621.
3. Compute Part V. The PFIC Calculator & Form 8621 Generator runs the PFIC tests, the 125% test for each block, the allocation, the rates and the interest, and fills in the official Form 8621 for each fund and year, with workpapers showing every figure and where it goes on your return.
4. Decide how the form travels with your return before you file, not after. The instructions say it is attached.

Glossary

• Unsupported form: a form a tax program can’t prepare. TaxSlayer publishes its list.
• Part V: the part of Form 8621 for distributions from, and sales of, a fund taxed under section 1291. Lines 15 and 16.
• Line 16e: the deferred tax from Part V, added to the tax on your return.
• Line 16f: the interest on that deferred tax.
• FBAR (FinCEN Report 114): the report of foreign financial accounts, filed separately from the tax return.
• PFIC: a passive foreign investment company, including most foreign mutual funds and ETFs. See what a PFIC is.

Frequently asked questions

Does TaxSlayer support Form 8621?

No. TaxSlayer’s Unsupported Forms article lists Form 8621 with the status “Not supported” for its individual tax software.

Can I file Form 8621 separately from my TaxSlayer return?

TaxSlayer suggests filing an unsupported form separately with the IRS when permitted. The Form 8621 instructions say to attach the form to your tax return, and describe filing it on its own only for a shareholder who isn’t required to file a return.

Does TaxSlayer Pro calculate Form 8621 Part V?

TaxSlayer Pro’s help pages describe entering the tax calculated on Form 8621 Part V line 16e, and the line 16f interest, as figures. They don’t describe computing them, so the calculation is done elsewhere.

Does TaxSlayer file the FBAR?

No. TaxSlayer’s help pages say its program does not support filing FinCEN Report 114. The FBAR is filed separately from the tax return.

Where do I get the Form 8621 figures if TaxSlayer doesn’t support it?

From a tool built for the section 1291 calculation. The PFIC Calculator & Form 8621 Generator computes Part V block by block and fills in the official Form 8621 for each fund and year.

Settle the calculation, then the filing. Test the fund with the free PFIC Analyzer, then let the PFIC Calculator work out Part V and produce the form your return needs.

TaxSlayer, TaxSlayer Pro and TurboTax are trademarks of their respective owners. This guide is not affiliated with or endorsed by any of them. Product features are described from the makers’ own help pages as of this writing and can change.