As a U.S. citizen residing abroad you have to be particularly careful with respect to your investments and assets.  One particular “thorny” issue is that of foreign mutual funds. 

The problem with foreign mutual funds is they are Passive Foreign Investment Companies, or PFICs.  The tax treatment of PFICs is extremely punitive compared to similar investments that are incorporated in the U.S.  Combining the high tax rate with the cost of complying with IRS reporting rules on PFICs and the investment may quickly lose any appeal it once had. 

As a U.S. citizen residing abroad you have to be particularly careful with respect to your investments and assets.  One particular “thorny” issue is that of passive foreign investment companies, or PFICs. 

The tax treatment of PFICs is extremely punitive compared to similar investments that are incorporated in the U.S.  Combining the high tax rate with the cost of complying with IRS reporting rules on PFICs and the investment may quickly lose any appeal it once had. 

What could go wrong with investing in a mutual fund? PLENTY if you're an American living abroad. I was on the Goldstein on Gelt Show to help you understand why.

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