Most NRIs assume that once they land back in India, their PFIC problem ends with the last US tax return they file that year. It usually does not work that way.
The Form 8621 reporting duty is tied to being a US person, not to where you live. How you actually stop being a US person, a visa expiring versus a green card being formally given up, decides when that duty ends, and whether it ends at all for what you already own.
This matters for anyone holding Indian mutual funds, ULIPs, or other PFICs after returning to India, whether you are winding down an H-1B, letting a green card go, or planning to give up US citizenship altogether. Below is what actually determines when PFIC reporting stops, and the one part that never stops on its own.
Who counts as a US person for PFIC purposes
The PFIC reporting rules apply to US citizens, green card holders, and anyone who meets the Substantial Presence Test for the year. That test counts your physical days in the US using a weighted formula across the current and prior two years.
If any of these apply to you for a given tax year, you are a US person for that year, regardless of your passport or where your paychecks came from. This status, not your address, is what triggers the Form 8621 duty under Treasury Regulation 1.1298-1. Indian equity and debt mutual funds, ELSS, and most ULIPs generally meet what actually counts as a PFIC, covered there in full.
You can read the IRS instructions for Form 8621 directly for the underlying filing triggers: receiving a PFIC distribution, recognizing gain on a sale, making an election, or simply being a shareholder in a year covered by Section 1298(f) annual reporting.
Meera, an L-1 visa holder who split her year between a US assignment and a posting in Hyderabad, ran the Substantial Presence Test for the year and confirmed she still met it. That single calculation, not her physical location on December 31, decided that her Indian mutual funds were still reportable PFIC holdings for that tax year.
If you're on a visa: what happens when you fail the Substantial Presence Test
For H-1B, L-1, and F-1 holders returning to India, US person status usually ends once you stop meeting the Substantial Presence Test, generally starting the tax year after your last qualifying day in the US.
The year you leave is usually a dual status year
The year you actually depart is different. You were a US person for part of it and a nonresident for the rest, which makes it a dual status year. Anil, who left his H-1B role in Seattle in August to move to Bengaluru, is a US person from January through August and a nonresident alien from September onward, even though he files one dual status return for the full year.
Form 8621 for the dual status year
Form 8621 is still required for any PFIC you held during the US-person portion of that dual status year. Once your nonresident status is fully in place for the following year, the ongoing annual Form 8621 duty stops, because it only reaches US persons.
There is a practical wrinkle worth knowing here. If your Indian mutual funds are in the growth option, the default for most equity and hybrid funds, they do not distribute income, so no excess distribution or disposition event happens as long as you hold and do not sell. Under the default Section 1291 regime, that can mean $0 PFIC tax for the years you were a US person, even though the information return was still due each year. The choice between staying on that default and electing QEF or mark to market treatment is a separate decision on its own.
If you hold a green card: moving to India does not end anything by itself
Green card holders are a different case entirely. A green card holder remains a US tax resident, full worldwide income tax, FBAR, Form 8938, and PFIC reporting, until the status is formally revoked or abandoned. Relocating to India, or simply not using the card, changes none of that.
Priya moved back to Chennai in 2022 and assumed her green card, unused and eventually expired, ended her US filing duty. It did not. An expired card with no Form I-407 filed leaves you a US person indefinitely, and that gap can surface years later on an unrelated audit, along with every PFIC year in between.
There is a second trap here that catches people who think they have handled this correctly. Claiming nonresident treatment under a tax treaty's tie-breaker rule, disclosed on Form 8833, while still holding the green card, can itself count as an expatriation event for a long term resident, without you ever filing Form I-407. The fuller picture on keeping your green card after the move covers what that decision actually requires.
The exit tax trap for long term green card holders
If you have held a green card in at least 8 of the last 15 tax years, you are a long term resident under Section 877(e)(2). Surrendering the card, or triggering the tie-breaker trap above, is an expatriation event for you specifically.
If you meet any one of three tests, net worth of $2 million or more on the day before expatriation, average annual net income tax over the prior five years above $211,000 for 2026 under Rev. Proc. 2025-32, or you fail to certify five years of US tax compliance on Form 8854, you become a covered expatriate.
Covered expatriates face a mark-to-market exit tax on worldwide assets, including PFIC holdings, as if everything were sold the day before expatriation. A gain exclusion of $910,000 applies for 2026. This is the one scenario where leaving the US can create a larger PFIC-related tax bill than anything you faced while living there.
Ravi, a long term green card holder with a concentrated position in Indian equity mutual funds, ran the covered expatriate tests before surrendering his card and found his average tax liability sat just above the threshold. That single number changed his entire exit plan, since the mark-to-market calculation would apply to gains he had deferred for over a decade under the Section 1291 default. Running these numbers before filing Form I-407, not after, is what makes the difference here.
| Scenario | Must you keep filing Form 8621? | Does the PFIC tax regime still apply? | Key risk |
|---|---|---|---|
| Visa holder who fails the Substantial Presence Test | No, once nonresident status is fully established the following year | No, for years you are a nonresident alien | Dual-status departure year still needs Form 8621 for the US-person months |
| Green card holder who files Form I-407 | No, from the date US person status is formally ended | No, from that date forward | Any unfiled Form 8621 from prior US-person years stays open |
| Green card holder who lets the card lapse without I-407 | Yes, indefinitely, since US person status never actually ended | Yes, indefinitely | Assumes departure ended obligations it did not, discovered on audit |
| Long-term resident who becomes a covered expatriate | No, after the expatriation date | Mark-to-market exit tax applies once, at expatriation, in place of ongoing reporting | Exit tax can exceed years of ordinary PFIC exposure combined |
The row every competitor guide skips is the risk column, not the filing column. Section 6501(c)(8) keeps the entire tax return's audit window open indefinitely for any year a required Form 8621 was not filed, regardless of what happens afterward.
Someone who never filed Form 8621 while a US person, then leaves and genuinely becomes a nonresident alien, has not fixed the earlier years. The IRS can still examine that old return and assess the deferred Section 1291 tax plus interest, with no time limit, because the clock on that return never started running in the first place.
Departure changes your filing duty going forward. It does not erase exposure that already exists. If there is unfiled Form 8621 history sitting behind you, that needs attention on its own timeline, not left behind with the move.
What to actually do before and after you leave
Work through this in order, not all at once on your way out the door.
First, confirm which scenario actually applies to you, visa and the Substantial Presence Test, or green card status. These are not interchangeable, and the wrong assumption is where most of the trouble above starts.
Second, if you are on a visa, get the dual status departure year right, including Form 8621 for the months you were still a US person, before treating yourself as fully nonresident.
Third, if you hold a green card, decide deliberately whether and when to file Form I-407, and if you are a long term resident, run the covered expatriate tests before you surrender anything.
Fourth, check for unfiled Form 8621 history going back several years before assuming a clean break. This is worth doing even if you are confident you have already left US person status behind, since Section 6501(c)(8) does not care where you live now.
Fifth, once the picture above is clear, get the mechanics right on filing Form 8621 correctly, line by line. The broader question of your continuing US filing obligations after the move is covered separately as well.
Conclusion
Whether your PFIC reporting continues after leaving the US comes down to how your US person status actually ends, not to where you happen to be living. Before you assume a clean break, pull the last three years of PFIC and Form 8621 filings and confirm how your departure year should be treated. An advisor who works across both the US and Indian tax systems can walk through your specific visa or green card situation before anything is filed.
Frequently asked questions
Do I have to keep filing Form 8621 after I move back to India?
It depends on how your US person status ended. If you were on a visa and no longer meet the Substantial Presence Test, the annual duty stops once your nonresident status is fully in place, though the departure year itself usually still needs it. If you hold a green card and never filed Form I-407, the duty continues indefinitely because you remain a US person on paper.
What happens if I never filed Form 8621 while I was still a US person?
The statute of limitations on that entire tax return stays open indefinitely under Section 6501(c)(8), even after you leave the US. The IRS can still assess the deferred Section 1291 tax plus interest on that old return with no time limit, because the clock never started.
Is there a dollar threshold that lets me skip Form 8621 entirely?
Yes, a narrow one. If your total PFIC holdings are $25,000 or less as a single filer, or $50,000 or less filing jointly, and you had no distributions, no sales, and made no elections that year, Section 1298(f) reporting is suspended for that year. Most NRI portfolios with meaningful Indian mutual fund holdings exceed this.
Does giving up my green card automatically end my PFIC reporting duty?
Only if you actually file Form I-407 or have the card administratively revoked. Letting the card expire without that filing does not end US person status, so the PFIC and Form 8621 duty continues. If you are a long term resident, giving up the card can also trigger exit tax under Section 877A instead of ending things cleanly.
Can the IRS still examine my PFIC holdings after I have left the US for good?
Yes, for any year a required Form 8621 was not filed while you were still a US person. Section 6501(c)(8) keeps that specific year's audit window open indefinitely, regardless of your current residence or citizenship status.