Topic 6:- Joint Indian Mutual Funds With Spouse – FBAR or Form 8621?

Primary Keyword: Joint FBAR vs Form 8621 Indian Mutual Funds

Meta Title: Joint Indian Mutual Funds: 2026 Guide to FBAR & Form 8621

Meta Description: Owning Indian mutual funds with a spouse? Learn the 2026 reporting rules for joint FBAR filings and the “one form per fund” requirement for Form 8621 (PFIC) to avoid penalties.

In 2026, if you and your spouse jointly own Indian mutual fund folios (e.g., with SBI, Axis, or HDFC), you are subject to two entirely different sets of “joint” rules. While the FBAR allows for streamlined spousal reporting, Form 8621 (PFIC) is far more rigid and can double your paperwork if not handled correctly.

1. The FBAR (FinCEN 114) Rule: One Form for Both?

For the FBAR, the IRS and FinCEN provide a “Spousal Exception” to reduce redundant filing.

• When You Can File Jointly: You can file a single FBAR for both spouses only if all reportable financial accounts are jointly owned. You must both sign Form 114a (Record of Authorization) and keep it in your records.
• When You Must File Separately: If either spouse owns even one account individually (like a personal NRE savings account), both spouses must file their own separate FBARs. Each spouse must report the full maximum value of the joint accounts on their individual form.

2. Form 8621 (PFIC) Rule: One Form Per Fund

Unlike the FBAR, Form 8621 is attached to your tax return.

• The Joint Filing Advantage: If you file your 2026 tax return as Married Filing Jointly (MFJ), you can file a single Form 8621 for each mutual fund held jointly. You simply check the box on the form indicating the shares are “jointly owned with spouse.”
• The “Separate” Burden: If you file as Married Filing Separately (MFS), you generally must each file your own Form 8621 for the same fund, which effectively doubles the professional fees and time required for compliance.

3. Threshold Differences for 2026

The thresholds for deciding if you need to file these forms change significantly for couples:

*Note: The PFIC threshold only applies if you had no distributions (dividends) or sales. If you received even ₹1 in dividends, you must file regardless of the total value.

4. The “Signature Authority” Risk in 2026

If you are the primary holder of an Indian fund but your spouse has signature authority (common in Indian “Either or Survivor” accounts), your spouse may have an FBAR requirement even if they don’t “own” the money. In 2026, the IRS is increasingly using FATCA data from Indian banks to identify U.S. persons who have “control” over funds, making it vital to list all authorized signers on the FBAR to avoid the $16,536 non-willful penalty.

How KKCA Secures Your Status

We specialize in optimizing spousal reporting to minimize both risk and cost:

• FBAR Consolidation: We review your entire account list (NRE, NRO, PPF, MFs) to determine if you qualify for a single spousal FBAR or if separate filings are legally required.
• 8621 Synchronization: We ensure the “Jointly Owned” checkboxes are correctly marked on your 2026 return so you only pay for the preparation of one form per fund rather than two.
• Threshold Planning: We calculate your aggregate values to see if filing jointly for 2026 allows you to bypass the complex Form 8938 (FATCA) entirely by utilizing the higher $100,000 threshold.

Call to Action

Looking for personalized tax services about your specific tax situation? Please contact us. We are here to help you with your specific tax matters.

Frequently Asked Questions (FAQ)

Q: Does my spouse need an ITIN to be on a joint FBAR? A: No. While an ITIN is required for a joint tax return, you can often file a joint FBAR using the spouse’s foreign passport information if they don’t have a U.S. tax ID yet.

Q: We have 5 joint funds; do we file 5 or 10 Form 8621s? A: If filing a joint tax return (MFJ), you only need to file 5 forms (one for each fund), provided they are all jointly owned.

Q: What if we own a fund 50/50 but with a parent in India? A: This is an “Indirect Ownership” scenario. You and your spouse must report your respective 50% interest, while the Indian parent has no U.S. reporting duty.

Disclaimer

This blog is intended for informational purposes only and does not constitute legal or tax advice. Please consult a qualified U.S. CPA or tax attorney for guidance specific to your situation.