First, thank you to all those posting here re: taxation and the complexities of various form completion. I've found it to be incredibly helpful in the completion of some of the forms.
Background: Cdn citizen, now living in USA and completing initial returns (3520 and 3520a) for TFSA (that in hindsight, should have closed before departing Canada).
A couple of questions...
Can someone provide insight on how to handle unrealized gains/losses on investments (market value at end of year being higher/lower than beginning of year? I had one long term investment that was sold in 2013 and it resulted in a capital loss and I see where I would enter that into 5b (Part II), but I'm not sure how to handle changes in value of other investments (not sold). Are they considered income/loss, despite not being sold yet?
And, is there any impact if a portion of the TFSA portfolio included mutual funds?
Thank-you
3520a - TFSA unrealized gains/losses question
Moderator: Mark T Serbinski CA CPA
TFSAs and RESPs, for US income tax purposes, are like any other non-sheltered accounts. You are only taxed on actual income generated within the account, like interst, dividend and cap gains distributions, and gains from actaul dispositions of the investemnts (ie. sales). You report these on your 1040
No sales, no cap gains from dispositions.
However, keep in mind that RESPs and TFSAs are also subject to the PFIC rules, as well as trust rules.
You cabn read about this elsewhere, while you are waiting on the phone to close these headache accounts.
No sales, no cap gains from dispositions.
However, keep in mind that RESPs and TFSAs are also subject to the PFIC rules, as well as trust rules.
You cabn read about this elsewhere, while you are waiting on the phone to close these headache accounts.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
The PFIC rules I allude to generally mean that even when you don't sell a particular investment, you must pretend to have sold it (mark-to-market) or be penalized. So, a TFSa in which you didn't even sell an investmenbt may result in US tax.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thank-you nelsona!
Definitely a headache...and yes will definitely be closing this account.
Obviously, will have to file one more year now...but maybe you can answer another question about that. I have one investment that was purchased at end of March 2013...I'm assuming it would make sense to wait and close the account once that particular security reaches 'long term' status (so not lumped into ordinary income tax rate?).
Really kicking myself that I didn't make myself aware of this before! Will have to do some reading on PFICs (I'm assuming a mutual fund must fall under that category). If I don't include any unrealized gains on 3520a, how will IRS know if its taxable or not...is there another form I should be completing? Please say 'no'....
Definitely a headache...and yes will definitely be closing this account.
Obviously, will have to file one more year now...but maybe you can answer another question about that. I have one investment that was purchased at end of March 2013...I'm assuming it would make sense to wait and close the account once that particular security reaches 'long term' status (so not lumped into ordinary income tax rate?).
Really kicking myself that I didn't make myself aware of this before! Will have to do some reading on PFICs (I'm assuming a mutual fund must fall under that category). If I don't include any unrealized gains on 3520a, how will IRS know if its taxable or not...is there another form I should be completing? Please say 'no'....
Like I said, PFICs may mean "selling every dec 31, so short/long-term may not matter.
I suggest you read over the long threads that deal with PFIC and 3520 for TFSAs and RESPs etc. No sense re-inventing anything at this point.
Been covered already.
I suggest you read over the long threads that deal with PFIC and 3520 for TFSAs and RESPs etc. No sense re-inventing anything at this point.
Been covered already.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best