TFSA reporting requirements in the US

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Joined: Sun Apr 17, 2022 11:55 pm

TFSA reporting requirements in the US

Post by Amzon »

Hello, I did a cursory search for TFSA in this forum but didn’t find an answer. My apologies if this type of question has been asked often.

Born in the US, moved to Canada in 2014, became a Canadian citizen in 2020. Have filed all taxes since 2014 in both countries. On the US return I usually do form 1116, but was considering switching to 2555 in the future for reasons below. Always fill out FinCen. Currently have an RRSP. Opened an HISA in early 2021 to park my emergency fund (around 30k), but looking to take advantage of something better than 1.1% interest…

Most of the advice I’ve read is usually not to have a TFSA because of the “multiple reporting requirements” and the requirement of only taking PFIC-compliant investments. If I did want to open a TFSA, what do I need to look for?

As for the reporting requirements - Is it only filling out form 3520 and 3520-A? Are there any additional forms or requirements? I’ve always filed my own taxes in both the US and Canada with the exception of the first year I moved to Canada, which I had the help of a cross-border accountant. I’m not an expert but I usually think I know enough to navigate most tax forms. There’s a lot of language on 3520 I’m not familiar with, but those of you who have, is it something that can be done by someone without a deep tax background?

Not familiar at all in terms of what it means to not invest in when it comes to PFIC-complaint investments. I would most likely look at TD e series US index and TD e series CAN index as that’s what i use for my RRSP. Would those qualify as PFIC-complaint?

I’m not adverse to hiring a tax border specialist.. However, if I were to move my current emergency fund to a TFSA, and had I had a 5% rate of return, I’m up about $1,500 on the year. So if I go to a specialist for information, and the cost to do so is over 1k, it’s not really worth it in the short term. Long term of course it could be as I might learn how to fill out those 3520/3520-A forms correctly. But it’s just confusing enough to where it might turn into a new yearly expense, and at the levels I’m currently investing or seeing returns at, it might not be worth it.

Thanks in advance for any insight.
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Joined: Wed Jan 25, 2023 10:02 pm

Re: TFSA reporting requirements in the US

Post by birdadam »

Hi! I am in an almost identical situation. All accountants want $1000 or so to file the 3520 forms. Did you figure this out? Any tips on a good tax accountant to use? Any experience and advice greatly appreciated! Thanks!
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Re: TFSA reporting requirements in the US

Post by ND »

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Joined: Wed Apr 12, 2023 12:01 pm

Re: TFSA reporting requirements in the US

Post by FunTopic »

US Tax court rulings since 2019 seem to indicate that 3520's are not needed for TFSA accounts. So don't file them.

The PFIC/8621 stuff is harder. Easy solution is just don't own PFICs. Then no 8621's needed.

If you do want to hold PFICs, hold them in an RRSP. Then you don't need to worry.
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