RRSP/TFSA/RESP related filing requiremnts for Canadian citizens in USA

[Moving2PS]

Hello,

Can someone summarize what forms need to be filed every year with respect to RRSP/TFSA/RESP for a Canadian citizen living and working in USA and how much does it usually cost to hire a cross border tax specialist?

Thank you !

[ND]

RRSP - no forms
RESP - no forms (if under $100k for family member limit) but include RESP income on 1040
TFSA - if posit it's not a foreign trust, no forms and answer 'no' on Sch B, if report like a foreign trust, file 3520/3520-A and make sure not to be even one day late, answer 'yes' on Sch B. Alternatively, add 8275R to 1040 to disclose position 3520 not required and answer 'yes' on Sch B. In all 3 reporting styles, include TFSA income on 1040.
Fees for RRSP/RESP s/b NIL. Fees for TFSA depend upon which method selected.

[nelsona]

Just to add, With an RRSP, one has to tick yes on Schedule B.

Also, TFSA and RESP value and contents could make them subject to PFIC and FATCA reporting.

[Moving2PS]

ND wrote:
> RRSP - no forms
> RESP - no forms (if under $100k for family member limit) but include RESP
> income on 1040
> TFSA - if posit it's not a foreign trust, no forms and answer 'no' on Sch
> B, if report like a foreign trust, file 3520/3520-A and make sure not to be
> even one day late, answer 'yes' on Sch B. Alternatively, add 8275R to 1040
> to disclose position 3520 not required and answer 'yes' on Sch B. In all 3
> reporting styles, include TFSA income on 1040.
> Fees for RRSP/RESP s/b NIL. Fees for TFSA depend upon which method
> selected.

Thank you ND & Nelsona for your reply.

RESP : Once I leave canada, I will be a non resident and I am not eligible to make any further contribution which means I will not get any grants from Canadian Govt after leaving canada . If my investment is held in non dividend paying US stocks or Index funds (say Vanguard) for long term with no transactions made for the year, I will have no income to report and hopefully no capital gains to pay right?

TFSA : Similarly if I invest my entire TFSA in US based non dividend stocks or Vanguard index funds, It would not be considered PFIC or foreign trust right? Hence no complicated forms to file. Also, there would be unrealised gains /losses but really no capital gain/loss to report if i don't have any transactions and just leave it as a long term investment to grow. Can you confirm this?

Thanks again for all the valuable info !

[ND]

RE: Also, TFSA and RESP value and contents could make them subject to PFIC

IRS has never opined or clarified or confirmed that TFSA and or RESP would be considered PFICs, including those with Cdn mutual funds.

Practitioners (like Max Reed) posit that many, if not all, are NOT PFICs.

Other practitioner, and no one has ever categorically proven that Cdn mutual funds. TFSA and RESP are PFICs (the often cited PLR doesn't prove so) report them as PFICs as CYA practice. Downside is, that IRS computers take their reporting at face value, treat them like PFICs, which comes with assessing all penalties related to PFICs including late filing. A CPA being conservative to skirt a potential pushback from client easily translates into unnecessary extra prep fees and IRS penalty assessment for the taxpayer client, often not understanding that it was the CPA who put them into that position.

[nelsona]

The word COULD covers what I said. And of course, it is the CONTENT of the RESP or TFSA that COULD be PFIC, not the account itself.

>TFSA : Similarly if I invest my entire TFSA in US based non dividend stocks or Vanguard index funds, It would not be considered PFIC or foreign trust >right? Hence no complicated forms to file. Also, there would be unrealised gains /losses but really no capital gain/loss to report if i don't have any >transactions and just leave it as a long term investment to grow. Can you confirm this?

Correct, but you could also have non-dividend Cdn stocks, or even dividend producing stocks that trade on US market (thus qualified dividendssand owe no taxes in US depending on your income)

[ND]

RE: The word COULD covers what I said.
In your mind, yes, in an uneducated reader's mind no, as it easily could be interpreted to mean depending on the account's investment it certainly will be a PFIC. Dependent upon what's invested. While in fact, the uncertainty (the COULD) is one of law not of investment content.

[nelsona]

Ok. RESPs and TFSA are NOT PFICs

The investments within them certainly can be PFICs

[Moving2PS]

nelsona wrote:
> Ok. RESPs and TFSA are NOT PFICs
>
> The investments within them certainly can be PFICs

That makes it very clear :)

Thank you both for the wealth of information.

[DBinROC]

I’m a dual citizen and US resident. Been filing US taxes only for past 20+ years. My accountant used to report my RRSP holdings (ETF’s) and contribution cost base. It was a separate form, I think sent to IRS Detroit. I live in western NYS. When the PFIS and trust determination came into effect, we learned that it would apply to Mutual Funds inside the RRSP. Since I held ETF’s, it was exempt from filing these forms.

About seven years ago the IRS changed the reporting law on RRSPs. If the value is under $100k, and no Mutual Fund investments, I don’t even need to declare them at all.

If I were you, and your time in the US is temporary, I’d put the RRSP investments into GIC’s ( aka CD’s) paying 5.x%. No questions asked.
If you have more than USD 100k in your RRSP, consider the same investment and try splitting into two RRSP’s. Opening a second RRSP as a non-resident might be challenging. I’m told TD Bank is more cooperative than others with cross border issues. Even branches can open RRSP for foreigners but only using GIC’s.

FWIW.

[nelsona]

RRSPs are completely exempt from PFIC. It is the only type of account that has such exemption, by treaty. Your accountant handled your RRSP incorrectly.

[MIKE2000Z28]

So we are leaning that the TFSA is not a foreign trust anymore? I know it was a firm yes up to a couple years ago when some professionals stated that it was not and don't consider it as such.

Are professionals receiving less pushback from the irs regarding that account in not filing the 3520 forms?

[nelsona]

From what I've seen the only pushback from IRS is for those that HAVE filed 3520 (late filing, wrong info, etc).

No one that I know of has been "accused" of never filing 3520 for TFSA

[ND]

RE: [nelosna[ RRSPs are completely exempt from PFIC. It is the only type of account that has such exemption, by treaty. Your accountant handled your RRSP incorrectly.
[DBinROC] My accountant used to report my RRSP holdings (ETF’s) and contribution cost base. It was a separate form, I think sent to IRS Detroit.

I think all DBinROC meant is that he mailed FBAR that included RRSP to U.S. Department of the Treasury, Post Office Box 32621, Detroit, Michigan 48232-0621

[nelsona]

RRSPs are completely exempt from PFIC. even if you hold Cdn Mutual funds or ETFs, It is the only type of account that has such exemption, by treaty.