Help filling 3520 / 3520a for ING Direct TFSA Saving Account

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albator73
Posts: 8
Joined: Sat Nov 03, 2012 4:14 pm

Help filling 3520 / 3520a for ING Direct TFSA Saving Account

Post by albator73 »

Hi,

I'm very confuse and hope someone can clarify my situation.

In 2008, I open a [url=http://www.ingdirect.ca/en/save-invest/tfsa/index.html]Saving Account TFSA from ING Direct[/url] and every year I invest the maximum per year. $5K

From what I'm reading lot of people mention that we need to fill 3520 / 3520A for TFSA, but there seem to be different TFSA. (Trust, No Trust, etc)

Does a basic saving account TFSA ( No trust) need 3520 / 3520A form?

I call ING Direct and they confirm it was NOT trust account. He doubt I need to fill out these forms.

Thanks
:?:
nelsona
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Location: Nowhere, man

Post by nelsona »

ING specifically calls this account a non-trust, so you are fine with respect to 3520.
However, it is not a sheltered account for US purposes, so remember to include any intwrst on your 1040.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
albator73
Posts: 8
Joined: Sat Nov 03, 2012 4:14 pm

Post by albator73 »

[quote="nelsona"]ING specifically calls this account a non-trust, so you are fine with respect to 3520.
However, it is not a sheltered account for US purposes, so remember to include any intwrst on your 1040.[/quote]

Thank!!

That is GREAT news. Yes, I did including them in my Schedule B & 1040.
After including the exclusion from 2555 and little interest of $500 from TSFA, I realize that I didn't have to pay any tax.

I also included them in the FBAR report.

Knowing all this now, for the relief of paper complexity for this poor performance account I didn't took a chance I close all them.

Have great day
Albator73
rafa02
Posts: 95
Joined: Sat May 26, 2012 3:18 pm

Post by rafa02 »

nelsona, your comment that the ING TFSA is not a trust is surprising. I went to ING's website and was not able to find where they state it is not a trust, but if this is the case, is the ING TFSA a special type of TFSA. Pretty much all the "opinions" on the internet state that TFSA's are trusts and require 3520, and your position in previous posts was that these accounts are trusts and require 3520. One post mentioned David Ingram receiving notice from the IRS that the IRS considered these to be trusts.
rafa02
Posts: 95
Joined: Sat May 26, 2012 3:18 pm

Post by rafa02 »

When I do an internet search for TFSA's and trusts, one link takes me to a CRA page that discusses various trusts, one being a TFSA trust. So then, can a TFSA be either a trust or non-trust depending on how the financial institution has set it up?
nelsona
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Location: Nowhere, man

Post by nelsona »

Yes. All RRSPs are trusts, All RESPs are trusts, however *some* TFSas are not trusts, but only if the institutaion has specifically designated them as non-trust accounts. Otherwise, they should be treated as trusts.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
albator73
Posts: 8
Joined: Sat Nov 03, 2012 4:14 pm

Post by albator73 »

I call ING again, they don't have any official paper but mention to go on CRA website.

From CRA, here the document I found for TFSA type:
http://www.cra-arc.gc.ca/E/pub/tg/rc4466/rc4466-12e.pdf (page 5-6)

From what I read, I suspect my ING Saving Account TFSA is a DEPOSIT type.

--------------------------------------------
Types of TFSAs
There are three different types of TFSAs that can be offered:
a deposit, an annuity contract, and an arrangement in trust.

- an arrangement in trust with an issuer that is authorized
in Canada to offer to the public its services as a trustee;

- an annuity contract with an issuer that is a licensed
annuities provider;

- A deposit with an issuer that is a person who is a
member, or is eligible to be a member, of the Canadian
Payments Association, or a credit union that is a
shareholder or member of a “centralâ€￾ for the purposes
of the Canadian Payments Act.
--------------------------------------------
nelsona
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Location: Nowhere, man

Post by nelsona »

ING's paperwork does indeed menation what ytype of account it is, but you have found your answer.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Mark T Serbinski CA CPA
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Post by Mark T Serbinski CA CPA »

Even though the institution calls this a "deposit account" for U.S. purposes, any TFSA is still a foreign grantor trust. You, as the trustee and grantor, establish a trust which is has certain tax attributes associated with it, but only as long as the funds remain within the trust.

If the institution calls the TFSA an "arrangement in trust" the institution may be the trustee, but that is the only difference.

For U.S. purposes, any income earned with in the trust and attributable to a U.S. beneficiary is taxable in the hands of the beneficiary.
Mark
jayaamit
Posts: 9
Joined: Thu Jun 02, 2016 9:54 pm

Post by jayaamit »

[quote]For U.S. purposes, any income earned with in the trust and attributable to a U.S. beneficiary is taxable in the hands of the beneficiary.[/quote]

I have an RESP set up with Knowledge First Financial in which both me and my wife have been mentioned as Subscribers and my daughter as the beneficiary. I understand that any income on our deposits and any grants received from the Canadian government are to be reported on 3520/3520-A as well as to be reported in the 1040.

My question is - since the kids are the beneficiaries of the RESP accounts - should we be filing 1040 for the kids and report the income in their 1040 instead of reporting the income in our 1040 as the owner/grantor of the RESP trust? I thought till now that since we are the owner hence we are supposed to pay the tax on the earned income inside the RESP and the beneficiaries receive a gift (for US tax purposes) when the RESP starts giving distributions out. What is the correct way to handle RESPs? Kindly suggest.
tony
Posts: 97
Joined: Tue Oct 18, 2016 8:50 pm

Post by tony »

jayamit,
The question is where your daughter is. If she lives with you in the US more than 183 days in a particular tax year, then the earning although not distributed needs to be reported!
jayaamit
Posts: 9
Joined: Thu Jun 02, 2016 9:54 pm

Post by jayaamit »

[quote="tony"]jayamit,
The question is where your daughter is. If she lives with you in the US more than 183 days in a particular tax year, then the earning although not distributed needs to be reported![/quote]

Hi Tony,

Thanks for the reply. I understand that the earning has to be reported. But, on whose tax return? I am the owner and I thought I have to declare the earnings in my tax return. She is the beneficiary and I thought that she doesn't have to file any tax till she receives the money. When she turns 18 - and goes to college and the RESP starts distributing the money - I thought that she will have to file her tax returns and declare that as a gift from us - as we have already paid tax on it over the years as we were declaring the earnings in our tax returns. The earlier message from Mark actually confused me and now I think that my understanding was incorrect. Since she is the beneficiary and even though the trust/RESP hasn't been paying any money to her - she is 15 right now and has no other earnings - then should she be filing a 1040 and report the earnings from the RESP in her 1040? And, not us? Hope this clarifies my question - which is who reports the earnings in their tax return - me as the owner, or she as the beneficiary?
tony
Posts: 97
Joined: Tue Oct 18, 2016 8:50 pm

Post by tony »

hi Jayamit,
I search in this forum: it looks like 3520. But, also you need to fill FBAR + FATCA.
Regarding the details, I suggest that you read on this forum.
I know there are lots of them.
And, also don't ask a general question try to be more specific so that your question gets answered.
jayaamit
Posts: 9
Joined: Thu Jun 02, 2016 9:54 pm

Post by jayaamit »

[quote="tony"]hi Jayamit,
I search in this forum: it looks like 3520. But, also you need to fill FBAR + FATCA.
Regarding the details, I suggest that you read on this forum.
I know there are lots of them.
And, also don't ask a general question try to be more specific so that your question gets answered.[/quote]

I don't know how more specific can I be? In no way or form was my question a generic question. It's pretty simple. From what I know that the income inside an RESP has to be reported in 1040 returns. I am the owner of this "so-called" Grantor Trust, and for the RESP my daughter is the beneficiary. Should I report the income of RESP in my tax return or should my daughter file the return and report the income in her 1040? If this is a generic question and not specific then what would be an specific question related to this issue. I was always under the impression that the grantor/owner is supposed to report all income inside an RESP in their tax return and not the beneficiary but the post from Mark Serbinski mentioned that it has to be beneficiary who has to report this income. My question is specific to the reply that Mark Serbiniski wrote - that its the beneficiary who has to report the earnings of the RESP. Was that a typo? Wasn't it supposed to be the owner and not the beneficiary that reports the trust income as all undistributed earnings inside a trust are supposedly taxed to the owner and not the beneficiary?
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