Basic, unusual TFSA/3520 question

CdnAmerican · Post by **CdnAmerican** » Sat Feb 18, 2017 6:05 pm

This is probably an easy one. I'm a USC living in Canada. I went to set up an RRSP at my Cdn bank. The agent set this up, and then "helpfully" also set up a TFSA for me, in case I might want one. Do I need to file a 3520 for it? It has no money in it, though I might want to use it in the future (especially if I am going to have to file for it anyway).

Thanks!

brianbbc · Post by **brianbbc** » Sat Feb 25, 2017 8:05 pm

I hope you got an answer already. do not open a tfsa as an American citizen. the irs does not recognize or accept it for what it is. when you cash it out later, the cra will not tax you but the irs will tax you on the capitol gains.you will also be required to pay taxes on the yearly dividends. the cra is much better to usa citizens or previous residents as they accept the roth ira just the way the irs does. also be careful how you invest your taxable accounts in Canada, the irs will heavily tax foreign income (pfic). sheltered accounts like rrsp are safer.

nelsona · Post by **nelsona** » Sun Feb 26, 2017 8:07 am

Well CRA is nicer because US had the sense of putting Roth in the treaty while Canada didn't. Until it was in the treaty CRA treated Roths exactly like IRS now treats TFSAs