Hello,
I become aware while reading this forum that Canadian TFSA has some extensive reporting requirements and penalties up to 50% of the amount held in the account if not properly disclosed.
I probably have some $500 in my TFSA. Is a reporting hassle of this account overweighs the risk of a maximum penalty of $250 or there's more to it?
I do plan to close this account right away. And I would do it earlier if I knew about all the reporting problems it creates.
I'm afraid of losing a lot of time that cannot be written off my taxes while trying to become tax perfect.
TFSA, reporting requirements and possible penalties
Moderator: Mark T Serbinski CA CPA
Re: TFSA, reporting requirements and possible penalties
It has been the consistent advice here that one should close their TFSA when (and preferably before) moving to US.
Any account, other than a no fee Cdn bank account, with such a small balance, should be closed for simplicity.
Any account, other than a no fee Cdn bank account, with such a small balance, should be closed for simplicity.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Re: TFSA, reporting requirements and possible penalties
Hello,
While preparing to report in some way my TFSA, I found a lot of different scenarios:
Some people forget about this filing requirement without any questions from IRS from 2016;
Some people don't think that TFSA is a foreign trust and thus, they don't file without any consequences;
Some people file form 3520 and in this case, one has to be very accurate and not late, I presume there may be penalties for non accurate filing or may be just questions from IRS;
And there's one suggestion that I found particularly interesting (posted by ND): Alternatively, add 8275R to 1040 to disclose position 3520 not required and answer 'yes' on Sch B.
Has anyone tried to use 8275R for this matter?
May I use both methods - form 3520 and form 8275R ? I explain: if form 8275R is accepted and there're any questions from IRS related to inaccurate filing of form 3520, I'll answer that I don't need to file anyway, so disregard this form. If form 8275R is not accepted, no problem, I still did my reporting on time and may be even accurately, who knows, so no penalties for late filing.
Any ideas are welcome,
While preparing to report in some way my TFSA, I found a lot of different scenarios:
Some people forget about this filing requirement without any questions from IRS from 2016;
Some people don't think that TFSA is a foreign trust and thus, they don't file without any consequences;
Some people file form 3520 and in this case, one has to be very accurate and not late, I presume there may be penalties for non accurate filing or may be just questions from IRS;
And there's one suggestion that I found particularly interesting (posted by ND): Alternatively, add 8275R to 1040 to disclose position 3520 not required and answer 'yes' on Sch B.
Has anyone tried to use 8275R for this matter?
May I use both methods - form 3520 and form 8275R ? I explain: if form 8275R is accepted and there're any questions from IRS related to inaccurate filing of form 3520, I'll answer that I don't need to file anyway, so disregard this form. If form 8275R is not accepted, no problem, I still did my reporting on time and may be even accurately, who knows, so no penalties for late filing.
Any ideas are welcome,