Segal, Cohen & Landis, P.C.
Canadian TFSA: IRS Reporting and Tax Compliance for US Persons
IRS tax attorneys — Beverly Hills, CA. National representation.
The Tax-Free Savings Account (TFSA) is Canada's most popular registered savings vehicle — fully tax-exempt under Canadian law. For US citizens and Green Card holders, the situation is significantly more complicated.
The US-Canada tax treaty does not protect TFSA income from US tax. Interest, dividends, and capital gains earned inside a TFSA are taxable to US persons each year. The investment funds held in a TFSA are likely PFICs. The TFSA must be reported on the FBAR.
How We Help
Our Approach to Canada TFSA Tax Attorney for US Citizens
TFSA Income Reporting
We calculate taxable income inside the TFSA for all open years — interest, dividends, and capital gains — using Canadian account statements.
PFIC Analysis and Elections
Canadian mutual funds, ETFs, and certain other investments held inside a TFSA are PFICs. We identify PFIC holdings, make QEF or MTM elections, and prepare Form 8621.
FBAR and Form 8938 Filing
A TFSA with a value exceeding the FBAR threshold must be reported on FinCEN Form 114. We include TFSA accounts in all required foreign account disclosures.
TFSA Cleanup for Prior Years
For US-Canada dual citizens who have never reported their TFSA income, we develop and execute the appropriate disclosure path — typically Streamlined procedures.
How It Works
The Resolution Process
TFSA Account Analysis
We analyze the TFSA holdings, identify PFIC exposure, and calculate the total unreported US tax for each year.
Disclosure Strategy
We determine the optimal disclosure path based on the number of years, the amount of unreported income, and the client's residency history.
Return Preparation
We prepare amended or delinquent returns, Form 8621 for PFICs, FBAR filings, and Form 8938 disclosures.
Ongoing Annual Compliance
We handle annual TFSA reporting as part of a comprehensive US-Canada tax compliance package.
Ready to Resolve Your Tax Problem?
Our attorneys have helped thousands of clients resolve IRS matters. Your consultation is free and confidential.
Common Questions
Frequently Asked Questions
Is a Canadian TFSA taxable in the US?+
Yes. The US-Canada tax treaty does not exempt TFSA income from US tax. All income earned inside a TFSA — interest, dividends, capital gains — is taxable to US persons in the year earned.
Are Canadian mutual funds in a TFSA PFICs?+
Generally yes. Most Canadian mutual funds and many Canadian ETFs qualify as PFICs. Without a QEF or MTM election, gains are subject to the punitive excess distribution tax plus interest charges.
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Segal, Cohen & Landis, P.C.
9100 Wilshire Boulevard, 601 East Tower, Beverly Hills, CA 90212
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