A client asked:
“I’m a dual citizen living in Canada. I have a Canadian TFSA account, and opened it before I realised that this might be a problem. Do I report this to the IRS?”
Unfortunately there are no relieving provisions in the US/Canada tax treaty that relates to the TFSA for US citizens. As such, it’s generally treated as a foreign trust, and you’ll need to file a Form 3520-A within 2 1/2 months of the “year end of the trust.” (ie. Dec 31/xx) This is one of those $10,000/yr penalties if you don’t file, so you’ll want to stay on top of these.
Additionally, you will have to do the FBAR filings, and possibly a Form 3520 to report draws/contributions to the TFSA.
Usual Disclaimer: This information is for general information purposes only, and deals with complicated and time-sensitive info that may not apply to your situation. Tax rules are always changing, and this information may not be current. Tax is complicated, this information is not tax advice, and don’t rely on this info to make tax decisions – Hire someone to help you.