Can you point me to the correct US tax forms if I have a Canadian TFSA mutual fund?

Question

I am a Canadian citizen and American permanent resident who invested in a TFSA mutual fund with a Canadian bank. Im looking to be pointed in the right direction for filing American taxes on these capital gains.

Thanks very much

Answer 1

As opposed to RRSP, TFSA and RESP accounts are not covered by the US-Canadian tax treaty and the gains are taxed as current income by the US.

You report it on forms 3520, possibly 3520A, possibly form 8938 and the FinCEN form 114.

For RRSP use form 8891 that allows deferring the gains to when you start drawing distributions (making RRSPs similar to the treatment of IRAs/401k in the US).

Call your congressmen to complain, or your nearest US consulate to give up your US green card (it will take ~10 years for your US tax liabilities to slowly dissolve if you chose to give up the US citizenship, or permanent residency that you had for more than 8 years, and pay the expat tax).

Here's one blog post on this topic, here's another blog post on this topic.

Needless to say, get a licensed tax adviser (EA/CPA licensed in your State) to help you figure this all out, the penalties for not filing the right piece of paper are humongous and may bankrupt you even if you don't owe any taxes at all.