Do I have to report my TFSA on my US return?
Yes, in substance. The account is tax-free in Canada, but that shelter is a Canadian one and it does not travel. For a US owner the growth inside the account is taxable in the United States as it arises, so interest, dividends and realised gains belong in the US computation for the year they occur. On top of the income reporting, the plan may fall to be treated as a foreign trust, which brings information returns of its own. The filing set therefore has two halves: the income, and the disclosure of the arrangement holding it. Both are settled by reading the account itself, not by a rule of thumb.
Is a TFSA treated as a foreign trust by the IRS?
It may be, and that is the question to settle before anything is filed rather than after. Neither the tax-free savings account nor the education savings plan is recognised by the United States as the sheltered vehicle it is in Canada, and depending on how the plan is constituted it can be reportable as a foreign trust. That characterisation changes the paperwork substantially, because trust information returns sit alongside the ordinary income reporting and carry their own requirements. We read the plan documents and the way the account is held, then set the position in writing so every later year is filed consistently.
Does the Canada US tax treaty protect my RESP?
Not in the way it protects registered retirement savings. The treaty has a mechanism for deferring tax on certain registered retirement plans, and people reasonably assume it covers everything with the word registered in its name. It does not. An education savings plan gets no equivalent shelter, so the income and growth inside it remain currently taxable to a US owner, and the plan itself may be reportable as a foreign arrangement. If your position was built on an assumption that the treaty carried the plan across, that assumption is the first thing to test.
My spouse is not American, does that change what I file?
It can change a great deal, because the reporting follows who owns and controls the plan rather than who benefits from it. Where an account is held by the non-US spouse alone, the US reporting picture differs from one held jointly or held by the US person. Where the US person is the holder or subscriber, or has control over the plan, it comes into their return and possibly into the trust reporting as well. So the first step is documentary. Establish from the account paperwork who actually holds each plan, then work the filing consequences out from that rather than from the household.
Do I report a TFSA that only holds cash?
Yes. The obligation does not turn on whether the account holds shares or a savings balance, nor on how much it earned. Interest is income, and for a US owner it is income in the year it is credited, without the Canadian shelter. A cash account is simpler to compute in practice, because there are no dispositions to track, but it is not exempt. The disclosure side is unaffected too. Whether the arrangement is reportable as a foreign trust depends on how the plan is constituted, not on what the plan is invested in.
Which years do I need to report my TFSA for?
That is decided by your filing history and by the position taken on the plan, not by a standard answer. Once the characterisation is settled, the same treatment applies across every open year, which is what makes establishing the position worth doing before anything is filed. Where returns were filed without the account in them, the question becomes which of those years should be corrected and by what route. Where no returns were filed, the years follow from the filing requirement itself. We work it out from the account statements and the returns actually filed, then set the years out in writing before starting.
What happens if I have not filed for several years?
Missed years are handled as one package, not one at a time, because the route chosen for the first year determines the relief available for the rest. Each country has a disclosure or relief programme with its own conditions, and entering the right one — before the authority contacts you — is usually what keeps penalties down. Filing quietly outside a programme forfeits that protection. See catching up on missed returns.
What is the penalty for a late T1135 or a missed FBAR?
Both are penalty regimes attached to the form rather than to any tax, which is why people who owed nothing still face them. The Canadian foreign property statement carries a per-month penalty with much larger amounts for a failure that continues or is made knowingly; the US account report is separate again and pivots on whether the failure was wilful. Relief exists — voluntary disclosure, reasonable cause, taxpayer relief — and it narrows once the authority makes contact. The reporting trigger on the US side is an aggregate balance over $10,000 at any point in the year. See late T1135 penalty relief.
