I am a US citizen with a TFSA, where do I start?
Start with the plan documents, not with the forms. What has to be filed follows from how each account is characterised for United States purposes, and that characterisation comes out of the account agreement and the way the plan is held. So the first task is to collect every plan document and every annual statement, establish who the holder is and what the plan actually is, and settle the position in writing. Only then does the filing set follow. Working the other way round, picking forms first and fitting the facts to them, is how positions end up inconsistent from year to year.
What documents do I need to gather before getting advice?
The plan or account agreement for each account, the annual statements from the institution covering every year the account has been open, and the transaction history showing contributions, withdrawals and any trades inside the plan. If there is an education savings plan, the paperwork naming the subscriber and the beneficiary matters, because ownership and control drive the reporting. Add the United States returns already filed, if any, so we can see which years included the accounts and which did not. With that set in hand the position can usually be settled without further requests.
Should I close my TFSA before doing anything else?
Not as a reflex. Closing an account is itself an event with consequences on both sides of the border, and doing it before the position is settled can make the reporting harder rather than simpler, because the year of closure then needs explaining as well. The sensible order is to establish what each plan is for United States purposes, compute what holding it actually costs annually, and only then decide whether to keep it, stop contributing, or wind it up. The decision is usually a computation, and it reads quite differently from one plan to the next.
How do I work out what my TFSA is costing me?
By computing the income inside it as the United States sees it, year by year, and setting that against the Canadian benefit of holding it. The growth is taxable to the US owner as it arises, so interest, dividends and realised gains inside the plan are the cost side, together with the preparation the reporting requires and any trust information returns the characterisation brings with it. The benefit side is the Canadian shelter you would give up. Written out plan by plan, the comparison usually makes the decision obvious, and it often differs between the savings account and the education plan.
I only just found out my RESP is a problem, what now?
Deal with it in order, and resist filing anything in a hurry. First settle what the plan is for United States purposes and who is treated as holding it. Second, compute the income inside it for each year the plan has existed, from the statements. Third, decide which years need to be corrected and by what route, and whether contributions should continue while that is under way. Each of those steps depends on the one before it, which is why the sequence is the work. We agree a fixed fee in writing for the review before it starts, so the first step does not commit you to the rest.
Can you review the accounts before I decide to file?
Yes, and that is usually the right first engagement. The review reads the plan documents, establishes the characterisation of each account, and computes the income inside it, which is everything needed to decide what to do next. It produces a written position and a schedule of the years in scope. Nothing is filed on the strength of a review alone. If you then want the returns prepared, they are prepared from the same schedule, so the filing matches the analysis. The fee for the review is agreed in writing before it starts.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
Do I need to report a foreign business I own?
Almost certainly, and on more than one form. Canada requires reporting of foreign affiliates on the T1134; the United States has a family of returns keyed to the entity type and your level of control, and several carry penalties that apply whether or not any tax is owed. These are information returns, so the obligation follows the ownership rather than the profit. See T1134.
