Comments on: U.S. Citizens With A TFSA http://blog.taxresource.ca/u-s-citizens-with-a-tfsa/ Canadian Tax Help & Financial Planning Resources Sun, 12 Feb 2012 02:53:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Tax Guyhttp://blog.taxresource.ca/u-s-citizens-with-a-tfsa/comment-page-1/#comment-4572 Tax Guy Wed, 20 Jan 2010 16:13:20 +0000 http://blog.taxresource.ca/?p=4150#comment-4572 The Canada-U.S. Tax Treaty covers pensions and similar retirement plans. based on a read of the current definitions an RRSP or RRIF qualifies as a pension as does an IRA. But, the Roth version, generally, does not (except in limited circumstances).I'm not convinced the treaty will ever cover TFSA and Roth accounts directly although any thing is possible.My opinion is that if you have US filing obligations, let a tax professional deal with them. I suppose you could prepare the returns a couple of times to eliminate the tax effect.As for not disclosing the TFSA to the IRS? If you are a US citizen and fail to disclose an interest in a foreign trust (the self-directed TFSA is a trust), you could run into some pretty heavy handed penalties. The Canada-U.S. Tax Treaty covers pensions and similar retirement plans. based on a read of the current definitions an RRSP or RRIF qualifies as a pension as does an IRA. But, the Roth version, generally, does not (except in limited circumstances).

I’m not convinced the treaty will ever cover TFSA and Roth accounts directly although any thing is possible.

My opinion is that if you have US filing obligations, let a tax professional deal with them. I suppose you could prepare the returns a couple of times to eliminate the tax effect.

As for not disclosing the TFSA to the IRS? If you are a US citizen and fail to disclose an interest in a foreign trust (the self-directed TFSA is a trust), you could run into some pretty heavy handed penalties.

]]> By: Satyricoshttp://blog.taxresource.ca/u-s-citizens-with-a-tfsa/comment-page-1/#comment-4571 Satyricos Tue, 19 Jan 2010 21:37:52 +0000 http://blog.taxresource.ca/?p=4150#comment-4571 Thanks for this information. I wonder if the reason that TFSA is not covered under the tax treaty between the US and Canada is simply because the TFSA is new--it is virtually identical to the Roth IRA. This means, that for all intents and purposes, an American living in the US cannot benefit neither from a Roth IRA nor from a TFSA.I suppose that what would happen is that any tax paid on a TFSA in the US could then be deducted from the Canadian taxes, while any tax paid in Canada would be deducted from the US tax. After five or six such iterations, I suppose that I would still owe no tax in the US since Canadian taxes are higher for someone in my tax bracket (below 50,000). What do you think? Why bother informing the IRS of my TFSA in the first place if that is the case? Thanks for this information. I wonder if the reason that TFSA is not covered under the tax treaty between the US and Canada is simply because the TFSA is new–it is virtually identical to the Roth IRA. This means, that for all intents and purposes, an American living in the US cannot benefit neither from a Roth IRA nor from a TFSA.

I suppose that what would happen is that any tax paid on a TFSA in the US could then be deducted from the Canadian taxes, while any tax paid in Canada would be deducted from the US tax. After five or six such iterations, I suppose that I would still owe no tax in the US since Canadian taxes are higher for someone in my tax bracket (below 50,000). What do you think? Why bother informing the IRS of my TFSA in the first place if that is the case?

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