# Help filling 3520 / 3520a for TFSA.



## albator73

Hi,

I'm very confuse and hope someone can clarify my situation.

In 2008, I open a Saving Account TFSA from ING Direct and every year I invest the maximum per year. $5K

From what I'm reading lot of people mention that we need to fill 3520 / 3520A for TFSA, but there seem to be different TFSA. (Trust, No Trust, etc) :confused2:

Does a basic saving account TFSA ( No trust) need 3520 / 3520A form?

I call ING Direct and they confirm it was NOT trust account. He doubt I need to fill out these forms.

Thanks


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## Bevdeforges

If your bank has told you that the account is not a trust, I would rely on that information. From what I can see your TFSA is a simple tax-free savings account, similar to some of the savings "livrets" we have here in France.

You will have to report the interest income from the TFSA on your US tax returns each year, and depending on your financial situation this may mean you'll have to pay US taxes on some part of the interest income. And you should report the TFSA on your Treasury form as a foreign financial account (since I imagine the balance is definitely over $10,000 at this point).

Past that, however, I wouldn't worry about it. You've disclosed it, and if the IRS wants more information, they'll contact you. (But don't hold your breath.)
Cheers,
Bev


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## albator73

Thank Bev, 

It is GREAT news! As to report it, Yes, I did including them in my Schedule B & 1040. 
After including the exclusion from 2555 and little interest of $500 from TSFA, I realize that I didn't own any tax. I'm surprise to see that I can go up to $5700 in interest before I start paying Tax.

I also included them in the FBAR report. 

Knowing all this now, for the relief of paper complexity for this poor performance account I didn't took a chance I close all them. 

Have great day 
Albator73


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## albator73

If this can help demystify TFSA type to other.

I called ING again and they didn't have any official paper but mention to go on CRA website. 

From CRA, here the document I found for TFSA type: 
http://www.cra-arc.gc.ca/E/pub/tg/rc4466/rc4466-12e.pdf (page 5-6) 

From what I read, I suspect my ING Saving Account TFSA is a DEPOSIT type. 

-------------------------------------------- 
_Types of TFSAs 
There are three different types of TFSAs that can be offered: 
a deposit, an annuity contract, and an arrangement in trust. 


an *arrangement in trust *with an issuer that is authorized in Canada to offer to the public its services as a trustee;

 an *annuity *contract with an issuer that is a licensed annuities provider; 

 A *deposit *with an issuer that is a person who is a member, or is eligible to be a member, of the Canadian Payments Association, or a credit union that is a shareholder or member of a “central” for the purposes of the Canadian Payments Act. 
_--------------------------------------------


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## keesio

Hi albator,
Did you ever confirm what the IRS considers the ING TFSA basic savings account as a trust that needs a 3520/3520a?

I have the same and I can't confirm from ING DIRECT themselves. They were no help on the line and couldn't confirm one way or the other.

Thanks


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## Grace72

I am an American living in Canada and discovered the need to file taxes two years ago. I consulted with a professional accounting firm that specializes in this and discovered that -- yes -- you have to file 3520s and 3520As for TFSA and for RESP.

I managed to learn how to do all the other forms on my own but these two were completely impossible to figure out so I had to pay to have them completed ... I got off those accounts as fast as I could. Not worth the cost of filing the paperwork.


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## northcut

*TFSA Tax-free for Expats in Canada*

Incidentally, I see references in these postings to the interest from a TFSA being taxable on the US return for a US citizen living in Canada. Under the last protocol to the Canada-USA Tax Treaty, all interest in taxable only in the country of residence. Therefore, a TFSA is not taxable in Canada (since Canada does not tax them) but they are also not taxable in the USA (for interest income) since the interest is exempt from taxation in the USA by the Tax Treaty (for a US citizen living in Canada). Of course, you still need to declare the interest and file any required forms (such as the Form 3520) but interest income is deducted from gross income on the same line (as a negative number) where foreign employment income is deducted.


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## Vangrrl

northcut said:


> Incidentally, I see references in these postings to the interest from a TFSA being taxable on the US return for a US citizen living in Canada. Under the last protocol to the Canada-USA Tax Treaty, all interest in taxable only in the country of residence. Therefore, a TFSA is not taxable in Canada (since Canada does not tax them) but they are also not taxable in the USA (for interest income) since the interest is exempt from taxation in the USA by the Tax Treaty (for a US citizen living in Canada). Of course, you still need to declare the interest and file any required forms (such as the Form 3520) but interest income is deducted from gross income on the same line (as a negative number) where foreign employment income is deducted.


Do you have a reference for this? I've never seen anything to indicate that TFSA and RESP interest is tax exempt. 

I did recently read an article in the Globe and Mail where an accountant suggests that you can use a foreign tax credit to offset TFSA interest if you paid tax on any other investments in Canada. Does anyone know if this is true? I receive a dividend that I pay (a lot of) tax on in Canada. Is that considered tax paid on an investment that I could apply towards TFSA interest?


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## northcut

*Tax Treaty*



Vangrrl said:


> Do you have a reference for this? I've never seen anything to indicate that TFSA and RESP interest is tax exempt.
> 
> I did recently read an article in the Globe and Mail where an accountant suggests that you can use a foreign tax credit to offset TFSA interest if you paid tax on any other investments in Canada. Does anyone know if this is true? I receive a dividend that I pay (a lot of) tax on in Canada. Is that considered tax paid on an investment that I could apply towards TFSA interest?


It says in Article 6 of the Fifth Protocol modifies the way that interest is taxed. In answer to your question, yes, tax paid on dividends can be used as a foreign tax credit for other items of investment income, on which tax is due. This is my opinion but should not be taken as expert tax advice.


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## Edmonton

So what did you do in the end? I am facing the same problem. I had a TFSA at Tangerine (formerly ING) in 2014. I called them and I was told it is not a trust, no need to file 3520/3520A.
Now I am really confused.


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## maz57

Edmonton said:


> So what did you do in the end? I am facing the same problem. I had a TFSA at Tangerine (formerly ING) in 2014. I called them and I was told it is not a trust, no need to file 3520/3520A.
> Now I am really confused.


Ing (now Tangerine) created the product; they should know better than anybody. If they say its not a trust, its not a trust. It is a simple savings account that pays interest that is not taxable in Canada. Report the interest on your US return and leave it at that. You really don't want to file 3520's. The IRS will let you know if they think there is a problem. You'll never hear from them.

Re: the discussion about interest on Canadian accounts not being US taxable under the Treaty. I've never heard that but I suppose its possible. It certainly isn't common knowledge. If you are filing a nil return its a moot point anyway.


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## athanan

*3520A for TFSA*

Hello, 

Need some assistance in what goes into Line 18 column D on Part III of the 3520A for a TFSA.

Here is the scenario:

- I made 2 withdrawals from the TFSA in 2015: those are listed under the Distributions section

- I made 0 contributions to the TFSA in 2015.

Line 11 d (total assets) shows the closing balance on the TFSA as of Dec 31, 2015.

Line 17 d (contributions) shows 0 as I did not make any contributions in 2015.

Line 18 d Accumulated Trust Income shows the closing balance on the TFSA as of Dec 31, 2015...is that correct?


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## Lawgrrl

*TFSA Taxation*

Sorry I can't help with reporting but the advice I've received is that TFSAs owned by "US persons" ARE taxable. Here's a quote from BDO, a national Canadian accounting firm: "U.S. persons investing in TFSAs cannot elect to defer the taxation of income earned inside the plan. The plan's income is taxable to the U.S. owner for U.S. tax purposes..."
The link to the entire newsletter on Tax Consequences for U.S. Citizens living in Canada can be found here: http://www.bdo.ca/en/Library/Services/Tax/Documents/Tax-Bulletins/Tax-Consequences-for-US-Citizens-and-other-US-Persons-Living-in-Canada.pdf


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## BBCWatcher

I don't think anybody has disagreed with that. Income is income.

The outstanding question is whether a TFSA is a trust or not, i.e. does it require filing IRS Form 3520/3520-A. And the best answer I've seen is "it depends." Some are, some are not. It just depends on the construction and holdings in the account, as the U.S. tax regulations see it.


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## jbr439

Phil Hodgen just had an article on TFSAs.
See: Canadian TFSAs and the Certification Test


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