Personal Finance

What do you think the IRS's position on the TFSA will be? Should I use it?

  • Last Updated:
  • Oct 16th, 2019 12:39 pm
[OP]
Member
Jul 8, 2017
212 posts
123 upvotes

What do you think the IRS's position on the TFSA will be? Should I use it?

Some say its a foreign trust and taxed as ordinary income. Some say its not a foreign trust, but still taxed.

The IRS has made NO position or official statement.

I have >$50,000 In TFSA contribution room I've never used and am paying handsomely in taxes on any earnings I make.

I really wish I could use it. What do you think the IRS's future position on the TFSA will be?
4 replies
Deal Addict
May 16, 2017
1508 posts
1902 upvotes
The short answer is that regardless of how a TFSA is exactly treated by the IRS it WILL BE TAXED as current year income. So, there is no point in investing in one if you have to pay US taxes on it as that defeats the entire point of a TFSA. Then there are the potential complex tax filing forms that MAY be demanded by the IRS, who has shown no movement in clarifying US tax treatment of Canadian TFSAs.
Deal Addict
May 12, 2014
2801 posts
2529 upvotes
Montreal
The solution to this and all your previous threads remains: renounce your US citizenship.

For this specific thread: $50,000 sounds like a lot, but whatever you earn on it will be dwarfed by legal fees if the IRS so much as challenges your TFSA. Let alone what you'll have to pay in interest and penalties if they win.
Sr. Member
Nov 12, 2014
916 posts
588 upvotes
Kingston, ON
FrancisBacon wrote: The solution to this and all your previous threads remains: renounce your US citizenship.

For this specific thread: $50,000 sounds like a lot, but whatever you earn on it will be dwarfed by legal fees if the IRS so much as challenges your TFSA. Let alone what you'll have to pay in interest and penalties if they win.
Or...don't use a TFSA until they officially comment, if he wants to keep his citizenship...
Deal Addict
May 12, 2014
2801 posts
2529 upvotes
Montreal
The issue is that from what I see of his previous threads, he has major tax problems. This TFSA issue is tiny compared to them, hence my advice.

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