Need a little help on how the IRS works (so confusing!). How does the IRS treat income earned through a TFSA, and do I need to report it as taxable? If so, could you let me know what form?
A TFSA is not considered tax-free by the IRS in the U.S., and income earned in a TFSA is reportable and
taxable on a current year basis in the U.S. on form 1040.
In Canada, Canadian are encouraged to open TFSA accounts and save for retirement without worrying
about tax. All of the interest, gains, dividends, and investments made throughout as well as withdrawals
from these savings sources are tax-free. But, in the US, the TFSA account does not enjoy the same tax
status as it does in Canada. For U.S. taxpayers such as Canadian living in the U.S. or U.S. citizens and
green card holders resident in Canada, any gains, interest, dividends is reportable and taxable on the