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International Tax, Cross-Border and Expatriate Tax Expert
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What are the processes to treat TFSA in IRS rules?

Hey Mohammad, can you please let me how to treat TFSA in IRS rule? It’s actually frustrating and I don’t know how to go about it.

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.

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