Tax on both sides of the border

U.S. citizens living in Canada not only have to file Canadian tax returns reporting their worldwide income, but they also have to file U.S. tax returns reporting the same income. That’s because the U.S. imposes taxes and filing requirements based on citizenship, not residency.

To make matters worse, if the U.S. citizen holds a TFSA, RESP or RDSP, these accounts are not recognized as tax-preferred by the U.S. and the income from these must be reported annually on a U.S. return. Most U.S. tax professionals consider these Canadian plans to be foreign grantor trusts from a U.S. tax perspective and thus also subject to onerous and costly information return filings. Many Canadian tax advisers recommend their clients to simply avoid these accounts altogether.  Read More…


  1. Wow, that is crazy that there is a risk of being double-taxed by both countries if you aren’t keeping a watchful eye.

    What i cant understand is why RRSP is exempt (as far as i know) and they cant do the same for other investment instruments?

  2. Why bother is the real question. The time it will take to sort out the logistics and methods and penalties between both countries just seems ill-advised and would be smart to avoid and stick with your own countrys offerings. my 2 cents.

  3. This has always been a serious problem by both countries. It, at least for me and my family, has caused us to disregard very interesting investments out of fear of tax burdens by our neighbors in the south.

  4. Hmm, does this imply that the IRS or CRA will be witholding income when withdrawing from these accounts or does one need to report it before they know?

    I ask because why not just ignore reporting? I figure the other country wont find out.

  5. Ok but i am still a bit lost after reading the article. What kind of relief are we expecting to get? Am i missing something?

  6. I hate to say it but this is why you should keep it simple and invest locally and not make it complex by jumping around and investing in other countries.

  7. I get the sense that the U.S. is capitalizing on this better than we are. Maybe under Trudeau things will get better. I saw Obama and Trudeau the other day and they were like bffs. lol

  8. Do things change if the Americans live so many years in Canada and vice versa? Or does this apply for life?

  9. Honestly, i doubt the problem will ever be fixed. Both nations have positives in not fixing the problem — it ultimately brings in more revenue.

  10. So TFSA is equivalent to Roth IRAs, and RRSP is like 401Ks? If i have it right then what is the big deal if most Canadians/Americans will only use those?

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