Do You Have to File FBAR for RRSP or TFSA?

If you are a U.S. person with Canadian retirement accounts like an RRSP (Registered Retirement Savings Plan) or TFSA (Tax-Free Savings Account), it is very natural to wonder if these need to be disclosed to the IRS. The answer varies in accordance with how much money you hold across all foreign financial accounts during the year.

When Does FBAR Apply?

The FBAR, officially known as FinCEN Form 114, is necessary when the total value of the foreign financial accounts simply exceeds $10,000 at any point during the calendar year. The mentioned threshold covers:

• Individual and joint accounts
• RRSPs and TFSAs
• Other Canadian accounts you may have signing authority over

RRSPs: What You Should Know

Thanks to the dual tax treaty US Canada, RRSPs generally qualify for tax deferral and, under IRS Revenue Procedure 2014-55, are usually exempt from Form 3520-A filing. However, that simply does not mean they are exempt from FBAR.

• RRSPs should be reported on the FBAR if the value satisfies the threshold.
• Form 8938 may also be necessary in line with FATCA rules.
• Income deferral is possible, but only if treaty benefits are claimed correctly.

TFSAs: A Different Treatment

TFSAs, unlike RRSPs, do not enjoy treaty protection. The IRS generally treats them as foreign grantor trusts.

• This usually means filing Form 3520 and Form 3520-A.
• TFSAs also are included under FBAR requirements if the total account value qualifies.
• Income in TFSAs may be taxable to the U.S. taxpayer.

Key Considerations

• Both RRSPs and TFSAs are counted toward the $10,000 FBAR threshold.
• The highest value during the year—not just the year-end balance—matters.
• Reporting is necessary even if no income was earned or if taxes were already paid in Canada.

Final Consideration

In a nutshell, proper management of cross-border retirement accounts can present assistance in preventing unnecessary penalties. No matter if it is acknowledging FBAR for RRSP and TFSA or managing TFSA IRS reporting, professional guidance goes a long way in establishing full compliance in parallel to the dual tax treaty US Canada. For expert assistance, contact Watter CPA to schedule your initial consultation.

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