The TFSA file
Is my TFSA taxable in the US?
Short answer for a US person: usually yes, and the paperwork can be worse than the tax. Tell us your situation and see what likely applies to you.
Quick answer: usually yes, if you are a US person. The Canada-US treaty shelters your RRSP, not your TFSA, so the IRS taxes the growth every year, and your TFSA may also need foreign-trust filings (Forms 3520 and 3520-A).
Your situation
What likely applies to you
The growth is taxable in the US, every year
TaxableThe Canada-US tax treaty shelters your RRSP and RRIF. It never mentions the TFSA. So the IRS treats your TFSA like an ordinary account and taxes the interest, dividends, and capital gains inside it on your US return, the same year they happen, tax-free status in Canada notwithstanding.
It may be a foreign trust (Forms 3520 and 3520-A)
Gray areaThe IRS has never clearly ruled whether a TFSA is a foreign trust. Many TFSAs are arrangements that could be treated as one. If yours is, you may owe Form 3520 and Form 3520-A each year, and the penalty for missing them starts around $10,000 per form. This is the single biggest gray area for a US person with a TFSA. Have a cross-border accountant make the call on your specific account.
Your Canadian funds are PFICs (Form 8621)
TaxableCanadian mutual funds and ETFs are Passive Foreign Investment Companies to the IRS. Holding them, even inside a TFSA, can trigger Form 8621 and a punitive tax calculation. Individual stocks, GICs, and cash sidestep this. Many cross-border holders move TFSA money out of Canadian funds for exactly this reason.
It also counts for FBAR and possibly Form 8938
ReportingA TFSA is a foreign financial account. Its balance counts toward the $10,000 FBAR threshold and, at higher thresholds, Form 8938 under FATCA. These are reporting forms, separate from the tax you owe on the growth.
The honest bottom line
For a lot of US persons, a TFSA creates more US tax and filing than the Canadian benefit is worth. Some close it, some keep it with their eyes open. Either way, get a cross-border accountant to look at your account before you move money.
Let the count run itself.
Being Canadian tracks your days and balances in the background and warns you before you cross a line, on both the US clock and your provincial one. Get on the list and you walk in first this Canada Day.
General information, not tax or legal advice, and not a substitute for a cross-border professional who has seen your actual account. Rules verified 2026-05-21. Sources: IRS Form 3520 / Form 8621 (PFIC).
More from the cross-border file
The Day Counter
How many US days before the IRS calls you a tax resident.
Do I need to file an FBAR?
Reporting your Canadian accounts to the US government.
Canadian-owned US rental property
30% gross withholding vs the net-basis election, and your FIRPTA exposure.
Can I move to the US?
TN status under USMCA, the move most Canadians think is impossible.
Border duty calculator
What you owe at the Canadian border after a US trip, by province.
Cross-border moving checklist
Tax, health, and logistics for a move between Canada and the US.
