# TFSA and working in the USA



## clovis8 (Dec 7, 2010)

My brother is working in the USA as a resident alien (L1A1 VISA). If he opens a TFSA here in Canada does anyone know if the growth would be considered tax-free in the US as well? 

Does each country respect the others tax law?


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## MikeT (Feb 16, 2010)

You can contribute to a TFSA only until you become a non-resident. If he is already there he can't contribute until he comes back. He also does not accumulate TFSA contribution room while away.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html

He can however, open a Roth IRA in the US which is similar in that it is an after tax- tax deferred account but not the same because it is tied to retirement. However, if he plans on returning to Canada that would not be a wise move as Canada does not defer taxes on growth in a Roth.


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## OhGreatGuru (May 24, 2009)

clovis8 said:


> My brother is working in the USA as a resident alien (L1A1 VISA). If he opens a TFSA here in Canada does anyone know if the growth would be considered tax-free in the US as well?
> 
> Does each country respect the others tax law?


Well, to start with he is not eligible to contribute while he is a non-resident. See http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html So the question may be moot. And he accumulates no TFSA room for years in which he is a non-resident. There are conditions under which you may declare yourself to be resident even if living abroad, but then you are also subject to Canadian income tax.

If a Canadian resident has a TFSA and then becomes a non-resident, he can keep the TFSA, but not make further contributions while a non-resident; and it will not be taxed in Canada.

Tax status in the country of residence will vary with the country. I thought I had seen a thread saying the US has recognized tax-free status of TFSA's, similar to RRSP's, but I can't find it to verify: and I have found several warnings on web sites that the US is(was) planning to tax earnings in TFSA's.

PS: this site : http://forums.serbinski.com/ specializes in Canada/US tax issues, and they indicate TFSA's are not tax-sheltered in the US.


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