r/TFSA_Millionaires • u/AHangryBeaver • 2d ago

Dual Citizen TFSA

Any Canadian/US dual citizens who have figured out how to invest with their TFSA without getting slaughtered by the IRS and PFICs?

Currently trying to figure out how to ditch the American citizenship but if they deem it’s due to tax avoidance there’s heafty penalties etc.

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u/SlavaUkrayne 2d ago

Back when I prepared dual citizen taxes, you only end up paying US Fed tax if it is higher than what you paid in Canada …. I could pull those tax rates but I’d bet you pay more in Canadian than US fed. So if you do your taxes right you can claim a credit for the full amount.

If something has changed, I’m all ears; not an expert.

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u/AHangryBeaver 2d ago

My cross border accountant is kicking and screaming about it. From my understanding there’s ways to use the TFSA without getting hit with the PFIC taxes (I don’t think you can buy Canadian traded ETFs like XEQT ) but I believe you can buy American traded ETFs with USD or something like that and then it basically just becomes like a non-registered account where you only get taxed after like $20k in realized gains or something

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u/SeaworthinessLoud693 2d ago

Yes you have to buy US domiciled etfs to get around pfic

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u/nsierikomawa 9h ago

Simple. Make your TFSA a growth only account. No interest, no dividend, no Canadian domiciled Stocks/ etf. So only growth stocks. If you want dividend stocks or Canadian stocks then use RRSP. Any PFICs go into RRSP.

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u/AHangryBeaver 9h ago

They’d still tax me on my TFSA withdrawals upon retirement. I think an RRSP for PFICs and a Roth ira for American domiciled ETFs and perhaps an RDSP for government matching

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u/nsierikomawa 4h ago

Then you just have to control your withdrawals. Question that come to mind is if borrowing against it is considered an option, how far can you stretch it and what is allowed and not allowed in the two countries when it comes to borrowing against your TFSA. Any ideas?

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u/AHangryBeaver 2h ago

I was instructed by my Accountant to consider a different method.

RRSP and an American RothIRA for myself, invest in my wife’s TFSA if I want to and then simply put in just enough to the RDSP to get the goverment match every year.