Form 8938 after moving from Canada: RRSP, TFSA and more

Do I file Form 8938 in the year I move from Canada?

You file Form 8938 for your arrival year if you became a resident alien for any part of the year, you must file a US income tax return anyway, and your foreign assets, Canadian and any others, together pass the threshold for people living in the US. A resident alien for any part of the year is a "specified individual" (IRS instructions). If you have no US return to file, you have no Form 8938 to file. Form 8938, the FATCA form, is attached to your Form 1040 or 1040-NR and is due with it, including extensions.

The higher "living abroad" thresholds need a foreign tax home plus a presence-abroad test, such as 330 full days abroad in 12 consecutive months ending in the tax year (26 CFR 1.6038D-2). Do not assume them because you lived in Canada for part of the year; an early-year arrival should have that test checked.

Cases that are not simple: shares of your own Canadian company, a defined-benefit pension, an interest in a family trust, a spouse who stayed in Canada, or a treaty claim to stay Canadian for part of the year. Gather: your residency starting date, every Canadian statement from that date to year end, pension statements, and a value for any private company shares.

Which part of the year does Form 8938 cover?

Form 8938 covers only the part of the year you were a specified individual. A person who arrives on 1 February and meets the substantial presence test reports from 1 February to 31 December (IRS instructions, Example 14). Publication 519 sets your residency starting date: generally your first day present in the US that year under the substantial presence test, or your first day here as a green card holder. A short US trip before the move counts: visit in January and move in May, and January starts your reporting period, unless you exclude up to 10 days by showing a closer connection to Canada in a signed statement attached to your return.

If you are married to a US citizen or resident at year end and you both choose to be treated as US residents for the whole year on a joint return, you are a specified individual for the whole year: report from 1 January, and a spouse who joins the choice adds their Canadian assets to the same Form 8938 (IRS instructions; Publication 519). If you are single at year end, you cannot make this choice. See the dual-status return guide.

The regulation tests the thresholds "at any time during the taxable year" but limits the reporting period to the part of the year you were a specified individual (26 CFR 1.6038D-2). Neither it nor the instructions says whether balances held before your residency starting date count toward the threshold. If only those earlier balances put you over, have that judgment made with a professional rather than assuming you are under. The FBAR works differently, covering the whole calendar year; see the first FBAR after moving from Canada.

Do my RRSP, TFSA and other Canadian accounts go on Form 8938?

Accounts at Canadian financial institutions count, including registered plans (an account kept by a US payer, such as a US branch or a Canadian subsidiary of a US firm, is the exception below), and so do pension interests, directly held shares and known trust or estate interests. The instructions say retirement and pension accounts must be reported even where an intergovernmental agreement excludes them from bank reporting (IRS instructions). Revenue Procedure 2014-55 removed the old RRSP and RRIF election form but left Form 8938 in place.

How the IRS taxes each of these accounts is a separate question: see Canadian registered accounts on a US return. For Canadian funds inside the accounts, see Canadian ETFs and mutual funds after moving to the US.

Which Canadian items stay off Form 8938?

CPP, QPP and OAS stay off, along with directly held real estate, accounts you can only sign on, and physical cash. The IRS lists each of these as not reportable (comparison table; Form 8938 questions and answers).

How do I value each asset and convert it to US dollars?

Report each asset's highest value during the reporting period in Canadian dollars, then convert at the US Treasury rate for the last day of the tax year (IRS instructions). Use the Bureau of the Fiscal Service rate for buying US dollars, even for an account closed earlier in the year, or the rate on an account statement issued at least once a year. You may rely on account statements for the highest value unless you know they understate it; no appraisal is needed.

Pension plans and estates follow their own order. Use the fair market value of your share on the last day of the year. If that value is not readily available to you, use the year-end value of what was paid to you during the year. If nothing was paid and no value is readily available, the value is zero, and the plan is still listed if you file (IRS questions and answers). A defined-benefit statement that shows a commuted value may be such a readily available value. For pensions in more depth, see foreign pension reporting.

What if an asset is already on Form 5471, 8621 or 3520?

An asset on a timely filed Form 3520, 5471, 8621 or 8865 is not listed again on Form 8938, but its value still counts toward your threshold (IRS instructions). In Part IV you name the form and how many you filed.

• Your own Canadian corporation: if you file Form 5471 for it, the shares are referenced, not repeated; see keeping your Canadian corporation after moving to the US.
• Canadian funds held directly: a fund on Form 8621 is referenced the same way.
• A trust you report on Form 3520: referenced; if you are treated as the trust's owner, the trust must also file Form 3520-A on time.

How much of a joint account do I report?

You usually report the whole account. Spouses filing jointly list a joint account once at its full value. Spouses who are both US filers and file separately each report the full value, but each counts half toward their own threshold. If you share an account with a spouse who stayed in Canada and does not join your return, or with a parent, you count and report the entire value (IRS instructions). If that spouse joins a choice to be treated as US residents and you file jointly, the joint rule applies instead, and the spouse's own Canadian assets go on the same form.

What if I claim Canadian residence under the treaty for part of the year?

If you are a dual resident who uses the Canada–US treaty to be taxed as a US nonresident for part of the year, Form 8938 is not required for that part. The relief depends on filing on time and correctly: Form 1040-NR with Form 8833 if you end the year as a nonresident, or Form 1040 with a schedule showing the part of the year you were treated as a nonresident, and Form 8833, if you end it as a resident (26 CFR 1.6038D-2(e)). Whether the tie-breaker favours Canada is covered in the treaty tie-breaker guide.

What happens if I miss Form 8938?

A missed Form 8938 can cost US$10,000, plus US$10,000 for each 30 days it stays unfiled after 90 days from an IRS notice, up to US$50,000 more (IRS instructions). Underpaid tax tied to an unreported asset can draw a 40% penalty. The assessment period for the return stays open until 3 years after you file the form, and runs six years if you leave out more than US$5,000 of income from foreign assets. No penalty applies if you can show the failure was due to reasonable cause and not wilful neglect; the IRS decides this case by case. To fix a missed year, see catching up on missed foreign reporting.

Example

All figures are illustrative. Assets are in Canadian dollars, converted at an assumed year-end rate of C$1 = US$0.73.

Single, US resident from 1 May

A single woman becomes a US resident on 1 May. On one day after 1 May her RRSP holds C$120,000, her TFSA C$45,000 and her chequing account C$10,000. That day's total, C$175,000, converts to about US$127,750, above the US$75,000 any-time threshold for a single filer. She lists all three on Form 8938 for May to December. Her CPP statement does not go on it.

Married couple who own a Canadian corporation

A couple chooses to be treated as US residents for the whole year and files jointly, so they report for January to December. One spouse owns all the shares of a Canadian corporation worth C$400,000, about US$292,000, which is above the joint thresholds. The shares count for Form 8938 though they are not an account and are not on the FBAR. The owner files Form 5471 for the corporation, so Form 8938 refers to it in Part IV instead of listing the shares again.

Savings account and a defined-benefit pension

An engineer holds a C$30,000 savings account (about US$21,900) and a defined-benefit pension. His year-end statement shows a commuted value of C$90,000 (about US$65,700). If that counts as a readily available value, his year-end total is about US$87,600 and he files. Had no value been readily available and nothing been paid out, the pension would count as zero and he would be below both thresholds. He can sign on his mother's Canadian account but owns none of it, so that account stays off Form 8938; it may be an FBAR item.

Different for you?

• You own shares of a private Canadian company: valuing the shares and the Form 5471 that goes with them need cross-border tax help; see keeping your Canadian corporation after moving to the US.
• You have a defined-benefit pension or a beneficiary interest in a family trust: the value rules turn on what you know and what was paid; get cross-border tax help and see foreign pension reporting.
• Your spouse stayed in Canada, or you are deciding whether to file jointly in your arrival year: the choice decides whose accounts and which months go on Form 8938; get cross-border tax help.
• You need the FBAR for your arrival year: see the first FBAR after moving from Canada.
• You want the general rules on who files the FBAR and Form 8938: see foreign account reporting.
• You are filing a dual-status return or choosing to be treated as resident all year: see the dual-status return guide.
• You may still be a Canadian resident under the treaty: see the treaty tie-breaker guide and get cross-border tax help.
• You already missed Form 8938 for a past year: see catching up on missed foreign reporting.