Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@beaconhillwm.ca or via telephone at 778.433.1314. You can also read more about Phil at www.Beaconhillwm.ca/team/about-phil/

ROTH IRA and TSFA Questions
Question
Hello!
This is Erin from the recent question about what to do with American investments.
A little about me:
I make 12k USD per year through remote work for an American company.
I make about 30k Canadian self employed income.
Is it possible to invest in both TFSA and Roth IRA? Should I not bother with the IRA and just invest more in Canadian accounts?
I just recently changed my Chase Bank address to my Canadian address (I just forgot to do it until now), and it basically froze my investment account.
I know I can use the Foreign Income Tax Credit to still have money to put into the IRA as opposed to the FEIE.
Any advice would be much appreciated. And I am willing to pay for your time!
– XXXXXX
Answer
Hi XXXXX
Thanks for the email.
These are just my general thoughts on your situation based on the information you gave below. We would need to confirm an approach via a paid consult. That being said, here are my initial thoughts (I’m assuming you’re a US citizen).
- If you’re already in Canada you won’t be able to contribute to a ROTH IRA
- Investing in a TSFA can be tricky as you may have 3520 and 3520-A filing requirements and the income earned in the TFSA will be taxable in the US
- You may have passive 1116 credits on your 1040 that could reduce the US tax on the TFSA
- You can always invest inside an RRSP which would allow you to claim a deduction and shelter some of your income from tax, however your income may not be high enough to see significant tax benefits
- Contributions to a regular IRA will not help as you won’t get the deduction on the US side.
Hope that helps.
Cheers
Phil
Phil Hogan, CPA, CA, CPA (Colorado)
Partner
Specializing in Canadian and US Tax
(250) 661-9417
phil@hutcheson.ca
This commentary reflects the personal opinions, viewpoints and analyses of the Beacon Hill Wealth Management Ltd. partner providing such comments, and should not be regarded as a description of advisory services provided by Beacon Hill Wealth Management Ltd. or performance returns of any Beacon Hill Wealth Management Ltd. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Beacon Hill Wealth Management Ltd. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Any discussion about taxation is for educational purposes only and should not be viewed as professional advice. Consult your tax professional for tax advice on your particular situation.
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