The US does not recognize the tax shelter on any of these accounts. Income earned inside is generally taxable on your US return each year.
The difference is paperwork. RESPs and RDSPs are exempt from Forms 3520 and 3520-A under Rev. Proc. 2020-17. The FHSA is not, so it raises the same Form 3520 question as a TFSA. All three go on your FBAR and Form 8938.
FHSA (First Home Savings Account)
The FHSA started in 2023. In Canada, contributions are deductible and a qualifying withdrawal for a first home is tax-free. Neither benefit carries over to your US return:
- Contributions don't reduce your US income.
- Interest, dividends and gains inside the account are reported on your US return each year, the same way as for a TFSA.
- Because the income was already taxed on your US return as it was earned, taking your money out for the home does not create new US income under this approach.
The FHSA doesn't fit the Rev. Proc. 2020-17 exemption (it is not a retirement, medical, disability or education account), and the IRS hasn't said whether it is a foreign trust. That leaves the same choice as a TFSA: many professionals file Form 3520 and a substitute Form 3520-A to be safe.
RESP (Registered Education Savings Plan)
For US purposes the subscriber, usually the parent who contributes, is treated as the owner. Income earned inside the RESP is reported on the subscriber's US return each year.
No Forms 3520 or 3520-A. Rev. Proc. 2020-17 exempts education savings trusts whose contributions are limited to $10,000 a year or $200,000 lifetime. The RESP's $50,000 lifetime contribution limit fits, so the foreign trust forms are not required.
Government grants such as the Canada Education Savings Grant have no clear US answer. If the grant amounts are large, a cross-border professional can help you choose a position.
RDSP (Registered Disability Savings Plan)
The RDSP also fits Rev. Proc. 2020-17, as a trust for disability benefits, so it is exempt from Forms 3520 and 3520-A. It still goes on your FBAR and Form 8938 if you have to file them.
At a glance
| Account | Income inside taxed by US yearly? | Forms 3520 / 3520-A | FBAR and Form 8938 |
|---|---|---|---|
| TFSA | Yes | Unsettled; often filed | Yes |
| FHSA | Yes | Unsettled; often filed | Yes |
| RESP | Yes, to the subscriber | Exempt (Rev. Proc. 2020-17) | Yes |
| RDSP | See a professional | Exempt (Rev. Proc. 2020-17) | Yes |
| RRSP / RRIF | No, deferred until withdrawn | Exempt (Rev. Proc. 2014-55) | Yes |