Canadian registered accounts are built around a simple promise: investment income inside the account is sheltered from Canadian tax. The problem for US persons in Canada is that the IRS never signed up to that promise. With one important exception, US tax law looks straight through Canadian registered accounts and taxes what happens inside them.

Here is the account-by-account picture.

RRSP and RRIF: the safe harbour

The Registered Retirement Savings Plan is the exception that works. Under the US–Canada tax treaty and IRS administrative relief, income accruing inside an RRSP or RRIF is automatically tax-deferred for US purposes until distribution — no special election form is required anymore.

Two cautions:

  • The accounts remain reportable on the FBAR and, where thresholds are met, Form 8938.
  • Contributions and withdrawals still need cross-border coordination — the US deduction treatment of contributions differs from the Canadian, and basis tracking matters at withdrawal.

TFSA: tax-free in Canada only

The Tax-Free Savings Account has no recognition in US law and no protection under the treaty. For a US person:

  • Interest, dividends and gains earned inside the TFSA are generally taxable on the US return in the year earned.
  • If the TFSA holds Canadian mutual funds or ETFs, the PFIC rules likely apply on top — punitive default taxation and a Form 8621 for each fund.
  • Whether a TFSA must also be reported as a foreign trust (Forms 3520/3520-A) has been debated for years. IRS guidance issued in 2020 relieved certain tax-favoured foreign accounts from trust reporting, and many practitioners read TFSAs as qualifying — but positions vary, and the filing posture should be chosen deliberately.

For many US persons in Canada, the practical answer is blunt: the TFSA’s Canadian tax saving is smaller than its US compliance cost, and the account is better held by a non-US spouse or not at all. That is a planning conversation, not a default.

RESP: the family savings plan with a US tax bill

A Registered Education Savings Plan is generally treated as the subscriber’s money for US purposes:

  • Income accruing in the plan is taxable to a US-person subscriber as earned.
  • Government grants (CESG) are typically taxable income too — money the family never sees as “income” in Canada.
  • The foreign-trust reporting question parallels the TFSA analysis.
  • Funds inside the RESP are, again, frequently PFICs.

The common fix in cross-border families: the non-US parent subscribes to the RESP alone. Done early, this keeps the plan entirely outside the US system.

FHSA: new account, familiar problem

The First Home Savings Account, introduced in 2023, combines RRSP-style deductibility with TFSA-style tax-free withdrawal — for Canadian purposes. It has no US recognition and no treaty protection, so the default analysis tracks the TFSA: income inside is taxable to a US person as earned, the account is reportable, and fund holdings raise PFIC issues. US guidance specific to the FHSA remains limited, which argues for conservative reporting and professional advice.

What this means in practice

  1. Inventory first. List every registered account, its owner, and what it holds. The owner question alone resolves many problems.
  2. Mind the funds inside. The PFIC problem comes from holding Canadian-domiciled funds — not from the registered wrapper. US-listed ETFs inside a taxable or RRSP account sidestep it.
  3. Report consistently. FBAR and Form 8938 should tell the same story every year; inconsistency is what draws attention.
  4. Restructure deliberately. Moving accounts to a non-US spouse, collapsing a small TFSA, or changing fund holdings are all routine fixes — but each has both Canadian and US consequences, so sequence them with advice.

US persons in Canada do not have to give up on tax-efficient saving — they have to do it with the US rulebook open on the table. That is precisely the work of a cross-border adviser.